How Blockchain Tackles 3 Big Gambling Industry Problems
Blockchain has been the belle of the technology ball for the past few years, and many experts claim that it has the ability to push many of the current best practices in multiple industries to the history books. Only time will tell whether blockchain’s impact will be as sweeping as futurists are making it out to be. However, if we zoom into the world of gambling as a small sample, it wouldn’t be a reach to assume blockchain could potentially live up to its industry-shaking hype.
The gambling industry might need blockchain and cryptocurrency to evolve, but an argument can be made that blockchain actually needs the gambling industry in order to legitimize itself as a functional technology. There are a few main drivers pushing gambling towards cryptocurrency and blockchain:
- The rapid growth of the Internet and mobile. More people around the world are getting access to smartphones and the Internet, boosting the tech-savvy gambling population.
- Growth of the gambling industry. The gambling industry has been growing at a compound annual rate of 9%, roughly three times higher than that of the global GDP.
- Globalization of gambling and bets. Gone are the days where gambling is limited to a single geographic region, and global payments enabled by cryptocurrency are the final nail in the coffin.
Diving deeper into the fundamental issues blockchain and cryptocurrency can solve, we find solutions for ideological, legal, and ethical problems rife in the gambling industry.
Cooling off a historically divisive activity.
Gamblers are largely fueled by human nature and tend to be attracted to gambling because of the highs of winning big and the relished risk of losing your stake. To many, gambling is seen as a safe way to spike adrenaline and compete without a direct physical risk of death or injury.
However, many people can also become addicted to the highs of winning, if not just the simple idea that if lady luck were on their side they would walk out a winner with some extra money in their pocket.
The negatives of gambling have created staunch critics out of many people in favor of a more orderly community, one in which the breadwinner of a household with children doesn’t bet the entire house on a single game of roulette. This is largely why there are some fairly strict geographic and jurisdictional standards that control where a physical casino can operate.
While blockchain and cryptocurrency aren’t a silver bullet to solve rifting moral issues, they offer a layer of discretion for gambling aficionados. Instead of gamblers increasing foot traffic in cities with casinos, they can play their favorite games online from the comfort of their own homes.
Navigating murky legal waters
The current laws on gambling are always changing and ambiguous at best. There is no federal law against playing poker online, for example, and placing wagers online is legal. If the site is located in the United States, any wagers placed on it are considered federally illegal. Sites set up outside of the United States, however, are considered legal. This is why many online casinos set up shop in Australia, Latin America, and the Caribbean.
And then there are also state laws, but the punishments for breaking those seem to be fairly light - the only time someone got into trouble with their state was in 2003, when a Jeffrey Trauman got fined $500 on over $100,000 of online sports bets winnings.
As you can imagine, these laws require some skillful navigation. The bulk of the responsibility falls on the site owners, but users still have to adhere to the laws to the best of their ability. Decentralized cryptocurrencies such as Bitcoin mean that there isn’t a centralized payment company that is held responsible for online payments, which helps to simplify the payment process of gambling across borders.
Bitcoin, for example, is the most popular cryptocurrency and can be used for virtually anything on the Internet from any location. As online casinos continue to pop up, people will continue to use cryptocurrency instead of USD to gamble.
Settling a gambling industry riddled with fraud and corruption.
The house always wins. Mathematically, the house, meaning the centralized casino operator, must generate more wins than losses for itself it wants to stay in business - there’s no way around that.
However, there have been countless incidents of casinos tipping the scales even further and adjusting the programming of slot machines, using loaded dice, or other more complex tricks to separate more customers from their money. Trust is a key issue in gambling, and blockchain is able to solve a focal point of many critics.
Blockchain isn’t going to immediately put the odds winning in a player’s favor, but distributed ledgers can be used to store records of all games, bets, results, and amounts won and paid out. The ability to track enables casinos to offer customers or authorities an immutable and auditable history that would discourage any foul play or book cooking.
By accessing transaction history, players can confirm the system is playing fair. This is especially important in the realm of online casinos, the majority of which operate outside of U.S. borders and seem more insulated from legal action if needed.
Gambling and cryptocurrency share many of the same libertarian ideals that someone is fully entitled to doing whatever they want to do with their time and money. Beyond the similar ideologies, blockchain and cryptocurrency offer highly effective pragmatic solutions for cross-border payments and transparency.
Online casinos will likely be the first of the gambling industry to successfully implement blockchain and use cryptocurrencies to showcase the technology’s capacity to add order and structure in favor of users. The online gambling market is estimated to be worth more than $55 billion in 2019, a number that will likely increase as users around the world become onboarded into a new, provable fair world.