Hardly a week goes by where we at Open Gaming Solutions don’t get asked if we can build a bitcoin lottery or support some other sort of crypto gambling scheme.
Our response is always the same. “Your project sounds exciting. Where are you planning to be regulated?”
Unfortunately, just about every time, the conversation stops there. It is evident that these many projects have never even considered the prospect of having to be certified and operate under a regulatory framework. That because they are using crypto, instead of a fiat currency, that the rules will be different.
If the prospect does engage any further, my advice is always the same. “If you are serious about this project, please seek out the various regulatory frameworks available and determine what it would take to get licensed.” “The risk of running an unlicensed gambling scheme is just too great.” Sure, there are many crypto gambling sites running out there and most of them fly under the radar. However, if you have any level of success, you’ll likely no longer be under the radar and the odds of ending up in handcuffs is significant.
I hate killing the passion that many of these people have, I just don’t want them to make a costly life mistake.
These discussions always beg the question for us, what role does blockchain have in the regulated gambling world?
For the record, I’m a big fan of many blockchain projects and hold many different tokens and coins. I primarily buy in to projects where I really like the tech and when I can see applications in an industry that could use disruption. I’ve yet to buy in to any gambling tokens.
Blockchain is a remarkable invention that can help solve many problems in the modern world. I believe smart contracts and decentralized transactions will be highly disruptive to the real estate and general contracting industries. I also feel that there is a lot of room for crypto in monetary transactions, but also believe that the current powers in those areas will continue to reign supreme.
So where does blockchain fit in the gambling world?
Blockchain excels when there is little or no trust of a central controller. For the majority of regulated gambling today, there is a pretty large trust factor with the central authority. Be it a casino, state lottery or other gambling arena, if it is sanctioned by the host government, the trust factor is pretty high. In most cases, not ideal for blockchain.
If there is no central authority, such as illegal bookmaking, then blockchain makes perfect sense. However, this is an area I have no experience in or desire to be involved with. Hence is not relevant to the discussion at hand.
One regulated area that does make sense though is peer-to-peer betting. Peer-to-peer betting is when two entities agree on a certain outcome and make a wager. This can be handled by a central authority, such as Betfair. However, this type of activity makes complete sense to run on a blockchain. Bets can be advertised on the chain and once accepted, confirmed by peers. Once the bet is confirmed, the funds can essentially be stored in escrow until the outcome is determined.
Blockchain has enormous applicability for peer to peer betting and I will be shocked if the predominant peer betting exchange in 10 years doesn’t rely on a blockchain of sorts. But for now, unless there is a massive reason to distrust the central authority; a situation highly unlikely if properly regulated, blockchain is a gambling solution to a problem that doesn’t exist in the legal world.