Integrity in Sports Betting and Blockchain
With the legalization of sports betting in the United States, the world’s largest sports market is poised to become the world’s largest betting market — potentially surpassing the U.K. and even China. While the United States is certainly late to the party, having banned sports betting prior to the advent of the Internet, the entire sports betting world waits with bated breath as state-by-state jurisdictional precedent is being set that will have far-reaching consequences. Of particular interest is legislation surrounding one of the most contentious terms in sports betting today — the integrity fee.
Unfortunately for the betting public, the dialogue surrounding integrity seems to be have focused around two main themes:
- proving its validity to a US public that isn’t sold on the pressing danger posed by integrity issues (see league sponsored website here); and
- deciding which party, professional leagues or operators, should be compensated for the additional costs related to policing said integrity, above and beyond existing integrity policing solutions.
This line of discussion is decidedly problematic for bettors as it assures only one outcome — that bettors will be left with the bill for integrity in the form of higher margins. A decidedly better focus, for the betting public, would be how best to leverage technology to reduce the costs associated with policing integrity.
What is so hard about policing integrity?
The current system for policing the integrity of professional sports markets is a complex monolith that requires the coordination and continued communication from a vast array of organizations. Stakeholders include sport governing bodies, regulators, betting operators, integrity bodies, law enforcement, betting content & service providers and others — all of whom must efficiently and transparently provide information to the various organizations, all in a time-sensitive manner. The very nature of sports betting, and the number of corruptible parties involved from athletes, officials, data providers, and administrators, implies a certain level of complexity with regards to policing. This is compounded by the fact that with betting increasingly moving online, corruptors now operate across different sports betting platforms, in an assortment of jurisdictions, through betting providers around the globe.
The integrity of sports leagues is currently monitored by a handful of major data providers such as Genius Sports, Opta or Sportradar. These companies aggregate market data from hundreds of operators globally and detect suspicious line movements on fixtures from their partner providers. These centralized entities each compete for business — fragmenting each others view of the global liquidity pool. Between them, they are the official data rights holders to the majority of the world’s professional sports leagues and provide live in-game data, often by utilizing market agents in the stands of fixtures. These feeds are then distributed to league outlets, media broadcasts and sportsbooks. Ironically, the very foundation of their data provisioning service provides an attack vector for corrupt parties as these poorly paid betting agents prove much cheaper and easier to turn than professional athletes and are difficult to police. By even just delaying the reporting of a goal by a few seconds, market agents can provide bad actors the opportunity to place late bets on known outcomes prior to the lines being shifted.
Global Liquidity Pool
Rather than debating who should be on the hook for the cost of integrity and passing this cost on to the end consumer, discourse would be more productively pointed in the direction of simplifying the policing of integrity. The utilization of a public sports betting blockchain provides the solution by utilizing a singular liquidity pool that is able to instantaneously and transparently share market information across all sports betting stakeholders. This drastically simplifies what was previously a highly complex system requiring enormous coordination between arm’s length parties.
Blockchains consistently prove to be excellent avenues for disintermediating systems. The benefits of disintermediating the existing policing system holds true for the provisioning of sports data and policing it’s integrity. By simplifying the flow of game data and odds information for all stakeholders, and providing a single transparent and shared global store, we are able to remove many layers of complexity. This creates a system that:
- mandates cooperation between stakeholders;
- removes the chance of knowingly or unknowingly withholding or losing data; and
- provides an immutable (see: tamper-proof) audit trail for all transactions.
An additional benefit of utilizing a global transaction store for betting data is that it provides a ready-made solution for multi-accounting. This refers to the practice of betting through multiple accounts, through numerous providers, designed to disguise suspicious betting patterns over many accounts. With a shared transaction history for bets made across all operators on the blockchain, policing this activity is trivial.
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