Matthew Stafford, CEO of BlockChain Innovations Corp, says USA sportsbook and iGaming operators should be born on the blockchain
US online gambling operators face many options when it comes to choosing the platform technologies that will power their iGaming sites. They can leverage the platforms and services offered by established suppliers or they can work with new and exciting companies utilizing state-of-the art technologies.
The former may seem like a safe bet given their experience and expertise, but, in reality, the technology offered is dusty and clunky. Those opting to partner with the latter can take advantage of cutting-edge solutions such as cloud and blockchain to deliver a superior player experience.
Some companies have already chosen to operate solely on a blockchain based platform. In the years to follow, however, we recognize that others will continue to develop and supply or utilize conventional platforms while the adoption of cryptocurrency and use of blockchain technology spreads across all industries.
Although gambling operators have a wide range of conventional platform providers to partner with, their options narrow significantly when it comes to available blockchain and cryptocurrency solutions for wagering.
With blockchain platforms, operators can choose to be born on the blockchain and run a complete cryptocurrency sportsbook or casino. More likely, however, the majority won’t want to wholly abandon their conventional platforms and will need to find a solution that is fully compatible with existing platforms.
BCI, for example, has built its crypto-wallet and smart-contracts wagering technology so that it seamlessly integrates into an operator’s current systems. This gives the operator the ability to embrace our innovative platform technology for payments and betting, without having to make the perilous decision of an enterprise-wide migration.
Improving the player experience
Our platform, and other similar products, greatly improve the player experience and the day-to-day processes for operators. Because computers on the distributed network do most of the work, this technology is a low-cost alternative or complimentary platform for operators.
Blockchain technology has the ability to create a frictionless betting environment because funds are immediately available for wagering and players can bet directly from the wallet. It eliminates bad debts, such as chargebacks and counter-party risk through innovative cryptography that both ensures player identity and prevents double spending.
All the while, it allows for the accomplishing of multiple tasks simultaneously, such as posting lines and settling bets, in a single solution.
Additional benefits to using blockchain include: zero trust – no one has access to funds ever; there is no opportunity to steal funds; and every winning bet is guaranteed to get paid under blockchain rules.
What’s more, the blockchain is 100% transparent regarding which bets are being traded; at what price and in what quantity can be public information. It also delivers superior compliance –this includes the assignment of specific player addresses that have met AML/KYC requirements with a full history of all activity associated with that specific address.
That said, some operators have raised concerns over how blockchain technology sits within regulations, particularly in new and emerging markets such as the USA. But they needn’t be concerned as regulators are coming to understand the scale and scope of the technology, and are taking it into account when developing their frameworks.
What operators should consider is that the current regulation/licensing frameworks being adopted by proactive regulators want industry participation in the process of blockchain adoption to ensure regulatory mandates and objectives are satisfied but also to ensure that the broad capabilities of this new technology are realized within the industry.
Uncertainty around cryptocurrencies
A challenge, particularly in the US, is the uncertainty around cryptocurrencies as a security and the regulatory consequences that go along with that determination. A positive is that the regulation of cryptocurrencies in the US is underway, including the licensing of exchanges and a process for exempting certain currencies as utility coins under the Howey test, which will create a viable framework in the coming months.
If operators can overcome these concerns, they can unlock the true benefit of being born on the blockchain. Currently, conventional platforms run on technologies and system that are not sustainable long term and one can’t expect a better outcome by building a new platform for today’s modern operator on yesterday’s technology. Any innovation is necessarily limited to their ageing technologies and processes.
For any single wager on a conventional platform, multiple third-parties, technologies, and systems that haven’t improved from the dot.com era are relied upon by gaming operators and their player communities to: process incoming and outgoing payments; provide the wagering environment; confirm and settle transactions; post lines and results; and ensure integrity and combat fraud.
Fully deployed blockchain platforms eliminate all or many of these functions, thereby eliminating not only the actual cost but opportunity cost of identifying a partner, contracting and scoping with all parties involved in establishing a wagering environment.
In short, opting for a fully blockchain enabled sportsbook allows operators to manage their core business as opposed to their partner-suppliers.
This born-on-blockchain opportunity is particularly compelling for governmental clients like state lotteries and the Tribes. Since the system runs at near-zero cost, that means savings both in direct dollars but also the limited use of state or tribal resources, which goes directly back to the taxpayer or tribal entity conducting gaming for the tribe.
For these reasons, it is clear that launching on the blockchain will enable US operators to offer a superior experience while driving cost savings and ensuring their long-term future in what promises to be one of the largest and most lucrative iGaming markets in the world.