Blockchain Sportsbooks — Good for Everyone
A response to European-Style Sportsbooks: Bad for Everyone
I have never been refused action by a single crypto-based sportsbook in my lifetime. I believe that this is the case for anyone who has made any decent amount of money in crypto betting. Spinning up a new account/wallet is easy at many of these sportsbooks.
I begrudge these non-crypto books and, frankly, feel super lucky that I never bet money on their platforms. It is hard enough to make money at a 2.4% margin. In my experience, many professional bettors have made significant profits in some form or another thanks to betting with cryptocurrency, and it makes sense that they are hungry for more opportunities to do what they came here to do: make money.
In my opinion, traditional sportsbooks struggle with antiquated ethical quandaries due to the direct adversarial relationship between themselves and their customers. Thanks to blockchain, trustless betting becomes reality through smart contracts. These contracts are compiled code that once deployed, are immutable and execute exactly as intended. Metaphorically this is the ideal state for punters. You should be able to make bets without the risk of bets not being honoured.
The only valve a bookmaker has on the blockchain is to simply trade better. Bookmaking is a very tough industry in which to make any money, especially nowadays. However, most bookmaking professionals dismiss blockchain because nobody explains the benefits of decentralization. The reality is that adopting blockchain technology, a decentralized oracle network and smart contracts allows for significant savings which can be passed on to customers in the form of reduced margins.
Of course, as the Head Trader for a blockchain-based sportsbook, I have no pity for traditional sportsbooks; the fact of the matter is that bookmakers who don’t adopt winning technology should be abandoned. They offer a lower integrity product at a much higher price, feature painfully slow account funding and withdrawals and often only do any business at all due to their natural monopoly that has come as a result of regulation. In fact, if you look at the industry today, all sportsbooks fall into three distinct groups, only two of which, in my opinion, are going to succeed in the technology driven, free market future:
Traditional Sportsbooks
Traditional sportsbooks are clearly for-profit enterprises and will do everything they can to make a profit, even if that is operating in a customer-unfriendly fashion. Personally, I would not operate how these sportsbooks operate- somehow making money while banning customers, taking weeks to deal with payments, not covering every market, offering bad odds with no chance of systematic winning and worst of all, failing to honour bets.
Cryptocurrency Sportsbooks
The crypto (escrow) sportsbooks are, in my opinion, worthy of some respect. They are often unable to offer a large volume of bets because their liquidity is limited. Nevertheless, these sportsbooks often offer a straightforward product with very good ancillary upside value. Traditional books, on the other hand, cut the bettor out from sharing in the financial value of the network’s growth and bettors deserve that opportunity.
Blockchain Protocol Sportsbooks
The FansUnite Protocol and to a lesser extent, some other options currently available, represent the best choice: protocols which allows any new entrant to join the network and take part in the value creation that arises from shared, immutable and fraud-proof data delivered to all participants involved in the ecosystem.
As an individual bettor you should demand some benefit from the network and data you create, which the bookmakers collect and use against you!
Blockchain Protocol Sportsbooks: Supreme for Integrity, Lower Operation Costs and Improved Bettor Experiences
Sportsbooks that are not blockchain-based are missing many benefits for operators, bettors, leagues and regulators. Integrity suffers, incentives are not aligned, and middle men are required. This includes payment processors, the costs of which must be passed on to the end consumer. A blockchain sports betting protocol is fantastic for bettors for various reasons:
- Data is open.
Blockchain data is transparent, immutable, free and open to everyone. Having a protocol’s betting data written to a public blockchain enables bettors and modelers access to data that was previously siloed by betting operators. Any Data Scientist knows the mantra:
More data is always better.
2. Data is immutable and fault tolerant.
Betting data written to a public blockchain cannot be altered, it can’t be voided, it can’t be hacked, and it is available to any network participant for nearly no cost.
The result is lower odds and forensic grade betting integrity tools (good for the leagues and regulatory bodies).
3. Data costs are very low (Good for operators).
Data is now available to everyone in real time. The entire cost of payment provision and bet resolution is nearing $0. The cost of data is now nearing $0. It’s all in the distributed database and sourced from the decentralized and incentivized oracle network.
4. Cronyism is abolished.
Smart contracts are compiled programmatic sets of rules that are immutable. What is deployed is written in stone and not even hacker cyborgs can change that. A smart contract executes exactly as written.
Sportsbooks, Exchanges, or Daily Fantasy applications built on top of the FansUnite Protocol would result in bettors receiving better odds or useful promotions thanks to a more competitive marketplace, making their gambling dollar last longer. The end result is the best possible chance to profit.
I shouldn’t have to tell anyone why non-protocol books are bad for the professional sports bettor — you get no upside in the growth of the sports betting computational network. Now that bettors have experienced the value of cryptocurrency in sports betting, we should demand this innovation for early support in a sportsbooks’ rise; We want to be paid for our loyalty to a brand and the millions of data points we provide!
Rewarding bettors is exactly what fansunite.com and its partner Ethereum-based bookmakers do on the FansUnite Protocol.
But there is another reason that these non-protocol books are bad for professionals, and it is why I am very high on the future of high-level blockchain-based sports betting. By on-boarding small to medium sized operators who target recreational action, they will expand their ability to make money by combining data resources and lowering costs. After all, to court professional bettors and gather their precious data, it would be wise to pass on some of the cost-savings in the form of lower margins.
With vastly sharper trading arms shaving cents off of every edge, it is logical to say the relative skill between bettor and bookmaker will stay the same given open data save one key fact: The cost of doing business with an inexpensive and highly concurrent distributed ledger is far less than expensive providers — by a significant margin. This is how operators win as well.
We have seen this fracturing of bet volume harm High Volume Market pioneers like Pinnacle Sports, who have cut back on limits and added vig in nearly all markets, with the exception of some eSports and soccer markets. It is a testament to their model that FansUnite even exists as we use a Virtual High Volume Low Margin Model (VHVLM) in order to test the limits of how low a margin can be and still be profitable. A protocol is designed to consolidate data from smaller books and make that data openly available so that everyone can take advantage, feeding into higher limits.
As previously mentioned, it should be important to high volume bettors that they get value for the data that they provide to the ecosystem. There is no better way to get said value than to get rewarded for providing data via a protocol like FansUnite.
Blockchain Protocol Sportsbooks: Great for leagues and Governments!
Clearly, traditional sportsbooks can do better for players, but they can also do better for leagues and governments too. Their high-margin, high-acquisition cost and player-unfriendly business model doesn’t profit enough to share with the leagues and compensate them for the data they produce and the cost of integrity.
It’s downright ludicrous to think that the leagues shouldn’t benefit. Only a blockchain-based sportsbook using machine learning can lower the margin enough to work with the leagues and deliver forensic-level betting integrity. This approach makes providing leagues with their deserved “cut of the action” feasible.
FansUnite seeks to work with global sports leagues/teams and develop top quality partnerships in order to find a fair and respectful solution to keeping the games we love safe and tamper free. Additionally, there is a goal to compensate the players and owners for the consistent efforts they put in each and every season. The greatest benefit to gambling operators from deploying on a protocol is the importance of presenting their product in a way that keeps the bettor engaged, providing data and using the power of this asymmetric data to stay profitable rather than harming the customer experience.
With the European-style model, instead of the virtuous cycle of crypto-bookmaking, we get the following ruinous cycle:
The above cycle is the current reality with sports betting in Europe — revenues decline every year in most regulated markets.
To those who would argue that Quantum Sports was wrong on with this assessment, I would suggest taking a closer look at the industry. Traditional books (especially brick and mortar, land-based operators) offer no upside to the user. It is clear where the volume is going, and it’s not fiat.
A blockchain protocol that utilizes cryptocurrency prevents these ruinous cycles before they’ve even begun. The answer, like with most of modern society’s payment problems, is to discard these current outdated processes and replace them with immutable, trustless digital contracts. Instead of oligopolies setting the rake and take, it is the decentralized network that creates the best rules for betting and optimizes the distribution of resources to maximize network health.
The largest benefit to participating in a decentralized network is being rewarded for the growth of the network. As the network grows, each individual earns potential rewards based on their interaction and data contribution to the Protocol.
Additionally, the leagues are looking for a solution and it seems that the United States wants a free market. That being said, it appears the U.S. wants innovation that delivers value not only to the source, but also to the business and the end user. It’s a high bar, but one that blockchain can uniquely deliver upon.
FansUnite is the protocol that supplies the necessary blockchain-based infrastructure for the sports betting world. We invite all fans, leagues, bettors and operators to unite with us in building a decentralized global betting community.
-Stephen Rothwell
FansUnite Head Trader
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