When Justify ended “Apollo’s Curse” in 2018 by becoming the first horse in more than a century to win the Kentucky Derby without racing as a 2-year-old, an anonymous bettor cashed in with an unprecedented wager in Bitcoin.
With the price of the cryptocurrency at nearly $10,000 per Bitcoin at the time, a client at BUSR received a handsome payout on the 10 Bitcoin wager. Now on the eve of the 147th renewal of the Kentucky Derby, another “Crypto Whale” has placed a wager that dwarfs the earlier bet in deposit size and potential payout.
The male customer, who has a residence in the U.S., deposited just over 20 Bitcoin, the equivalent of about $1 million, into his BUSR account last week. The client, a well-known entrepreneur who has founded several companies, initially sought to place the entire amount on Derby favorite Essential Quality, BUSR spokesman James Ross told Sports Handle. Ross reacted in shock, flabbergasted that a customer would place a wager of such value. But then he swung into action, contacting senior management on whether the boutique online gaming company could handle the wager.
“At first, we thought it was a prank from a competitor or someone who started celebrating the derby a few days early with too many Woodford Reserve or Mint Juleps,” Ross said with a laugh.
[Editor’s note: BUSR is not a legal U.S. sportsbook; this kind of crypto transaction is not currently permitted in the U.S. ‘Related’ gambling sites discussed here.]
Efforts to contact an assistant of the Crypto Whale and the whale himself to verify the wager were unsuccessful.
— Kentucky Derby (@KentuckyDerby) April 29, 2021
Six figures on Derby favorite
Shortly after the deposit, the entrepreneur made a chunky six-figure wager on Essential Quality (+250 odds), the unbeaten 2020 Breeders Cup’ Juvenile champion, according to the spokesman. The bettor has since placed all of his bets on the Derby — a total of $1 million, Ross added. The client also sprinkled in several wagers on undisclosed longshots, as well as exactas and trifectas.
BUSR is even offering a futures wager on the identity of the whale. As of Friday morning, Dallas Mavericks owner Mark Cuban remained as the favorite at +200, while Tesla product architect Elon Musk lurked closely behind at 8/1. The site has limited bets in the pool to $10 a wager. Ross described his phone conversation with the customer this week as brief, but business-like.
|Who Is The Crypto Whale?||Odds|
|A Hedge Fund Manager||+600|
|Private Equity CEO||+1600|
|None of the Above||+2500|
BUSR will grade betting on the identity of the Crypto Whale bet at the end of May, Ross noted. If the customer elects to remain anonymous, then all bets will be refunded.
Ross would not be surprised if the bettor attempted to place the wager at another book before he approached BUSR. Major sportsbooks are increasingly devising creative ways to incorporate horse racing into their digital offerings. Last week, BetMGM unveiled a horse racing-specific app, one that is still months from going live. Ahead of the Derby, FanDuel Group’s TVG added a new feature to its horse racing app that automatically facilitates a wager on a Pick 4 if the first leg of a Pick 5 is unsuccessful.
But it could still be awhile before a prominent track will accept cryptocurrencies at the window. Virtual currencies like Bitcoin face strict regulatory obstacles before they become de rigueur at top U.S. race and sportsbooks.
“At TVG and FanDuel Racing we are unable to accept wagers in cryptocurrency. There are several regulatory issues that would need to be resolved before cryptocurrency can be approved for legal Advanced Deposit Wagering in the United States,” a FanDuel spokesperson told Sports Handle.
Plus, a massive Bitcoin wager may encounter waves of risk management scrutiny at a leading North American book, while a whale can swim right into to a place like BUSR, as Ross puts it.
BUSR has numerous global offices including locations in the U.K. and Costa Rica. Last year, 5Dimes took initial steps to transition into the U.S. legal market after the Costa Rica-based sportsbook suspended service to U.S. customers, a move that may appease state regulators. As regulations progress, BUSR may explore the opening of a U.S. office, Ross said Thursday.
The sportsbook believes the Essential Quality bet is the largest ever placed on the Derby in Bitcoin. BUSR plans to make a submission to the Guinness Book of World Records for priority review, Ross indicated.
As of Friday morning, one Bitcoin equaled about $54,650, down from a monthly high of $64,778 on April 14.
The following interview with Ross was lightly edited for brevity and clarity.
Sports Handle: Describe the process of how the “Crypto Whale” approached BUSR with the idea. Why did he decide to go to BUSR versus another sportsbook that accepts Bitcoin? How intrigued was the risk management team at BUSR when they considered taking the bet? Did the team wrestle with the idea of accepting the Derby wager by deliberating about it for a considerable amount of time or did you decide to accept the bet almost immediately?
JR: The initial contact was through his personal assistant asking about million dollar bets, who contacted our Customer Service team — at this point many of us were extremely skeptical. Later, I arranged a call with the Crypto Whale himself where he asked me outright “Would you take $1 million on Essential Quality?”- at which point I frantically began emailing and WhatsApping senior management! Thankfully, we were able to accommodate this customer, and within an hour we were processing his deposit of just over 20 Bitcoins.
We don’t know if he’s got a tip, an artificial intelligence model like Unanimous for his picks, or if he’s selecting his horses by the color of the jockeys’ silks, but we suspect he has a system. Either way he’s placed his full $1 million of bets now, heavily covering Essential Quality. It was interesting that he waited until the draw to place the majority of his exotic bets on exactas and trifectas.
SH: If the customer does in fact win on the Derby, what is the withdrawal process like if he intends to redeem his winnings? Can he withdraw his funds reasonably quickly within a period of 72 hours? Did the customer who won on Justify in 2018 redeem his winnings, or did he leave the winnings in his account to continue betting?
JR: After the race has been graded and if the customer wants to withdraw, he can do so anytime he wants — it’s his money, after all! While Bitcoin network can be congested, payouts usually round out within 24-48 hours after withdrawal. Our previous biggest Bitcoin player on the Derby did choose to withdraw within a couple of days of the race. Remember, many of our biggest bettors will be on the track enjoying a glass of celebratory champagne so they tend to call us to withdraw their money a couple of days after the dust has settled. (See pages 10-11.)
SH: In 2020, BUSR achieved a 96% Gold Medal performance by Zendesk, according to your website. In major transactions such as this one, what steps do you take to ensure that the customer is protected from a cybersecurity standpoint? Do you encourage customers to maintain a multi-signature wallet to protect against Bitcoin theft? Did the customer in this case try to protect himself through two-factor authorization and offline transaction signing? Did the client express any hesitancy in completing the transaction due to the threat of a potential cyberhack?
JR: Nowadays, almost all wallets require two-factor authentication — and if you aren’t using it, you should. Google Authenticator is delightfully simple to use. No, the customer didn’t express any reservations. Once we got through talking the details, the transaction aspect was the easiest part.
SH: Without disclosing the amount of Bitcoin that BUSR has in reserves, what is your liquidity like from a crypto standpoint? Does BUSR have enough liquidity to cover the wagers from the “Crypto Whale,” and many others in the event that the customers prevail on Derby Day? Is BUSR required by regulators to hold a certain amount in Bitcoin to cover large wagers such as the one being placed on Essential Quality?
JR: As you know there is hardly any regulation in crypto — something that we look forward to and expect to see as the industry matures. However, our own risk management insists we can cover all bets that we accept. We wouldn’t be in business if we couldn’t.
— Richard Rosenblatt (@wewhine) April 28, 2021
SH: Ultimately, why did the client opt to make the transaction in Bitcoin versus a traditional cash wager?
JR: The Crypto Whale is no different to many of our customers, he’s just got a lot more zeroes on his bank balance! Tesla offer customers the chance to buy their cars with Bitcoin because it’s convenient to both parties, and Elon Musk himself has invested in crypto because he can see the versatility of it as a currency. Simplicity is key, and I believe that’s why the Whale chose to deposit using Bitcoin. … I’m not saying Elon Musk is the Crypto Whale here, my lips are sealed!