How Smart Contracts Can Revolutionize Gambling Markets
It is human nature to fall in love with the hope of getting something better. The problem with gambling is that you have to trust and hope everyone else participating is playing fair. Smart contracts are there to eliminate the need for people to trust each other, as it is forced upon them.
The gaming industry has demonstrated steady growth, with an annual turnover surpassing $3 trillion in volume. Betting is the third largest segment in the overall gambling industry, behind poker and casino games, but the largest segment in the online market with 48% of annual turnover. Betting on mobile devices is increasing rapidly, with 30% of turnover currently originating from mobile applications. The mobile segment has been a major growth driver for several years, corresponding to general trends in consumer technology. Desktop computers are largely being relegated to the workspace, while shopping and entertainment are carried out on mobile devices. According to The Statistics Portal, the volume of online betting is projected to reach $551,96 billion in 2018, more than twice the level of 2009. The global dispersion of market participants is expanding, recently fueled by a major influx of players from Africa and Asia
Despite the popularity of online betting, a number of difficulties hamper the development of the industry, impeding free, safe access of bettors to reliable platforms. The online betting industry is subject to the same risks inherent in all centralized systems, including lack of transparency, technical vulnerability, and dependence on third-party intermediaries, such as banks and payment services.
Smart contracts have the potential to remove the problem of trust issues by enhancing transparency in online gaming industry.
Transparency and Data Authentication
Right now, players often have issues receiving their winnings. Regular winners are usually banned and there is no trust between parties. Smart contracts can be set up under which certain actions will irrevocably take place (such as the exchange of money) if certain outcomes occur (such as one team’s victory in a sporting event).
To create a better picture of how smart contracts will impact gambling, let’s take a look at online slots. Slots are an insanely popular casino game, and they work almost entirely on luck. However, the biggest concern for players is casino owners running away with players’ money without paying them out. Smart contracts won’t allow this!
All information about the casino and their payouts are publicly available thanks to Ethereum smart contracts.
Furthermore, smart contracts work strictly on “if/then” code. For example, if you bet on a certain roulette number and you win, then Ethereum Smart Contracts will automatically forward the winnings to your private wallet. This system is automatic, and casinos won’t be able to mess with it in any way.
Efficiency
Transactions on conventional betting services pass through a number of intermediaries (banks, payment systems, brokers), incurring commissions at every step. With smart contracts users are able to conduct transactions directly, without intermediaries, under transparent conditions known in advance to all parties. Commissions are minimized and transaction speed maximized, as users connect to each other directly in cyberspace without interference from banks or third parties.
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 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.
Smart contracts have a huge potential to revolutionize the gambling industry for players, operators as well as regulators. There are many predictions that Blockchain’s transparency and provable fairness are going to lead to widespread adoption. We can predict that regulations will need to adapt to suit the new technology. And technology itself will evolve to enable auditing, monitoring and record keeping for every part of the supply chain from players to site operators to the games themselves.
What do you think about our article? We will be glad to discuss everything regarding smart contracts in our Telegram chat, will see you there :)
