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From the bettors perspective, sportsbooks are representative of a broken industry. Many of the problems stem from the centralised nature of these businesses. Trying to make a wager on a sport in the US is a bit like wading through treacle.
Bettors could be forgiven for thinking the industry is set up purely for the benefit of the sportsbooks and syndicates, with the quality of service to sports fans relegated to a distance consideration.
It’s an arduous game for bettors
For example, users have to deposit their cash and earn no interest while it sits in the bank account of the sportsbook. Price discovery is a nightmare, with bettors having to set up accounts on multiple outlets in their attempt to get the best prices.
Then there is the associated matter of the analytics, fragmented as it is between the sportsbooks, the teams, syndicates and other stakeholders.
Also, there is no way of systematically tracking the success or otherwise of the industry’s self-appointed experts.
The most pressing of issues is perhaps the speed of pay-outs by the sportsbooks. They are often only too happy to take your money and have you betting straightaway but are much slower to act when it comes to paying out and transferring winnings to bettors’ bank accounts.
Perhaps you thought many of these problems were being fixed by a new breed of prediction market offerings from blockchain startups such as Gnosis and Augur, but not so fast. Certainly, the trustlessness properties of blockchain means there is not a central authority that you have to battle on these platforms. That’s good great but there are still unfortunately major issues around grading wagers, which can take days to do and dispute resolution concerning contracts can sometimes drag on for weeks.
Here’s how to fix the mess
These issues matter for bettors today but even more so for tomorrow because this is an industry possibly on the cusp of major expansion – sports betting may be legalised this year at the federal level, and could be worth as much as $6 billion by 2023.
The US Congress is reviewing all forms of betting, including sports betting, and if legalisation does come forward this year, the stranglehold of the current incumbents – in Nevada or beyond the US among the internationally based betting companies – will be thrown into doubt. It is expected that other players from beyond betting will join the party, such as from among the big technology companies.
Clearly, the platform that gets the offering right for bettors has a big prize to win.
What would such a platform look like? That’s a question a nimble and innovative new player in the blockchain space called BlitzPredict is aiming to answer, as we’ll see in a moment.
The first problem that needs to be addressed is aggregation. In an age of digitisation it is truly shocking the sheer lack of tools that are available to scan the sportsbooks and prediction markets for the best prices.
A real-time price-quoting system to which you could link a smart contract configured to place bets when certain conditions are met, would at a stroke bring the advanced techniques and tools of the betting syndicate to the ordinary sports fan. It would mean that users would always have access to the best lines from the sportsbooks.
You could imagine a menu of smart contracts tailored to the characteristics of different sports and for wagers on different aspects of a game, from the date of the first touchdown in the NFL to how many golfers in a tournament will finish under par for the course.
Liquidity issues could be addressed by, for instance, using the Bancor protocol and additionally lower rates for users. Tokenisation means instant exchange, so you could get the odds you see before prices move. It would also of course make pay-outs instant.
And blockchain technology means it could also be a fully transparent system, with the reserves held by the platform publicly audited for all to see.
Incentivizing the experts and smarter markets
Also, the experts predicting outcomes could be incentivized to work with the platform, basing their assessments on the actual odds being generated.
These experts, in turn, would have skin in the game – they would have to back their predictions, and the models they develop, with a stake using the platform’s native token. In such a scenario the experts could earn tokens in proportion to the number of users accessing their information.
This could be extended beyond the experts to the enthusiasts among the ordinary users of the platform. Over time the system itself could also reward those experts and models that are providing the most accurate predictions and sift out those that are consistently wrong with their predicted outcomes.
Major leagues such as the NFL, NBA and NHL all have deals in place with sports betting data firms as they seek to monitor lines for unusual activity. That alone is an indication of some of the expense involved in securing the integrity of these sports.
Another benefit then is that the transparency of blockchain-based systems would be a huge step forward for the leagues and teams, making it much easier to monitor betting activity.
And the winner is…
Owner of basketball team Dallas Mavericks, Mark Cuban, the well-known tech entrepreneur, is a big fan of legalized betting. He sees coming into view “a lot of attempts by companies big and small to use their own versions of big data to be predictive in sports, financial markets and other industries,” he said in remarks to sports channel ESPN in May last year.
Cuban is betting that the winners will be the companies “which create the most powerful learning and reproductive algorithms”.
Those companies will likely emerge from the blockchain space because decentralised ledger technology is perfectly suited to fix the betting industry’s dysfunction.
As we mentioned, one such contender leveraging the power of blockchain is BlitzPredict.
Its pitch is to implement all of the fixes suggested above. By unlocking access to the analytics that underlies the odds offered by bookmakers, bettors on the platform BlitzPredict is building will be able to wager more successfully by weighing probabilities derived from real data.
Aggregation has the promise of upending sports betting in a big way with better odds for bettors, easier-to-use interfaces thanks to smart contracts and better liquidity because of tokenisation and transparent reserves.
Sports betting fans will want to get a piece of the action coming down the line.
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