How Blockchain is Revolutionizing Sports Betting Payments?
How Blockchain is Revolutionizing Sports Betting Payments?
Sports Betting- A term that sounds thrilling, adventurous and entertaining all at once. Sports betting refers to one of the most popular kind of gambling in which people place bets on events through predictions and earn money upon winning.
There are many sports that allow sports betting such as football, cricket, basketball, golf, horse racing etc. Over the course of time, land based sports betting is being accompanied by online sports betting platforms as the internet is swiping new generations off of their feet.
Sports Betting and Digitization
Analysts have forecasted that the global sports betting market is expected to grow at a CAGR of 8.62% during the period 2018–2022. This increasing growth of online gambling is acting as an important factor in the over all market growth. The accessibility of digital platforms along with internet penetration has made it easier for people to engage in sports betting.
Since online betting does not require any on-ground or physical presence, it can reach more bettors through Internet. Millennials are adopting online sports betting even more as they use mobile and computing devices frequently. Despite the constant rise in digital consumption of sports betting along with its growing popularity, challenges persist.
Liquidity Issues in Online Sports Betting
As per the Global Sports Betting Market 2016–2020 report, one of the most worrisome issue for both, the players and the bookmakers, is liquidity. Traditional sportsbook work in a centralized manner i.e. before playing, users deposit a specific amount in their account for placing their bets. This results in blocking of user funds for a long time without interest.
In the payment processing cycle of an online sports betting, there are multiple actors involved, namely- the company, the customer, KYCs and the payment gateways. When user raises a withdrawal request for his winnings, the payments is processed through the payment gateways and are directed to the customer. With blockchain, payment transparency is automatic. As a result, some predict financial reporting costs could shrink by 70%.
During this process, a huge percentage of the transferred money is taken as a fee by the payment gateways. Moreover, when the remaining amount is sent to the customer, he/she has to pay the levied tax for it which again leaves less earnings in his/her account. Due to this cumbersome process, the end-user is left with much lesser amount than what he/she deserved.
On the flip side, for business operations cost for operators is increasing and a major part goes to financial reporting expenses resulting into low margins for operators.
How Blockchain Solves the Problem?
Blockchain– The technology behind leading cryptocurrencies like Bitcoin and Ethereum– is emerging as a solution for such issues of the online sports betting industry. How? Dive a little deeper:
This challenge in the sports betting industry can be addressed by Blockchain thus, resulting in higher payouts for users on correct predictions and winning bets and increased margins for operators.
Blockchain introduces the concept of tokens which makes the payment processing efficient. Tokens represent any particular asset or utility that are tradable in exchange of commodities, loyalty points and even other cryptocurrencies.
Upon creation of a specific token by any online sports betting platform, all its users will be able to conduct all the transactions in terms of these tokens. The value of a token will increase according to its usage.
When all the players on the platform start dealing in tokens, the market value of the token will eventually grow, which in turn, would result in higher profit margins. Moreover, the value of tokens associated with them cannot be fluctuated by the interference of any individual or the company, instead, it’ll entirely depend on the usage of the token by the users of the platform. This also makes the process of receiving payments and earning profits more reliable and secure.
Smart Betting
When tokens are implemented in a blockchain based sports betting platform, they guarantee instant and fair payouts to the bettors. Moreover, payments and other process such as gaming logic when placed on a Blockchain removes the need for a central authority to manage transactions, making these transactions highly secure and impenetrable for hackers.
The concept of “smart betting” can be introduced by using smart contracts in online sports betting platforms. Smart contracts are self-executing codes that perform an action when certain defined criterions are met. A smart contract can be used in a online betting platform for placing automatically placing bets on happening of a particular event like a penalty kick in football.
Blockchain technology helps to address challenges involving speed, transparency and costs associated with cross-border payments. Secure and transparent payments through blockchain based betting platform will provide the sports betting community with the assurance and guarantee of their investments by harnessing the potential of irrevocable digital ledger of transactions on blockchain. With many more similar use-cases in the online sports betting industry, blockchain can establish more trust and increase the consumption of sports even more. With blockchain technology, payment transparency is automatic. As a result, some predict financial reporting costs could shrink by 70%.
About Techracers
Techracers is an end-to-end blockchain solution provider with iGaming expertise. We create bespoke solutions based on our client’s needs and also help in implementing blockchain technology in existing gaming platforms. Connect with us for further discussion and understanding about the uses of blockchain in the online sports betting industry. Our entire suite of services for iGaming operators covers end-to-end bespoke product development for sportsbooks, online casinos, fantasy sports platforms, sportsbooks and eSports platforms, sports social gaming, blockchain technology implementation and cryptocurrency development.
This content is originally posted on Techracers blog
