Online wagering is getting transformed by blockchain
We know that online betting is a large industry — it’s expected to grow to $80 billion[1] by 2022 — and it’s estimated that sports betting makes up 40% of all online gambling. There are already large amounts bet on sports: in 2014, a national study[2] estimated that Americans wagered $3.5 billion annually in Nevada, one of the few states where it was legal at the time. It’s impossible to know how much is wagered illegally: estimates range from $50 billion[3] to nearly $400 billion[4] each year.
Identity and KYC critical for online wagering
Since the US Supreme Court has ruled that betting on sports is legal, all states will be able to offer this type of wagering, and much of the illegal market will likely shift into legitimate streams as a result.
At this point, it’s still too soon to know how states will respond to this ruling. Some will likely restrict sports betting to physical locations such as casinos or racetracks. Others, more progressive, will choose to allow online wagers placed through mobile apps or browsers. For companies offering online betting in these states, the process of digitally onboarding customers will be critical. Sportsbooks will have to know who their customers are, and must be able to ensure that they meet all legal requirements for betting.
Blockchain represents the best method for sportsbooks to manage customers’ digital identities and perform KYC checks. Customer identities need to be verified in such a way as to guarantee that the person placing the bet matches the identity on record. To onboard, customers might scan their driver’s license, and then take a selfie. Sportsbooks would check the license against existing databases, compare the selfie with the image on the license, then record the results of the check — the digital identity — securely on the Blockchain. Once the customer is ready to place a bet, identity can be verified using another selfie, or even using mobile phone account records associated with the identity.
Companies such as KABN are streamlining the ability for third parties to validate their users against a bank-grade attestation using pass/fail markers on the Blockchain. Whichever technology is used, the process must be seamless, as delays in authentication could have an impact on the ability of users to place bets in a timely manner.
Blockchain makes payments more efficient
Traditional online betting poses considerable issues regarding fund liquidity. Adding money to an account typically requires Western Union transfers or a credit card, and both can result in fees for users. Bettors can also face difficulties withdrawing their winnings as some sites require requests for funds to be made at specific times, while others issue only one free cashier’s check monthly.[5] Cryptocurrency transactions are generally much faster, even instantaneous, and because they don’t run through payment processing and banking middlemen, fees are lower.
In addition to identity and payments, Blockchain’s distributed ledger technology (DLT) offers many other benefits to the online sports betting industry:
· Governance: Some states may want to place restrictions on bettors, requiring that individuals place online bets only when they are physically within a state’s boundaries. Geofencing can be combined with behavioural biometrics to ensure user compliance,[6] and DLT would allow ready access to the data that would make this possible.
· Smart contracts: Users can create smart contracts that activate a bet only when the points spread reaches a certain level.[7] The FansUnite Protocol will include a public library of smart contracts that users can customize.[8]
· Odds aggregators: Instead of checking multiple sportsbooks for odds, aggregators such as BlitzPredict will provide access to constantly-updated odds and pricing for bets.
· Better information: BlitzPredict will also provide access to analytics, forecasts and predictions for events such as Wimbledon and the World Cup.[9]
· Accountability: Currently, betting track records are provided with little corroborating evidence, and betting results are frequently changed. Records stored on a blockchain cannot be altered, lessening opportunities for manipulating results and making it easier for bettors to trust their bookies.[10] The blockchain platform Decent.bet provides smart contracts and “a transparent profit sharing sportsbook,” promising to “ensure transparency, verifiability and constant uptime” for the benefit of users worldwide.[11]
There are many advantages, and few downsides, to using Blockchain and DLT technology in online sports wagering. It’s a safe bet that as betting volumes increase, so too will interest in the technology, and further use cases will emerge.
[1] https://cointelegraph.com/news/the-house-always-wins-can-blockchain-make-sports-betting-more-predictable
[2] https://bitcoinmagazine.com/articles/betting-blockchain-sports-gambling-bitcoin-1397890022/
[3] https://www.csoonline.com/article/3287102/authentication/legalizing-online-sports-betting-means-a-new-need-for-security.html
[4] https://www.geekextreme.com/gaming/using-blockchain-technology-revolutionize-online-sports-betting-21369/
[5] https://bitcoinmagazine.com/articles/betting-blockchain-sports-gambling-bitcoin-1397890022/
[6] https://www.csoonline.com/article/3287102/authentication/legalizing-online-sports-betting-means-a-new-need-for-security.html
[7] https://www.legalsportsreport.com/17265/cryptocurrency-sports-betting/
[9] https://cointelegraph.com/news/blockchain-sports-betting-app-to-predict-outcome-of-world-cup-matches
[10] https://thenextweb.com/cryptocurrency/2018/01/30/blockchain-sports-betting-platform-improves-betting-odds/
[11] https://www.newsbtc.com/2018/01/30/decent-bet-provable-fair-blockchain-based-casino-sports-betting-platform/
For more information contact Ben Kessler at ben.kessler@kabn.network or visit https://cryptokabn.com/
This article has been reposted from Pegasus Fintech, an advisory partner of KABN. It has been modified with permission.
