In early July, Augur launched what is believed to be the world’s decentralised betting platform. With no-one in charge, betting markets are created and settled by blockchain-secured smart contracts which gather in the bets and redistribute the winnings in a provably fair and transparent manner almost as soon as the outcome is reported.
In other words, gambling sits at the top of the list of those industries which are almost undoubtedly heading for a blockchain revolution. Over 120 ICOs have come to market over the last two years in search of funds to compete in the arena of online betting, an annual global market whose value exceeds $60 billion.
That figure does not take into account the sums which change hands in an industry in which 99% of all bets placed are done so illegally, according to one study reported in Forbes magazine.
“But it is not only the transparency and fairness brought to betting that will spur demand for blockchain-based betting platforms,” states Kelvin Coelho, CEO of meVu, one of the highest profile competitors in its field. “The blockchain represents the future of gambling for a whole host of reasons.”
Amongst the major reasons he cites are sports-books – as things stand today, any individual hoping to launch his or her own sports-book faces a number of obstacles.
“Firstly, there is liquidity. In traditional betting, to operate a sports-book, you generally need to start out with at least $300,000 in liquidity, and likely more, to run your own markets,” Coelho says. “With a blockchain platform, every participant becomes a potential market maker if they choose to.”
Secondly, there are costs: licenses and set-up fees. With a ready-made platform that manages the creation and execution of the bets themselves, costs come down and there is no concerns about regulatory intervention “because it is essentially impossible for a central authority to gain control of the Ethereum network,” the meVu white-paper states.
Whilst such platforms do exist already on the internet, they fall prey to two major disadvantages – they are locked into single jurisdictions and they are, as a result, subject to the actions of external actors who may want to close down or restrict the markets being proposed.
Once again, blockchain technology – with its ability to create a platform-native cryptocurrency that can trivially facilitate access to a global, borderless market along with anonymity – is set to offer the kind of improvements that make it a natural fit for the gambling industries.
Whilst others call into question the ability for DLT tech to disrupt certain industries, for gambling the question appears to be one of when and no longer if.