Will Blockchain Technology Offer Real Advantages to the Online Gambling Industry?
Online gambling is one of the fastest-growing markets on the planet, and it is bound to keep growing fast. For instance, in the past seven years, the market has been expanding at a compound annual rate of 9%, which is three times higher than that of the global GDP. Filip Poutintsev, the CMO of Bitbook.ag, a blockchain-based gambling and betting platform which will soon launch their token sale, explained that it’s not surprising that many blockchain entrepreneurs are eager to enter the gambling market, trying to “disrupt” it using distributed ledger technology. But does blockchain in the gambling market offer real advantages?
Poutintsev admits that often the advantages offered by blockchain are blown out of proportion, and it will take several years before this technology truly transforms areas such as HR or commodity trading. Nevertheless, online gambling is different. For one, it has a visible range of issues that need to be resolved to give the industry a better reputation and according to Poutintsev blockchain technology has the potential to solve these issues quite quickly.
Many people see online gambling and betting as inherently unfair. For example, casinos earn revenue because players lose more often than they win and many studies have demonstrated that users do not trust online casinos. Moreover, several users believe that these sites have a special switch that turns the odds against the player. High fees, both commissions charged by the payment system and the house-cut rates, are also disadvantages.
There are also many cases, where, even if users win, they must wait several days or even weeks to receive their pay-out, and sometimes winners are blocked from using the site again if they win big. Those who win are seen as a business risk. Lastly, merely making a deposit to play can be tough, since banks do not like gambling institutions. There are many situations where people had their bank accounts closed after depositing an online casino.
Poutintsev stated that blockchain would not magically transform gambling into a wonderland where players win most of the time. But there are clear reasons why blockchain can help solve some of these problems. First, blockchain will store records of all games and bets, their results, and the amounts that were won and paid out. This means players will always have access to the transaction history to confirm that the system paid out all that was due and that the odds were not rigged.
What’s more, Poutintsev points out that blockchain helps build trust among participants, but blockchain systems are simultaneously trustless. It’s not a contradiction: Both statements apply to blockchain gambling in different ways. Poutintsev believes that at the beginning, there will still be casinos and actual companies that run platforms including Bitbook.ag — and distributed ledgers will enable players to verify that the casino plays fair. Later on, it’ll become a more decentralized betting and gambling system, with not-for-profit structures at the center exercising a regulatory and protective role, which will indeed be trustless’. Bitbook.ag is working on developing such a system.
Poutintsev also highlighted further advantages of the blockchain, which are low fees and easy cross-border payments.
Bitbook.ag launched a functional beta version of the platform in September 2018, with over 200 casino games — slots, poker, blackjack, roulette, etc. — and a sizeable sports-betting module. They already have a loyal customer following and a real cash flow, and they’ve established partnerships with various companies in the business, such as game developers and DonBest, a provider of sports-event odds. Bitbook.ag is among the few who have a working product.
The next step for Bitbook.ag is to develop a peer-to-peer betting system. Poutintsev explained that as long as casinos dictate which games one can play and which sports one can bet on, the system is fully centralized. He thinks users should be able to add their own events and games, which do not necessarily have to be sports events — any type of event can be an object of betting.
This is a fast-growing field, especially regarding oracles, which provide odds. Bitbook.ag envisions itself as a space where members can bet on events added by others and play casino games against each other. To this end, Bitbook.ag is launching a token sale to finance the creation of the P2P betting platform.
For ethical and legal reasons it is necessary to ensure compliance if gambling sites become decentralized, so Bitbook.ag prioritizes the security and protection of their players. Bitbook.ag CEO, Andres Martinez, is an expert on international compliance and corporate law, both in gambling and in the cryptocurrency business.
Poutintsev added that the only way to get around legalities in every country is either to become completely decentralized, open source, and peer-to-peer, like Bitcoin, so that no single entity would own or be in charge of the platform and thus no one would be liable or could be prosecuted, or to go underground and become lawless, like Silkroad.
However, neither of these options are valid because the company plans to comply with laws and regulations. Instead, Poutintsev says blockchain can and should be used to make gambling fair, lower costs, and prevent fraud — and that’s what Bitbook.ag plans to do.
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