The sports betting industry has evolved a lot over the past few decades. The sportsbooks are able to offer gamblers several options to gamble on a daily basis without a problem. But like any other industry, there is room for improvement in sports betting as well.
Sports gambling industry is not different and it is believed by many that improvement can be brought with the incorporation of the blockchain technology.
Often blockchain is associated with cryptocurrencies such as Bitcoin and Ethereum. But the use of the technology is beyond the currency and well into the sports betting industry.
Let’s find out how the blockchain works and how can it can be applied to the sports gambling industry for improvements.
What Is Blockchain Technology?
For an average person, blockchain is a relatively new concept that was first brought to notice with the outburst of bitcoin as a record-keeping method for the currency.
Although the technology is existence for longer than crypto it is founding more applications in cryptocurrency and business. But in layman’s term, “what is blockchain?”.
From the very literal definition, the blockchain is defined as a distributed and decentralized public ledger that is primarily in the finance and banking sector. Maybe this definition is enough for you to understand what blockchain actually means but you if you still are confused, let us drill down deeper on the definition.
Here’s a diagram of blockchain at work:
The term “blockchain” is not just random nomenclature it’s actually how the technology works as the chain of digital blocks. The blocks here are the digital information while the chain in a public database.
Each block contains information that has three parts-date of purchase, time of purchase and the monetary amount.
One of the advantages of the blockchain is that there your name or any kind of identity is not stored in any of these blocks.
For sportsbooks, it will mean that there is no need for personal information of any kind for accepting the wager or to pay the wins. Blockchain recorder the information of all the transactions via an anonymous, digital signature known as the hash.
How will blockchain work in the sports betting industry?
When a sportsbook is based on the blockchain architecture, a new block is added to the chain whenever there is a need to store new data. To start this process, four occurrences are a must:
- A transaction- a bettor makes a wager at the online sportsbook
- Transaction is verified- a network of computers verify that the bet actually happened
- Transaction is stored- the bet placed is stored on the block, along with the amount and digital signature
- Block receives a hash- a unique hash is provided for the block for the new wager to distinguish it from others
The block becomes available publicly once it is added to the blockchain. This makes it possible for anyone to verify the authenticity of your bet.
The very fact that anyone can authenticate the wagers keeps bookmakers honest. No bookmaker can claim that you didn’t win or cancel your wager without exposing themselves.
All the traditional sportsbook businesses maintain private databases to store information. They can easily hide behind these private databases if or when an incident arises.
For instance, the September 2018 controversy involving the game between the Denver Broncos and Oakland Riders when a New Jersey man placed a $110 in-game wager late in the contest.
After his bet, the odds momentarily jumped to 750-to-1 in his favour. Although an error arising from a computer glitch, not bookmaker’s choice the man won his bet at this odd when the Denver kicker Brandon McManus booted a game-winning field goal against Riders.
However, FanDuel refused to pay to the bettor citing the glitch as the cause. Had not the various media outlets have jumped in, the bookmaker would have never paid the man. But not always media will be there to hold bookmakers accountable to their commitments.
This is why a public ledger system will bring a lot more authentication and honesty to the world of sports betting.
Pros of Blockchain in Sports Betting
Most new tech ends up being a novelty, but the blockchain has real applications for sportsbook and not just a gimmick to grab headlines. Instead, there are real benefits of the technology for both the bettors and the bookmakers.
Blockchain for sports betting brings a lot to the table, here are some of the key advantages.
Ensure Fair Betting
As a gambler, you will be benefited from the blockchain’s transparency. There will be no need to rely on media uproar or rely entirely on the goodwill on the bookmaker.
Blockchain ensures that fair bets take place from the beginning to the last.
If you have a dispute you can always review your wager via the blockchain that will ensure that everything is fair and square.
As the traditional sportsbook run their operation based entirely based on their private databases. There is no transparency nor it can be expected from bookmakers.
It might seem that all the benefits are endowed on the gamblers but sportsbook also benefits from this technology due to the increasing trust factor.
For most of the sportsbooks, there is an underlying distrust that they could rip off the bettors for their money. For the sportsbooks that put their operation on the blockchain, the same can’t be said.
On making use of the technology, bookmakers know that they cannot cheat bettors or treat them unfairly. As a gambler, you too can feel a lot more comfortable using blockchain-based sportsbooks.
Safeguard against potential mistakes
Not always when things go wrong in the sports betting business it is because of something sinister by the bookmakers. Instead, some mistakes also happen because of employees but more commonly because of technology.
On average, a sportsbook deals with thousands of wagers every day. And for the most part, they do an impressive job at handling all the bets and run operations without interruption but as evident in case of the FanDuel incident, mistakes are still very much possible.
A better way of preventing these mistakes from happening is to put a system in place to eliminate the instance of such occurrence. Blockchain technology can easily stop such mistakes from happening due to the use of a wide network of computers to verify bets, rather than a lone private database.
The security added by the blockchain to sportsbooks at a multiple-levels. In a blockchain, every new block is added chronologically at the end of the chain. It is virtually impossible to alter the content of a block once it is added to the blockchain.
The hash code that identifies each block contains a string of numbers and letters. If any info is altered the hash will also change.
To understand how blockchain promotes more security for bookmakers, here’s an example:
- A bettor places a wager.
- An online sportsbook offers incorrect odds that benefit the gambler.
- The bookmaker tried to edit the incorrect odds.
- The block’s hash changes.
- But the next block of the chain features the old hash chronologically.
- In order to pull off the scam, the bookmaker will have to update this block as well.
- If they did, the hash changes for that block as well.
- Now, the bookmaker is caught in an endless loop of altering the blocks to cover themselves.
No sportsbook will devote so much time and effort in scamming you than its worth. However, it is very rare that any sportsbook will try to change the odds to save the profits but, with blockchain, there is no possibility that it can happen.
More Banking Options
As blockchain is very closely associated with cryptocurrencies, the sportsbooks that will use this technology will be able to accept crypto-like bitcoins as well.
The benefit of cryptocurrencies for online gambling as compared to traditional payment options is huge.
The foremost benefit is decentralization.
As there is no central regulatory authority controlling Bitcoin, Ethereum, Bitcoin Cash, Litecoin, etc. so there is more anonymity and freedom as compared to other modes of payment.
No one can scrutinize the nature of the transaction when it is made with crypto.
Cons of Blockchain in Sports Betting
Blockchain seems to be working well for all the industries that might give an impression that the technology is not without its drawbacks but there are few concerns.
There is required time for learning the ropes of blockchain technology both for the bettors and the bookmakers. The process of placing the wagers might remain seamless but you need to figure out a way to make deposits with cryptocurrencies.
Also, if you want to verify the bets on the blockchain, then you will have to spend some time learning this as well.
For bookmakers, it will require efforts to implement blockchain as a solution with additional requirement to learn how to move operations from the private database to blockchain.
Every transition in the industry is expensive, some more than others. Implementation of blockchain tech for sports betting will require both times as well as a financial commitment.
Sportsbooks will have to retrain the manpower to make such a big platform transition possible. The employees must know how to operate with blockchain for putting bets and more.
This can also mean as a sports bettor, you might see the costs go up too.
At present, the fees associated with cryptocurrency deposits are not terrible but we can expect the fees to skyrocket during times of high network use. Traditional payment options have a fixed transaction fee, but with crypto, you never know how much you’ll have to pay from one time to next.
Shady Sports Betting Projects
It is no doubt that the trust in blockchain technology goes a long way, but the companies that use this technology are not always trustworthy.
If you follow the news, you might have heard of the scams that were run in 2018 in the name of betting-related initial coin offerings (ICOs).
Such scams are found to be raising huge funds from outside investors but putting little to no effort into growing their sites. Not only gambling, but such scams have also given a bad name for the blockchain technology in some other sectors as well.
Not enough jobs in the betting industry
Sportsbooks, both online and land-based employ a lot of people but with the adoption of the blockchain technology, some of these jobs might need to be cut off.
This will include the staff that is associated with operating a sportsbook’s database or verifying the bets. The tech can essentially eliminate these roles.
On the other side, this will reduce the overall operating costs for bookmakers, but until they pass on the savings made to the customers in form of lower juice, this is a disadvantage as it can put people out of jobs.
If the industry chooses to go with blockchain, it is important that the people employed must be informed of how they can upskill themselves to remain relevant.
Blockchain is not something revolutionary for the betting industry but it does offer some advantages that can make the industry better in a number of ways.
First, with the adoption of blockchain, there will be a trustful environment where bets can be placed without concern for scams. As everything will be in the public domain, no sportsbooks can deny your winnings or manipulate the outcome.
You will not longer be relying on some media reports or investigation as a proof, but can point to the publicly accessible ledger as the proof. Powerful blockchain technology at the core provides security at all levels and thwarts all unethical elements from hackers to crooked sportsbooks.
Once the blockchain is in place you do not have to worry about fraudster sportsbooks due to the failsafe convoluted procedure of trying to change hashes.
Another advantage of the technology for gamblers will be the availability of more deposit options. Cryptos like bitcoins will be more easily accepted and you will be able to make offshore wagers without being concerned or regulation or tracking.
Sportsbooks will also benefit from the added trust that blockchain will bring to the industry and will make the operations a lot more secure.
On the downside, the blockchain technology can make things difficult for bookmakers and bettors as there is a learning curve involved to truly implement the tech.
There are also additional associated costs that sportsbooks need to think about implement blockchain. Both the manpower and the time to transition from a private database structure will be needed.
All the ICO scams brought a bad name for blockchain which is why bookmakers will have to fight this bad reputation to lift things off the ground.
On weighing both the pros and cons it seems like sports gambling can benefit from the adoption of blockchain but for sportsbooks, it means additional costs and a lot of work on the transition.
As bookmakers like the privacy of private databases that allow them to run things their ways, it is still not clear whether they will consider blockchain a venture worth considering.
But there is still hope that blockchain the coming time can see widespread adoption in the sports betting industry. If the bookmakers see the benefits for their competitors is huge, they will be tempted to make a switch.