Why trade on decentralized sports exchanges over traditional sportsbooks?
Here we share some of the disadvantages of betting in traditional sportsbooks from both sports betting and blockchain perspectives. Depending on which background you have, some stuff might be obvious but others could give you new insights. After reading this post, you will see how decentralized sports exchanges address these problems.
Sports Bettor’s Perspective
1. Vigorish
Vig is a transaction fee that is charged by a bookmaker for taking the opposite side of a bettor’s wager. Because sportsbooks have the disadvantage of not being able to choose the side of the bet, their business model is to charge a high vig in order to overcome the disadvantage. Unfortunately, vig often ranges between 3.5–7.5% and becomes a huge burden for sports bettors.
For example, let’s consider an NCAA match between Iota State vs. Clemson on December 29th 2021. The moneyline odds were 110 and -131 (decimal odds are 2.1 and 1.763) respectively. If you are betting $100USD, then you are paying roughly a $4.3USD fee.
This is quite a high price that you have to pay in order to enter the game. Bettors who want to profit from sports betting (usually arbitrageurs) will find a platform that has better odds or lower vig.
Sportsbooks have to maintain a high vigorish in order to minimize their risks. Because most recent decentralized prediction markets, including UBet, have lowered their vig to 2.5%, these platforms will bring more opportunities to traditional sports bettors.
2. Banning
The existing traditional sportsbook framework is bettors vs. the house. The house loses if a bettor wins, and the house wins if a bettor loses. Therefore, sportsbooks do not like sharp bettors. It is incredible that somehow sportsbooks can determine if you are a sharp bettor very fast. If you are targeted by the sportsbook, then it is a matter of time before you get banned from their website.
With a truly decentralized sports prediction market, like UBet, there is no way that one can be banned. Not only that, bettors do not give away any of their personal information to any entity, since they directly connect their digital wallets to the protocol itself. This advocates the freedom of betting and bettor’s privacy.
3. No Exit Problem
There are a whole lot of similarities between betting and trading in many aspects like speculating on future outcomes. And yet, one of the major differences would be whether you are able to exit your position or not.
In sports betting (except in-game betting), it is not possible to exit the position once you enter it. On top of that, if you try to re-enter on the other side of the position, then you are just paying more vig to the sportsbooks. Again, because you are going against bookmakers who have an extra edge, it is difficult to enter both sides of a bet at the same time.
In trading, you have an option to exit the position and you are trading against other sports traders. This can mitigate risk if you time the entry and exit of your position right.
4. Lack of opportunities
It is possible that we may have exaggerated or understated things above, but all of these issues lead to less opportunities for bettors.
In addition, the traditional sports betting market is efficient. You may think that you are good at predicting the outcome of sports events, but so are others! Everybody seems to be good at forecasting on average up to some degree. If so, then you need to be super sharp.
There are bettors that favour prop bets, as they can find some edge. This is something that UBet incorporates into our platform. Through our governance tokens, bettors can vote on what propositional bets to be listed. Once the platform gains enough volume, we would launch this for our bettors. So stay tuned!
Crypto & Blockchain Perspective
1. Decentralization
Behind the disruptive blockchain technology, there has always been a key philosophical ideology of decentralization that advocates blockchain innovation. Both crypto communities (and as well as genZs) challenge traditional mechanisms of authority, control, and democracy. In such a perspective, traditional sportsbooks are a big red flag!
If you think about all the aforementioned reasons, the key problem comes down to sportsbooks having all the control. What if we remove their control? What if the bets and tournaments are run by automated protocols and algorithms?
2. Public Transaction Records
With the primary idea of having a transparent and trustless ecosystem, Blockchain technology keeps track of all transaction records in a public distributed ledger.
Having a sports prediction market on top of a blockchain and having betting contracts recorded in a blockchain ensures the transparency and accountability of bets. For example, you can observe the betting odds on the blockchain, and trace how they were affected by every transaction for an event. This enables us to see how the betting odds have changed over time. Furthermore, you can work out how the protocol of UBet or other decentralized exchanges’ work.
Can you imagine such an open system in traditional sportsbooks?
3. Fast Transaction & Settlement
It is usual to hear about a bettor complaining about the slow payout process in sportsbooks. For example, some sportsbooks payout twice a month. Another complaint would be about the slow credit card verification processes. These types of problems detract from the overall user experience.
The crypto community would balk at these payout issues. Thinking about bets in terms of smart (digital) contracts and waging using digital currency can effortlessly solve this problem. The smart contract can automatically be exercised with a triggering event, and the user can redeem their rewards.
4. Open Access
A large number of bettors tend to use offshore or illegal sportsbooks. Why? There are multiple reasons for it. One interesting fact from the American Gambling Association is that only 28% and 41% are aware that they are betting on offshore and illegal sportsbooks respectively (see the above figure). Most of the time bettors go to these sportsbooks because of better odds and more flexible trading limits.
It is obvious that there is high demand for sports betting across the world. With the innovations of UBet’s platform, we can provide a better experience, in all legal jurisdictions, allowing more open access to sports trading.
Marrying sports betting with blockchain technology is the natural direction to move forward. Over the next four months, we will share the concept of decentralized finance for the sports betting/sports prediction market. Finally, we will introduce the UBet platform at the start of Q3.
If some of what we covered in this post matters to you, then please follow us and join our discord!
Website: http://ubetsports.io/
Twitter: https://twitter.com/UBet__Sports
Discord: https://discord.gg/B7brvUEAFG
LinkedIn: https://www.linkedin.com/company/ubetsports/
Disclaimer: The above content is intended for information purposes only and is not intended to be gambling, trading, nor investment advice. Please perform your own analysis before making any betting, trading, or investments based on your own personal circumstances or seek a duly licensed professional for gambling and trading advice. Accordingly, neither UBet nor its partners, directors, shareholders or employees are liable for any damage, expense, or other loss that you may incur out of reliance on the above information.
