Blockchain is revolutionizing the world of online gambling. The question is, will it also change the way we bet?
For some sports bettors well acclimated with blockchain, the possibilities appear obvious, while others might scoff, thinking “why fix what’s not broken?”
However, blockchain is not about fixing sports betting, but improving its efficiency and security, while allowing for new types of bets, new assets to bet with, and new games to bet on.
Without getting into the technical details, blockchain basically involves a chain of digital blocks. Each block stores information that is recorded with an anonymous, digital signature called a hash. The information on each block is verified by a decentralized network of computers, and can’t be tampered with.
Individuals, investors, and even companies have trusted blockchain with billions in cryptocurrency, but how will this technology revolutionize sports betting?
How does blockchain work in sports betting?
Before a block is added to a sportsbook blockchain the data will go through four main steps:
- Transaction — You place a bet with an online sportsbook.
- Verification — Your bet is verified through a network of computers.
- Storage — The amount of your bet and your signature is stored in a block.
- Hash — Your block is given a unique, identifying hash
Once a block is added to the blockchain, it becomes publicly available and can be verified by both bettors and bookmakers. This means that bets and winnings can’t be “accidentally” canceled.
Pros of blockchain in sports betting
Blockchain is more than a hot buzzword. It is transforming industries from finance to real estate, and early adopters in sports betting are sure to gain an advantage in the long run.
- Fairer Betting — Bettors benefit from the transparency blockchain engenders. In the event of a dispute, bets can simply be reviewed on the blockchain.
- Increased Trust — Bookmakers can’t scam bettors or rip them off so easily. This increases trust in their operations and leads to increased business.
- Less Human Error — With sportsbooks handling thousands of wagers every day, mistakes are bound to occur. Verification through blockchain’s decentralized network of computers mitigates human error while increasing efficiency.
- Enhanced Security — Once a block is added to the blockchain, its data is virtually impossible to tamper with. This prevents sportsbooks from changing odds after bets have been placed. Cons of Blockchain in Sports Betting There are two sides to every coin. While blockchain offers solutions to many sports betting problems, there are some growing pains associated with the transition.
- Costs — Transitioning to the blockchain requires a commitment of time, money, and labor. When network usage spikes, transaction fees can skyrocket.
- Learning — Consumers and companies each have to acclimate themselves to blockchain technology. This includes using digital wallets for bettors, and transitioning operations from a private database to blockchain for sportsbooks.
- Scams — The proliferation of altcoins and NFTs has been accompanied by an upswing in scams. While blockchain is a secure technology, the companies that employ it might not be.
- Job Loss — Operating a traditional sportsbook database and verifying bets may soon be tasks of the past. This will lead to lower operating costs for sportsbooks, but also job loss.
Companies at the Forefront of Blockchain Adoption DraftKings made headlines in 2021 when it partnered with Autograph to jump into NFTs. Players can purchase and trade sports-themed NFTs, compete for digital property, and participate in specialized drops. This has allowed DraftKings to create a virtual environment for their subscribers and build greater customer loyalty.
Another company, Betswap, has created a platform based on pre-programmed and locked smart contracts that allow bettors to own a piece of their own platform. Betswap frees up users and traditional bookies to interact without conditions commonly found on traditional centralized exchanges.
The future of blockchain in sports betting looks bright. The novel technology offers the benefits of crypto’s convenience and a seemingly endless horizon of possibilities for how we bet, but also what we bet.