How Blockchain Is Changing The Gambling Industry
Blockchain Use Case Series (5 part series — PART 2)
Blockchain technology is gradually creeping into every industry, and in the coming years, its presence will be felt like never before. One of the industries that this technology is expected to connect with to a deeper level is the gambling industry.
The major concern with conventional online casinos is that data such as; gaming results, winnings and payouts are intentionally hidden or partly concealed from public scrutiny. The integration of Blockchain technology into this industry is expected to resolve these concerns and many other problems that the online gambling community has been facing since the extension of gambling business to the internet.
Let’s explore how Blockchain technology will disrupt the gambling industry:
1. Transparency and Trust
Online Casinos have in the past been accused of using tricks and scams to steal from customers’ right in front of their noses. Who has never heard the statement, the house always wins? Proven cases of fraud make online gambling something to keep away from. You see, if a gambler knows that the odds are stack against him/her because of lack of transparency, he/she will keep away. And if gamblers stay away, the casinos will not make money.
The introduction of Blockchain technology will boost trust among customer and enable them to bet with confidence since Blockchain smart contracts verify records on a shared ledger that cannot be manipulated therefore increased transparency.
2. Reduce Fraud
Online fraud causes account for significant loses in the gambling industry. A player may decide to be “smart “and defraud the operator when making a deposit or withdrawing money from the casino. Worse still fraudsters can hack the casino’s system through the servers’ back door.
Blockchain technology solves this problem by providing secure ways of transactions. Blockchain’s distributed ledger makes it an impossible task to manipulate anything in the system. Your winnings are automatically calculated and sent you. Thanks to smart contracts.
3. Paying with Cryptocurrency
The other obvious thing that Blockchain has brought on board is the use of cryptocurrency as an alternative payment method. A good example of a gambling site where the use of crypto has been very successful is SatoshiDice. It is reported that at one point they recorded more Bitcoin transactions than several other exchange platforms combined.
Accepting cryptocurrency creates an opportunity for players to venture way beyond there regulatory jurisdictions since crypto is no dependent on regulated payment services. In addition, Blockchain technology will significantly reduce costs associated with withdrawals and deposits to casinos since it eliminates intermediaries such as banks.
Traditional casinos are associated with many regulations when it comes to their dealings. This includes asking users to supply numerous documents when creating and verifying their accounts. The process could be lengthy and time-consuming. The process also limits the number of players.
Blockchain technology comes in to solve these issues with its anonymity feature. The feature ensures that users never have to share personal information when conducting transactions. Such a feature hinders hackers from accessing users’ data.
A good example here is Satoshi Dice- one of the very first Blockchain gambling sites. To bet, players were merely required to send Bitcoin to the provided address. As such, there was no need to download software, visit a website or even create an account.
However, this double-edged sword: guaranteeing anonymity is as good as ignoring AML and KYC regulatory requirement, and this raises questions on the legitimacy of crypto gambling sites. Consequently, crypto is often perceived to be linked with prohibited activity.
5. Token holder and Casino Membership
Blockchain enables gambling platforms to develop their tokens that can be used as currency on the platform. A great example here is Zero Edge.
Zero Edge- a leading player in the gambling industry, has Zerocoin as its digital currency. To be a shareholder of the platform, users are required to purchase the zerocoin tokens.
6. Increase Accessibility
In a world where most locations prohibit betting, gambling enthusiasts end up suffering. They suffer simply because most of them resolve to services offered by illegal bookmakers. Illegal bookmakers are dangerous because failure to pay often leads to assault or even death. Blockchain provides a decentralized platform where you can use digital currency. This currency allows for easy trade anywhere in the world. All you need is an excellent internet connection.
Also, unlike in regulated operators where withdrawal of wins can take several days to process and in most cases have minimum withdrawal amounts, in a Blockchain gambling site withdrawal of winnings is quick and there are no limits.
Crypto transactions will as well benefit operators since payments are irreversible, thus eliminating issues to do with fraud and non-payment.
7. Reduce House Edge Costs
House edge refers to the average percentage share that casinos take from its players to ensure the survival of the casino. Since the survival of the casino depends on paid employees and profits that satisfy shareholders, house edge can be a costly affair for users.
Blockchain gambling sites will cut down fees and charge related to gambling transactions. This is because crypto-only gambling sites have little overhead costs compared to regulated service providers. This includes; licensing fees, transaction costs, payment to merchants, regulatory compliance costs and tax (if any).
Since Blockchain is automated to do functions that were previously done by human beings, it will significantly reduce fees and charges associated with gambling transactions, and therefore enable consumers maximize on profits.
Blockchain technology allows for democratization that creates value. It provides a decentralized structure that ensures security, immutability and enables anyone to be a member of the casino. As such, Blockchain casinos enable users to fund casinos in return for a percentage of the profits realized.
For instance, Ethereum projects such as vSlice has created a system for token holders to automatically receive dividends when the platform generates profit. On the other hand, Wager provides a decentralized sportsbetting platform where event results are posted in real-time via a network of oracle masternodes.
9. Prediction Markets
But prediction markets have always been there? Yes, but their centralized structure has always been problematic. Blockchain prediction markets open up the betting arena to almost everything. Users can bet on anything, from sports to elections. Data that is generated from the collective bets will lead to a prediction that is considered more accurate with the outcome of the events.
Online gambling is one of the most promising industries. However, gamblers are subject to regulatory restrictions and exposed to fraud and dishonesty from other players as well as disreputable operators. Furthermore, relying on third-parties often results to unfair games and monetary transactions. Nevertheless, there is hope. As you can see in this post, Blockchain technology has a huge potential to revolutionize the gambling industry for players, operators as well as regulators. Maybe you should stick around to see what next this technology has to offer.
Blockchain Use Case Series (5 part series — PART 1): How Blockchain is Revolutionizing Finance