The gambling industry has always been on the shady side of our economy. Horror stories about mafia-controlled casinos, unfair games, and questionable legal aspects are some of the reasons the offline gambling world is struggling to grow any further. With the arrival of the internet, this only got worse. Suddenly there’s an even greater lack of transparency and more unfair games. Here’s where Blockchain comes into play.
Some facts and numbers
Back in 2014, Morgan Stanley published a report which estimates that the global gambling industry is worth $423 bln. This figure is composed of 34 percent by the revenue of casinos, 29 percent lotteries, 28 percent sports betting and 9 percent online gambling.
With a revenue increase of around 8 percent annually, online gambling is the fastest growing sector in the gambling industry.
The fact that the Blockchain technology is starting to see its first signs of adoption is excellent news for the online gambling sector. This is due to 3 main reasons.
1) Cryptocurrencies are already the most popular method of payment on many online gambling platforms. Players that use currencies like Ether don’t need to identify themselves, enjoy faster payments, can make unlimited transactions and benefit from a lower payment threshold.
2) Gambling is only interesting if there is a large prize. For the past years, the online gambling sector didn’t receive much love from VC’s due to its lack of transparency. However, smart contracts and the recent “ICO craze” have opened the doors to a whole new type of funding. Instead of relying on 3 or 4 key investors, startups in the gambling industry can now hold an ICO. This allows them to recollect funds for a huge jackpot, from thousands of small contributors.
3) Blockchain-based gambling sites are completely transparent. This is a key factor for increasing the trust players have in a platform. In the long-term, players will realize that blockchain based gambling sites are even more transparent than traditional casinos.
There are many companies that have tried to penetrate the online gambling market with the use of blockchain. However, only a handful have managed to actually build a community around their platform.
– Funfair uses Ethereum to deliver a low cost, high quality, transparent casino experience that is probably fair. Funfair is powered by the FUN token, which is the betting chip that pits the player against the casino, the financial reward paid to developers for their games and the fuel that enables key processes on the network.
– BetKing was launched back in April 2013, and until December 2016 it was the largest crowdfunded gambling site in the world. In April 2014, Dean, the founder of the platform, added a dice game. From that moment until he decided to it shut down in late 2016, the company made a profit of 7400 Bitcoin. Dean is relaunching BetKing in September 2017.
– Etheroll is an Ethereum-based, provably-fair and transparent dice gaming Dapp that enables individuals to place bets on the result of a 100-sided dice roll, with no deposits or sign-ups. The company has recently made headlines for surpassing 1000 daily bets with a total value of 4000 Ether.
These companies are giving us a quick glance into the future of gambling. It is yet to see which will be successful in the long-term, but the industry is definitely moving in the right direction.
What does the future hold?
The future of online gambling looks very bright. However, there are still some small issues that need to be solved before we can see mass adoption.
– Transactions per second. Ethereum can handle around 15 transactions per second. This means that just a few thousand gamblers could clog the entire Ethereum blockchain.
– Adoption of cryptocurrencies. Nowadays it can still be challenging for a newcomer to buy Ether or Bitcoin. The process needs to be made easier if online gambling sites only accept cryptocurrencies.
– Regulation. Most blockchain-based gambling startups need to register in countries like Costa Rica where online gambling is legal.
As soon as these issues are solved, we will very likely see a huge shift from traditional gambling to its digital twin.
The gambling industry has fundamentally stayed the same for the past 300 years. Blockchain has the potential to completely disrupt it.
CoinDiligent Staff Writer