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.

Blockchain based payment transactions 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.

Smart betting on blockchainBlockchain 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.

The Democratization Of Online Casino Industry Through Blockchain Technology

Pick a name of any industry and you can sense the smoke of Blockchain penetrating within. With this technology slowly entering our lives in different spheres, we can set our expectations high for it to change things for good. Consider the gambling industry for instance which operates successfully in both online as well as offline mode (land-based) casinos. The introduction of Blockchain technology in gambling has made significant impact in the industry.

Online casino industry growth
Talking about the online casino and gambling industry, there’s no doubt to the fact that it is one of the fastest growing sector. As per Statista, this sector was worth US $24.73b in 2009, and is expected to raise to US $56b by 2018.

The Democratization Of Online Casino Industry Through Blockchain Technology

Blockchain in online casinos
Although the online business of casinos is growing, there are certain areas where it still falls behind the land based casinos like free drinks, free food, travels and live entertainment. The biggest challenge however being the ‘settlements’ which are instant in most vegas based casinos but the online version takes 3-4 days to transfer the funds.

This is where cryptocurrencies comes handy and offers a solution. A crypto based casino platform like Satoshi Dice which offers a fair analyse and verify bets on games offered by a service provider. The platform has processed much more than 6,000,000 blockchain based bets and distributed winnings of more than 4,000,000 BTC. The platform returns bets in less than 20ms.
Many online gaming sites have acknowledged the power of cryptocurrencies by implementing them in their business models. Moreover, places like Malta which are considered as the leaders for the gambling industry are taking steps to make Bitcoins legal. As a matter of fact, the Maltese government has a strong belief in cryptocurrency and Blockchain technology and they plan to position Malta as a leading name for application of these.
The birth of ethereum blockchain and their smart contract applications that can facilitate, verify, or enforce the negotiation or performance has given a unprecedented opportunity to online casinos or betting platforms to regulate key operations of a using smart contracts.
Random numbers and payouts can be ruled by smart contracts which are fully public and implemented on an Ethereum blockchain. Now players can see everything: transactions, sums, bets, the reasons why transactions are moving and, most importantly, the mechanism of randomness. If the casino tried to rig the odds, it would be immediately spotted.

  Traditional Online Casino Bitcoin Online Casino Ethereum smart contracts Based Online casinos
No logins/ registrations needed for casino users * Yes Yes
Free money withdrawals and deposits * Yes Yes
No delay in money withdrawals and deposits * Yes Yes
100% anonymity provided by a
cryptocurrency
* Yes Yes
Random number fairness check * Yes Yes
Fully transparent random number
fairness
* * Yes
Transparency guided by Ethereum smart
contract
* * Yes
Impossible for intentional casino profits
draining
* * Yes

 

Reasons for applying Blockchain in Online casinos

Inexpensive and accessible
The use of cryptocurrencies to deal in the gambling domain has become a popular practice as both main as well as alternative payment systems. This has become possible as there are many advantages to this mode as it allows user to gamble anonymously without providing document copies or even creating an account as per the platform.

Moreover, the ability of processing transactions in real-time also makes cryptocurrencies preferable here. Also, the accessibility of online gambling has increased with the use of cryptocurrencies as they provide low entry barrier for new players.

Unbiased
The overall point of anyone owning a casino is to make profits in the longer run while providing the customer with the joy of making money at times. This practice might serve positively in land based casinos but when it comes to online gambling, things change and insecurities arise.

There’s always a doubt in the mind of gambler when it comes to transparency and profits provided by online casinos. In such cases, the application of cryptography makes it possible for the gambling platforms to gain the trust of the players. Blockchain technology and smart contracts can escalate this concept to next level for even more complex systems.

Decentralized
Similar to the functioning of miners in Bitcoin, Blockchain technology allows anyone to be a casino member. This way, while playing via the bitcoin casinos, the users get the share of house edge with the profits made by the casino.

Some sports betting platforms own their own blockchain network that report event outcomes by a network of masternodes.

The Future
For those who can not understand the disruptive power of blockchain technology, it is many times compared to the internet how our world was literally turned upside down after the Internet’s inception. With blockchain, we are moving towards and environment where peoples and businesses can transfer assets and have agreements in place as fast as sending emails without the need of personal trust.

There are multiple implementations of blockchain technology across industries, but the gambling industry is one which needs it the most. We all must agree that cryptocurrency and its underlying technology blockchain is disrupting the gambling and casino industry by inducing the quality and trust factor among gamblers and bettors.

About Techracers
Techracers is a blockchain studio specializing in implementing blockchain technology across multiple industries ranging from iGaming to healthcare to media/entertainment to supply chain and many more. We work with our clients as their consultants who work with them not only in implementing the technology but doing the business feasibility analysis and identifying the processes where blockchain technology should be implemented effectively.