Hello there,Let me start with the major problems that client faces while dealing with gambling and sports betting in particular. They include among others: lack of transaction transparency, fraud, bet cancelling, diminishing and non-payment of the winnings. Not to mention that clients have no access to the information on their bets, apart from the data a bookmaker chooses to reveal. Users have no power and control over a bookmaker’s actions, so they can’t even check if everything is in order. Finally, users have no idea how bookmaker calculates the odds, and they have no choice but to blindly follow the rules. The regulators are not much of a help there, because the procedures can drag on for months.
A majority of technologically challenged people see Blockchain as a magic cure-all, as Hermes illuminating the path for all the gamblers and solving all their problems in an instant. Let’s try to find out if it’s possible to create a full-fledged decentralized crypto bookmaker in 2018.
So, what are our options?
You can establish a regular bookmaker firm, pay for a WhiteLabel platform, provided by the likes of BetConstruct, hook all the necessary data from BetGenius and top it off with CoinPayments system. That’s practically it, you’re a bookmaker now, go ahead and make money. No licensing is required, no need for advanced technologies let alone blockchain.
You can deploy a primitive smart contract, which will handle the bets on the outcome of certain events, such as a team victory, and another one to deal with the odds calculation and to determine the winners’ shares in a betting pool system. But that solution severely limits the scalability of your business. And don’t forget, that you need copious amounts of of traffic in order to populate your p2p betting platform with actual gamblers.
…is wasting a lot of time on becoming a bet exchange. But keep in mind, that the traffic costs remain, and you need a monstrous budget on top of that. If you wish to become another BetFair, that won’t happen because BetFair had several multi-million funding rounds along with the marketing budgets of the same magnitude.
Alright, screw p2p, let’s make p2house! Pretty soon you will realise that you can’t do that due to inability of a smart contract to get odds from external sources, such as Sportradar servers. The entire idea of cramming all the algorithms and risk models along with terabytes of historical statistics and live data from the stadium for calculating your own odds into a smart contract is just 100% absurd.
No matter what you do with the smart contracts, the transactions will be delayed anyway. Have you seen an NBA in-play betting? Even a 1-second delay can cost you a winning bet, simply because odds are changing so fast, that your bet might be returned after that time. As an alternative, you can create your own blockchain from the ground up, which can solve the scalability and transaction delay issues, but it’s costly and time-consuming, not to mention that you need a whole team of experts to do that.
So, your only decent option…
…is to accept in-play bets on limited events with p2p model exclusively. Will be such a bookmaker able to compete with bet365 or bwin on the mass market? Feel free to try, but chances are, you’ll fail.
Understanding all this not only in theory, but also in practice at the earliest stages of prototyping BetOnChart allowed us to determine a place for blockchain in our project. And that is exactly what our next article will be about.
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