Blockchain Defining The Sports Betting Industry: Pros and Cons
August 30, 2021
6 min read
Sports Betting is popular around the globe, to say the very least, and therefore the growth the industry witnessed in the past couple of years is only natural. Needless to mention, the role the legalization of Sports Betting in the US played in fueling this drastic industry boom.
However, this growth is not limited to the number of people who know or take part in Sports Betting but also ranges over the expanse of evolving methods to make sports bets.
With digitalization, blockchain technology has already entered the Sports Betting Industry and is on its way to drastically change, or better said, evolve it. And, while it does provide the industry with a secure financial future, the advantages of block chain technology are not limited to just that.
Below is everything you must know about blockchain’s impact on the Sports Betting industry, including the advantages and disadvantages of blockchain. But, before going there, let us look at what blockchain technology is –
What is Blockchain Technology?
The typical technical definition of blockchain goes like “A distributed and decentralized public ledger.” However, considering how blockchain is still a new and, to a certain extent, a foreign concept to an average person, the definition barely suffices.
So, putting it simply, blockchain at the core is a method of storing and transferring information. You may consider it as a kind of database, but note that it is nothing like your traditional database type.
Blockchain stores data in the form of a continuous chain of blocks linked together using cryptography. The information in each block can be divided into three critical parts – a timestamp, a cryptographic hash (that of the previous block), and transaction data. Furthermore, any change in a block requires one to make changes to all the subsequent blocks.
Blockchain is a distributed database, implying it is not stored on a single PC. Instead, it has identical copies stored on a network of multiple computers known as nodes. In addition to this, the block content is verified by the consent of all the participating nodes in the network, making it hard for anyone to alter this information.
The fact that these blocks do not contain your name within them is seen as a major benefit of using blockchain in sports betting in the first place. Therefore, a reliable sportsbook will not require your data to accept pay wins and wagers.
The Advantages of Blockchain Technology in Sports Betting
Blockchain technology allows you to ditch the old-fashioned way of Sports Betting and instead do it in the comfort of your own home. With just a mere click, you can digitally bet on real matches, obtain real-time competitive odds and live scores, play with friends, get access to the global betting platform, and much more.
So, let’s get started with everything blockchain has to offer to the industry of Sports Betting –
Enhanced reliance and trust
Gambling of any sort is not exactly free of unjust play, and it is the very reason why many people struggle to put utter faith in bookmakers, considering how the context involves their hard-earned money. However, that’s not the case with blockchain.
Sportsbooks profit from when the bets involve blockchain technology as an alternative, as it completely eliminates the risk of cheating or unjust play, leaving bettors to feel secure and satisfied with the results.
Blockchain secures the process of Sports Betting not at one but multiple levels. First of all, each new block is chronologically ordered at the end of every blockchain. Thus, after the addition of a block, it is still almost impossible to tamper with the content of the block unless someone puts in highly concentrated effort into it.
Also, keep in mind that the hash code used to discover every block is a rather critical string of numbers and letters, not to mention how alteration in the data is likely to alter the hash sequence as well. Consider the following example to grasp the concept of blockchain security better –
You place a bet in which the online sportsbook, from the view of cheating, offers you incorrect odds that profit you; they then realize and try to edit these wrong odds, in the process of which they end up altering the hash of the block too.
However, since each new block in the chain features the hash from the previous block, he will also have to edit and update the current block to pull off the scam. But, again, the process will alter the new block’s hash as well, thus creating an endless loop of edits and alterations to cover what they did.
This entire scam scheme will cause the sportsbook more money, time, and effort than otherwise, making it worthless to cheat in the first place.
No technical errors and mistakes with quick payments
The fact that it takes time, sometimes up to a week, for transactions to happen before a person receives the cash in traditional betting formats makes blockchain a rather charming option. Not to mention the endless possibilities of technical and human errors halting an otherwise smooth process.
However, though bookmakers perform a reliable job of managing the hundreds of wagers, they deal with daily on average, the chances of mistakes are yet not a complete impossibility. But rather than managing the errors after, restricting the possibility of it happening is still is a more lucrative way to go.
Since blockchain utilizes a broad network of machines in order to legitimate bets, besides a lone private database, the chances of restricting such errors through the use of blockchain are instantly boosted.
The additional banking options
Take about blockchain, and the first thing anyone thinks of is cryptocurrencies, and it is only right considering how closely the two are linked. Needless to mention, how the use of blockchain technology facilitates sportsbooks to accept crypto as a payment option.
Using cryptocurrencies comes with its own set of particular benefits over other banking and payment alternatives; let us have a look –
Decentralization – Cryptocurrencies like Ethereum, Bitcoin, etc., are not managed by any government authority or bank; instead, they are based on peer-to-peer transactions. It takes away the power from a bank or e-wallet to cancel your betting deposit.
Privacy and security – Decentralization also allows the user to protect their identity, with increased privacy and security at hand. But, if not bank, then who authenticate deposits in blockchain? It is the job of miners. But that’s not all. Giving you high-end security, even the miner cannot scrutinize your transaction type.
Transparency – There are four main steps to the addition of a new block to the blockchain, including –
- Transaction – You make a wager at any sportsbook online.
- Verification of this transaction – A network of computers is used to authenticate if or not your bet happened.
- Storage of this transaction – Once done, your bet will get stored within a block, along with the amount and digital signature.
- Your block gets a hash – The block that concerns your wager will be provided with a unique hash that secerns it from other blocks in the blockchain.
After the process, your block that’s been added to the blockchain becomes publicly accessible, allowing you or anyone else in that matter to verify the legitimacy of the bet you made. The same is what bound bookmakers to follow the rules and maintain loyalty.
In the traditional bookmaking business, sportsbooks possess private databases that can be hidden. But, with blockchain in effect, they cannot falsely claim that you lost a bet or cancel wagers without exposing themselves, making the process entirely safe.
Disadvantages of Blockchain in Sports Betting
Just like everything else, blockchain comes with its own set of drawbacks. Let us have a look –
The unsettling learning curve
One cannot play a game without a basic understanding of its rules and methods, and the same is the case with using blockchain. Once understood, the blockchain technology works pretty seamlessly, though initially, one will still have to take time out to understand this new technology, including how deposits work with cryptocurrencies and how to verify the bets on the blockchain.
But not just you, sportsbooks, and bookmakers will also have to submit time understanding and implementing the technology, not to mention the time and efforts required to move the private database to the blockchain.
The cost of implementation of new technology
Not just time and effort, but transitioning from one technology to other comes with financial responsibility that is not very affordable. The prime costs include –
- The costs of workforce required to make a smooth transition possible.
- The cost to retain employees to utilize the blockchain and its features properly.
- The fluctuating costs associated with crypto deposits require you to keep in touch with the crypto value at all times. It might also result in your prices as a sports bettor going high.
The dip in jobs in the betting industry
While the Sports Betting industry, be it land-based or online, currently employs a lot of people, the same might not be the case once blockchain technology takes over. Apart from people involved with sportsbook databases, the ones verifying transactions will also lose their job.
The only apparent benefit of the unemployment caused due to blockchain is to the sportsbooks, who will then have to fund fewer people into jobs.
Blockchain and shady projects
While blockchain technology is transparent, clean, and trustworthy, it could not be exactly held true for the organizations that make use of it. Over the years of blockchain dominance, several scam projects, including those that fund from investors outside and put zero effort into their sites, have surfaced repeatedly.
These scams do not merely affect the Sports Betting industry but crypto as a whole, scarring the name of blockchain tech for several others.
Blockchain applications in Sports Betting are certainly a significant achievement for both the betting industry and the ultimate digitalization the world is headed towards.
However, while there are undoubtedly brilliant and constructive advantages of block chain technology, the Disadvantages of Blockchain are worth a concern too. With the promising scope of the Sports Betting industry, it will be interesting to note the turn of events and how far the acceptance of blockchain for betting will go. Talking about the future, how does the integration of Blockchain and AI sound to you? Excited, I’m sure! Happy Scrolling!
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