Sports betting is a fun, legal activity that has a rich history. A blockchain-based decentralized sports betting platform will revolutionize the industry, but the existing solutions don’t measure up.
In 2018, the US Supreme Court provided great joy to sports lovers worldwide when it struck down an old law barring gambling on sports in most states. For the first time in American history, users would not have to wonder about questions like “Is sports betting legal?”. They could now have fun using their predictive skills and betting on their favorite teams. This article looks at the exciting history of sports betting, the potential of blockchain-based decentralized betting, and glaring shortages in current options.
A Quick Glance At The History of Sports Betting
Betting is almost as old as sports — a look at history across the ages.
Olympic Betting in Greece: The earliest records of sports betting are more than two thousand years old! They come from the Greek Olympics1.
Rome and Legal Betting: After the Greeks, Sports Betting spread to Ancient Rome, who loved putting wagers on gladiatorial combats. Romans2 were the first to legalize betting, and since then, the past-time spread to the rest of the world.
Betting During Medieval Times: The church passed laws preventing gambling during the medieval ages, which just drove betting underground.
Rise of Bookies in England: Charles II’s passion for betting on horse races broke social barriers and popularized betting among the masses, which was earlier available only to the aristocracy.
Pub owners would soon become the first bookies. However, the British government realized that mixing alcohol and gambling was leading to disasters for many. They banned betting in pubs> Many organizations opened specialized betting shops.
American Sports Betting: In 1931, sports betting became legal in Nevada. The criminal underground or “mob” offered wagering on several games in the rest of the states. As times changed, gambling became legal in America and much of the world.
Information Age — Digital Transformation of Sports Betting
Anyone can now bet on an extensive range of sports and activities ranging from football to the weather. While people earlier were glad to find a bookie and deal with the mob, they need more choices today. Gamblers can now compare both markets and odds online, and bookies must compete to gain clients. Live sports betting, mobile sports betting, and crypto betting is a trend here to stay for the foreseeable future.
Centralized vs. Decentralized Betting
Cryptocurrencies and blockchain will revolutionize several industries.
Centralized Betting: In centralized gambling, an agent known as “The House” controls different aspects such as deposits, fund distributions, and withdrawals.
The only significant advantage of centralized gambling is that it is regulated and has an easy-to-access market. However, there are several problems: lack of transparency, verification requirements, high fees, unfair practices, etc.
Decentralized Betting (Crypto Betting) — A Better Alternative: There are no centralized authorities. Fair, transparent, and trustless technology to handle transactions and other activities.
Bookmakers Control Centralized Gambling
Online bookmakers open betting markets on events by offering odds on potential outcomes. They take bets from clients and pay the winners.
However, the problem is that bookmakers build their profit margins into the odds and lines offered by them. Such a margin makes it hard to make money from sports betting consistently.
Supposing there were two players, A and B. Now, if both had a 50% chance of winning, the odds would be:
Player A — 2.00 and Player B — 2.00
Compilers may change the odds as follows to meet their margins:
Player A — 1.91 and Player B — 1.91
Due to such bookmakers commissions, if you wagered $10, you stand to win $9.10, and someone else would stand to win the same if they wagered the same amount. The bookie would keep $0.90. Such mathematical disadvantages pose problems over the long run.
Current Decentralized Betting Solutions And Associated Problems
Although several decentralized betting solutions exist, almost every current option has its drawbacks, as discussed below.
Sportx is a regulated, non-custodial sports betting exchange based in Madrid, China, and other locations. Several of its C-suite members, including the co-founder, come from China. In 2019, The organization launched an ICO based in Korea.
· Not available in USA or UK
· No promotions or bonuses
· Limited sports betting markets
· Low Market liquidity, especially for live betting
· Bet types are limited3.
· Limited Payment options, only DAI and ETH
According to SportX’s customer support4, they are not completely decentralized and can thus not operate in countries like the USA or UK, where they do not have a license yet.
Kryptium is a decentralized, peer-to-peer betting platform. It is not a centralized sportsbook. Anyone can start a betting house, and an individual can make P2P bets by setting their odds and money. If someone agrees, they can match the bet.
· The system is in early development and does not have a well-developed business plan.
· There is also no mobile version yet.
· Compatibility issues and overall activity is low.
The BX.bet project is a Malta-based project that is similar to Kryptium. It is marginally better as it has a central betting exchange where users can accept and offer bets on market outcomes. The team is also experienced and understands regulation risks.
It also has a mobile app to keep track of the system and a well-thought-out business plan. Bx.bet also has an MVP and not just a whitepaper.
· Although better, this project is not very active and has gone quiet like several ICOs of 2019.
· Moreover, there is little to differentiate bx.bet from competitors, and the “wow factor” is missing.
· Bounty tokens offered may be harmful as they can be dumped on exchanges post bounty, thus hurting the company.
Wagerr is a decentralized wallet based in America. Like many others, the Wagerr platforms started very promisingly, but it is also deteriorating like others.
· An inexperienced team that works remotely and part-time. Amateur investors made their own betting wallet known as “betting-before-mainnet” simply because the project was doing poorly.
· Not transparent, and email customer service is abysmal.
· Key members have left the project. Moderators on their channel deleted factual statements, makes everyone suspicious.
· Poor communication with the community. Discord channel was closed and then reopened after outrage.
In Augur, Participants get to buy or sell shares on future event outcomes, and their collective opinion crowdsources the odds.
(Standard prediction Market. Image via Augur Whitepaper)
Augur had one of the first ICOs in Ethereum, with its REP token unveiled in 2018. There is an experienced team that runs everything. Moreover, Augur provides a “trading app” for greater convenience. It is USA-based.
Although one of the more competent organizations on the list, Augur has its share of problems.
· Not straightforward for betting.
· Overly dependent on Ethereum as it is an ERC-20 token. The organization could develop its blockchain.
· REP token can not be mined, but this is an ideological question of PoW vs. PoS
· Crowd predictions vs. individual odds
Existing Decentralized Sports Betting Solutions — Pros and Cons
Multiple existing decentralized sports betting solutions exist today or that existed some time back. Understanding their pros and cons in today’s context will help us decide what a powerful and promising future platform must be like.
Why Decentralized Betting
Blockchain makes gambling fairer, reduces costs, and helps lower fraud. Some problems of centralized betting solved by crypto betting exchanges include:
(Image Source: Pixabay)
· Solves Transparency Issues: In a blockchain, immutable decentralized ledger records provide transparent access that cannot be tampered with.
· Removes Unfair Practices: Gambling sites may have algorithms that switch odds to the casino’s favor. Blockchain solves these problems with trustless systems that make it simple to verify if odds and payouts were fair.
· Lowers Fees: The high commissions charged by payment systems and the rate of the house are significant disadvantages. Crypto provides lower or no fees and instant withdrawal times.
· Eliminates Problems with Claiming Prizes: Casinos are often reluctant about paying out to customers who win. People might need to wait for many weeks to receive payments and can be blocked if they win big. In contrast, blockchain-based organizations payout instantly.
· Easy Withdrawals and Deposits: Banks are suspicious about people who make deposits to online casinos. They may even close accounts based on this suspicion. Cryptocurrency removes such intermediaries.
Several states have legalized betting, and many more will follow. Betting is a perfectly natural, legal, and fun activity that can provide significant payoffs. Recent developments enable users to bet on weather, elections, or college games. We need a sophisticated blockchain-based platform to leverage the full potential of blockchain technology for betting.
1. Gambling on the Olympics, by Sally Melissa Gainsbury, on April 2010
2. Sports and gambling, by encyclopedia.com, on 2020
3. SportX review, By SportStatist, n.d
4. SportX, a new sports betting exchange built on Ethereum; bets can be made with DAI on 17 sports markets, By SportX Customer Support //www.reddit.com/r/ethereum/comments/c9h1o8/sportx_a_new_sports_betting_exchange_built_on/et304hx?utm_source=share&utm_medium=web2x&context=3