Blockchain and sports betting might not seem like they have much in common. But both are long-marginalized and looking for a little help going mainstream.
Blockchain has a technology with massive potential, characterized by trustlessness struggling to demonstrate its unique value and attract users.
Sports bettors have been poorly served by existing products and services, and only recently legalized; they’re crying out for a technology and a family of services that serves their needs and doesn't lumber them with unwanted middlemen.
Could the two be poised to facilitate each others journey into the mainstream?
Just how much sports betting is there?
Sports betting is a multi-billion industry outside the USA: it generated €1.3 billion ($1.5bn) in revenues in Europe alone in 2016. Betting on European soccer is a multimillion dollar industry in Kenya. But in the USA, it’s been illegal since 1992, outside Nevada.
That all changed in May of this year, when the US Supreme Court struck down a law banning wagers on collegiate and professional sports.
The future for sports betting in the USA now looks bright. Sports betting didn’t disappear when it was made illegal; mirroring earlier experiments with prohibition, it simply went underground. Ignoring direct peer-to-peer betting (‘Hey Joe, $20 says…’) and looking only at commercialized wagers, the illegal market is thought to be over triple the size of the entire economy of the state of Nevada.
Arguing that sports gambling should be legalized, NBA commissioner Adam Silver wrote in the New York Times that ‘Because there are few legal options available, those who wish to bet resort to illicit bookmaking operations and shady offshore websites.’
‘There is no solid data on the volume of illegal sports betting activity in the United States,’ Commissioner Silver continued, ‘but some estimate that nearly $400 billion is illegally wagered on sports each year.’
Is Commissioner Silver on the money? Hard to know. That figure seems to come from a 1999 government estimate of the value of illegal sports betting: the $80bn figure named in the report was then adjusted to 2017 dollars using inflation and GDP growth, and published by the American Gambling association, who it’s fair to say have some skin in the game here.
The AGA suggested a top figure of $380bn for the USA’s sports gambling industry, but there are dissenting voices: Ohio State University economist Jay L. Zagorsky wrote in The Conversation that the illegal sports betting industry is worth far less than $150bn - and Slate writer Jordan Weissman tracked the $400bn suggestion back to what he calls a ‘rhetorical flourish’ on the part of National Gambling Impact Study Commission member John Wilhelm in 1999.
Wilhelm told the commission: ‘According to the testimony and the staff briefings, there’s about two and a half billion dollars’ worth of legal sports gambling in this country and there’s somewhere, depending on whose guesstimate you take, within $80 to $380 billion worth of illegal sports gambling.’
Perhaps a better general indication of the size and value of US sports betting’s value is the growth in the value of the British bookmakers’ industry as they anticipate increased transatlantic income: on May 14 this year, the day of the Supreme Court’s ruling, British bookmakers added a total £1.5bn ($1.95bn) to their valuations.
A growing market
Sports gambling may be worth $400bn or $150bn, or considerably less: Zagorsky puts the figure at $67bn, about the same as the GDP of Idaho; lower than Silver’s, but still not small potatoes. But it’s a market that is likely to grow as sports viewing and service providers find ways to integrate gambling into their provisions, and as the totally undocumented and unknowable peer-to-peer gamblers join wider pools and as people previously deterred by illegality reenter the pool of bettors.
‘Betting shops, betting in stadiums, stadiums named after betting companies, a lot of ads promoting betting,’ sports betting expert and best-selling author Declan Hill told USA TODAY Sports: ‘That’s what you see in the United Kingdom, and without question you’ll see it in America before long.’
The question is: who will come forward to service these new bettors? They have no above-board betting habits — no legitimate bookmakers to habitually visit, no legitimate websites to feel loyalty towards, and no prepared, regulated industry to step in. (The last time the sports betting industry was legal was in 1992. Remember what the internet looked like in 1992?)
The rush to service sports bettors
Standard web app designers and developers are falling over themselves to service this new market. Google Apps’ store has over 230 sports gambling apps; gambling site advice sites are springing up; extant fantasy sports sites with already-large fanbases will transition to providing inbuilt gambling services on their platforms; and in Las Vegas, established businesses in the only place in the USA where sports gambling has been legal since 1992 have begun pivoting to online.
But one technology stands best prepared to accept and empower a community accustomed to peer-to-peer transactions in real time.
How blockchain-based businesses are stepping into the breach
Blockchain businesses are coming out of the gates with products aimed at sports betting fans whose habits and expectations have in many cases been formed entirely since the ban and by the internet. (Someone born in 1992 would be 26 today.)
This audience isn’t going to be satisfied by a bookmaker’s window — sports fans want up close and personal, and they want real time, and after experiences being bilked by crooked bookies and websites and being made to jump through hoops to bet at all, they’re going to want it all on their terms.
Blockchain-based sports gambling businesses are already making waves - and making money. Bettrium’s pre-ICO, three days before the Supreme Court handed down its ruling, earned the company $1.3m.
And BookiePro, built on PPY, announced a live, public play-for-fun ahead of this summer’s World Cup, offering participants the opportunity to play in tokens — and win real coins.
Fans, however, might want more direct, peer-to-peer control over their betting and less spectacle.
A good example of that effect is FansUnite. It’s a protocol for sports betting apps, based on Ethereum, and able to accept any ERC-20 token. Rather than creating a tool, FansUnite has built a ‘tool-making tool’ — a neighbourhood garage for sports fans, where they can use a library of smart contracts, standardized structures and an internal token economy to predict and bet on the outcome of sports.
One Dapp is provided already, a ‘decentralized sportsbook’ that features a 1% margin (compared to the standard 10% or so) and facilitates social interaction amongst bettors.
For less technically-minded bettors who just want to put a $20 on the 9th, there’s Wagerr.
Both a coin and a platform for betting using that coin, Wagerr also charges lower-than-average fees (2% to 6%). Beyond that, its main offerings are integral to blockchain technology: escrow, decentralization, smart contracts — it’s all standard in the blockchain world, but for sports bettors accustomed to profiteering middlemen and unsecure web services, it’s a new world.
But there are other uses for the blockchain in the sports gambling space. Gambling is an uncertain space, filled with ‘experts’ who carefully hedge their own bets while advising everyone else on theirs. Lacking transparency and auditability, it’s difficult for bettors to know whom to trust or what approach to take.
BlitzPredict aims to change that, immutably recording predictions ‘time-stamped against true market odds’ to ‘enable users to make informed decisions on which betting strategies to back, as it will become harder for experts to hide their record, lie about the prices they got, and delete their losses altogether.’
Blockchain’s inherent attributes can be used not only to facilitate safe, secure gambling, peer-to-peer and without profiteering middlemen, but also to hold the wider industry accountable to its end user.
In fact, it looks like blockchain and sports betting are perfectly made for each other and may help take each other mainstream.
A perfect fit
Blockchain technology has the capacity to rewrite the rules of the betting industry. What if the house didn't always win? Equal access to verified, immutable records levels the field, while trustless peer-to-peer technology reduces or eliminates the need for a ‘house’ altogether.
What if payments were guaranteed and secure? This is a particularly sensitive issue for online gaming. Here, banks, card companies and payment systems are traditionally so chary of involvement with gaming that many users have become accustomed to their online gambling transactions appearing as “gym fees” or “magazine subscription.”
The alternatives? Centralized money services that work slowly and do little to leave users feeling reassured that their money (and their personal information) will be safe.
Now, though, transactions on blockchain-based gambling services can be made safely and securely - players don't need to trust anyone with their money, neither Bank of America or offshore payments tools.
Digital wallets can be used to store funds, and fully-decentralized, blockchain-based exchanges like OpenLedger allow users to quickly convert coins and tokens.
This allows players to securely move their funds between blockchain-based gaming ecosystems and Dapps.
Conclusion
American sports gamblers are about to get a lot of options they never had before. Bigger companies with well -established revenue streams don't jump on new technology fast, and no-one has a sports gambling infrastructure ready to go. The fantasy leagues and extant online gambling sites will try to move into this space, but its wide open.
At the same time, blockchain has needed a little-contested space to prove its value. The standard suite of full -computing blockchain capabilities, like smart contracts and tokenization, dont need much tailoring to fit the needs of this space perfectly.
Hand in glove, then: blockchain and sports
betting can enter the mainstream together.
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