Many gamblers are still perfectly fine with this setup. In fact, online betting has never been more popular across the globe.
Nevertheless, decentralized sportsbooks seek to disrupt the current model by removing the middleman and making betting more transparent. The following guide covers more on decentralized betting, what advantages it holds, and what challenges it faces.
How the Current Sports Betting Market Looks
The current betting market is ruled by sportsbooks. The latter operate both online and in land-based establishments.
They carry out a variety of functions, including the following:
- Set odds on matches in different markets
- Take bets on matches
- Pay winners
- Offer customer support if any issues arise
- Provide bonuses and other promotions
Of course, you don’t have to accept the lines that a sportsbook offers if you don’t like them. The industry is full of operators that are willing to provide fair odds.
This competition helps create a marketplace where people can find decent odds in many cases. The customer support is also welcomed by those who need help with one or more issues.
What Are the Criticisms of Traditional Betting?
The current bookmaking model seems to be working well for most gamblers. However, sportsbooks do present some downsides that should be taken into account.
Governed by a Central Authority
Sportsbooks provide a service that you can either accept or reject. If one operator offers unfair odds, then you’ll assuredly find another that’s more reasonable.
But no matter where you go, you never have real control over the market. Instead, you’re merely bouncing from one central authority to another.
Luckily, most bookmakers don’t abuse their power. They fully realize that their reputation and longevity rely on treating gamblers well.
However, the chance always exists that a bookmaker could cancel your bet, refuse to pay winnings, or revoke bonus opportunities. You’re essentially relying on them to do the right thing in every instance.
Online sports betting used to be a borderless and lawless affair. However, this situation has changed greatly in recent years.
Many states and countries have rolled out regulated markets. They fully expect operators to obtain licensing and pay the proper taxes before serving their respective jurisdiction.
Many sportsbooks are willing to go through the proper channels in one or more jurisdictions. But most don’t obtain seek licensing in every regulated market. With that said, they must reject or restrict bettors in markets where they don’t hold a license.
Winners Can Be Banned
One common misconception is that sportsbooks ban gamblers just for winning. It doesn’t happen all the time. But you can be banned from a sportsbook when winning too much and cutting into their bottom line. Bookmakers especially don’t like when you win via arbitrage betting and chasing steam.
Sportsbooks feel justified in banning arbitrage bettors and placing bet limits on sharp accounts. However, you might not share this sentiment if you’re a successful gambler.
You vs. the Bookmaker
Betting operators don’t run extensive websites and take action from numerous gamblers for fun. They expect to make profits through the juice (a.k.a. vig).
Assuming both sides face -110 odds, the operator stands to earn 4.77% juice if the betting action is equal on each side. 4.77% may not sound like much, but it definitely starts eating into your bankroll over time.
Sportsbooks don’t share the innerworkings of their operators with customers. Instead, they merely expect you to trust them.
Many people get over this lack of transparency as they become comfortable with online betting. However, this transparency problem is always lurking beneath the surface.
The Basics of Decentralized Betting
Decentralized bookmakers operate on blockchain gambling platforms that utilize open source code. The latter refers to how any developer can work on and improve a project.
Decentralized sports gambling sites also allow anybody to act as a bookmaker (like betting exchanges). For example, an individual can set the odds and take action on the Chicago Bears playing the Detroit Lions.
Here’s a quick recap on the key elements behind decentralized betting:
- Decentralization – No central authority controls the sportsbook. This aspect allows for lower juice and fairer odds for gamblers.
- Exchange – Decentralized betting sites let users act as oddsmakers and take bets.
- Open Source – Any developer can work on these projects and make improvements.
- Public Wallets – Gamblers’ funds are kept in public wallets on the blockchain.
- Smart Contracts – Bets and payouts are enforced by smart contracts.
Where Can You Find Decentralized Betting?
Well over a dozen blockchain projects currently offer decentralized sports betting. You can read about some of the more notable options below.
- Augur – Launched in 2015, this platform features lots of prediction markets. Gamblers can use Augur to bet on sports, politics, prices of assets, and the Oscars.
- Bethereum – This open-source platform provides lines on esports, sports, and more. It offers a native token called Bether, which is used to place wagers on the Bethereum blockchain.
- BETR Betting – Launched in 2018 on the Ethereum network, this site features various betting markets. It calls on users to wager with a native token called BETR.
- bet – This platform operates on the VeChain network and offers betting along with casino games. It acts as an exchange where anybody can create bets and markets.
- Wagerr – Wagerr combines a high degree of privacy with decentralized betting. It also features a betting native token called WGR.
What Are the Benefits of Decentralizing Sports Gambling?
Decentralized betting attempts to right everything that’s wrong with the current industry. First off, it removes the middleman so that gamblers can bet with each other in a transparent environment.
As covered before, online sportsbooks control all aspects of the industry. A decentralized bookmaker, in contrast, hands over control to the bettors.
Removing the middleman reduces the juice from bets. In fact, decentralized operators only take fees to pay developers and those who help the blockchain run properly (e.g. master nodes).
Betting results are transparent as well. Gamblers can actually check the authenticity of their bets using the features of blockchain technology.
Bettors don’t need to worry about being rejected at these types of sportsbooks. Decentralized betting sites are merely platforms rather than full-fledged businesses that must always obtain licensing.
Finally, no third party controls the banking aspect. Gamblers use popular cryptocurrencies to make deposits. Given that banks and governments don’t control cryptocurrencies, bettors never have to fear their deposits being denied.
Challenges Facing Decentralized Betting
Decentralized gambling provides a number of key advantages. However, it’s also at an early and vulnerable stage.
First off, most people don’t want to take the time to learn about this type of betting. They’d rather get started quickly and painlessly than learn about each specific blockchain network and its native token.
Not every blockchain project is entirely trustworthy either. Most project founders keep a fair percentage of ICO tokens for themselves.
Assuming lots of people buy into these projects, then the value of the token spikes. Unscrupulous founders will simply sell off their coins and abandon their networks. This downside might not be so daunting if decentralized betting sites were highly successful and proven entities. To date, though, none have attained a high degree of success.
Even if these projects do gain traction, traditional online bookmakers aren’t going anywhere for now. Thanks to more online bookmakers and regulated markets, sports gambling is hotter than ever before. The global betting market is currently worth $110 billion.
By 2024, the global betting market is predicted to be worth over $155 billion. The numbers say everything: Gamblers are pleased with the current market model.
Will Decentralized Betting Ultimately Succeed?
As of now, decentralized sports gambling isn’t doing very well. The exchanges and prediction markets aren’t drawing much interest outside of those who buy tokens and hold them as investments.
Decentralized betting currently suffers from a major liquidity problem. It doesn’t draw enough bettors to create serious action in a broad range of markets.
Of course, none of this is to say that decentralized wagering can’t ultimately become a success. It does provide certain advantages that fix the problems associated with regular sports betting.
But the problems with how traditional sportsbooks make money don’t surface very often. Few bookmakers jack up the vig to extreme levels, steal people’s money, or blow off customers who have questions.
The big question here is whether decentralized betting is a solution to a legitimate problem, or a solution looking for a problem.
Making an educated guess, I think that decentralized sites will take a small piece of the betting market. They appeal to those who want privacy, decentralized banking, no middleman, and low juice.
However, it’s hard to envision decentralization completely taking over the sports gambling world. Bookmakers have a good hold on the market right now.
In theory, decentralized betting sounds like a dream, especially the low vig aspect. But it has a long way to go before becoming an institution.
As it stands, decentralized wagering is more of an idea than legit marketplace. It doesn’t offer enough liquidity to interest the average gambler.
This situation may change over time as more people become comfortable with blockchain tech. After all, decentralized betting sites do offer some impressive advantages.