January 28, 2019


Blockchain remains one of the hottest topics in the news today. Its presence is still significant while interest in Bitcoin and cryptocurrencies are showing new record rates. So, what is the role of the blockchain technology in the gambling industry?

There are various industries where Blockchain has a serious impact on technology startups being focused on developing decentralized systems. The online gambling industry is one of them despite the fact that it was one of the last economic sectors to face the importance of deployment of blockchain-based technologies.

Malta, one of the pioneer countries in gambling, has claimed it plans to legalize Bitcoin as well as other popular cryptocurrencies at online casinos. The country government has already begun to learn the most convenient ways to implement these secure currencies in the industry. Therefore, the future of the blockchain seems to be very promising. So let’s consider how it can benefit online gaming.

Gambling Market Review

Online casinos or gambling platforms have already built a big community of fans – gamers, who annually spend billions of dollars on playing games online and offline. Gambling includes various worldwide known games, such as blackjack and roulette, bingo, poker, lotteries, and sports betting.

The popularity of offline casinos remains a primary cause of the fast growth of the online gambling industry. In 2015, the U.S.-based casinos generated $71.1 billion of revenue with 42.31 million visitors counted in Las Vegas in the same year.

In 2016, Statista estimated the online gaming market at $41.77 billion. This value was forecasted to grow to $59.79 billion by 2020. Since 2009 this market has become twice larger and is currently approaching the figure of $51.96 billion.

How Blockchain Helps to Eliminate Challenges in Online Gaming

Like all other industries, online gambling has its own challenges that players across the globe face every day. People often complain that casinos and other gambling services may have only one payment system available in some countries.

In addition, gamers often become frustrated by online gambling intermediaries charging high fees for winnings. However, there are also other existing downsides which the blockchain can eliminate. These are pay transparency and ensuring fairness of game results. This technology has various characteristics that make it worth implementing in online gambling.

Result Fairness

In typical online casinos, players have no capabilities to check how fair their game results are. They cannot know whether they have lost the game or it’s just because a service provider has some hidden algorithms in the system. Therefore, gamers mostly rely on regulatory audits that were applied to a certain operator.

Fortunately, the blockchain can deal with gamer’s doubts and fears due to its certain features. With its decentralized nature, no user can control the blockchain network, making it nearly impossible to modify the underlying data.

In addition to regulatory audits, technology provides the provable fairness of results since it makes it nearly impossible for operators to affect the results by implementing unfair algorithms in their systems. With the gambling blockchain systems, players can be sure they are not playing the one-way-street game.

Transparency of Payouts

At the same time, players usually cannot be sure that operators honestly distribute winnings in a casino, lottery, or poker.

Since the blockchain provides the concept of ‘provable fairness’ it makes all game entries (bets, and payouts ever set within a blockchain network) entirely accessible and verifiable by all network users. Game-play algorithms integrated into blockchain-based smart contracts can ensure the fairness and transparency of the payouts.


Benefits of Blockchain for Gambling Business

The blockchain provides the immutability concept. Once a data block is recorded in the registry, it’s nearly impossible to alter or delete it. When any network member aims to modify certain values in data block, all other network participants in the network, who have a copy of this data block (encrypted with a public key), verify the transaction using special automated validation algorithms. If network nodes validate this transaction by recognizing the information “matches”, then this transaction becomes approved and the system adds a new data block to the existing chain.

Once any user or process initiates data modifications, the system generates a unique digital footprint and applies it to the current data block. Each network participant receives this footprint for validation. In case if these footprints don’t match, the transaction will not be approved. This principle makes blockchain network participants altogether responsible for each transaction and provides gambling businesses with a few important benefits that include:

  • fraud prevention during the gambling process,
  • increasing trust to a particular online gambling company as well as to the whole industry, and
  • saving operational costs.

Let’s consider each advantage in details.

Fraud Prevention

Since no particular users or entities have an advantage during the gambling process, gambling business also can benefit from this concept as well as gamers. The blockchain ensures that users are fully incapable of forecasting game results, such as dealing a particular card.

The verification of transactions ensures a high level of security for any operation during the gambling process. This also provides the reliable protection from fraud as well as prevents any manipulation attempts within the network. The blockchain makes any transaction completely transparent and verifiable for both gambling companies and network participants (gamers). When using cryptocurrencies for gambling, businesses are able to form an additional security layer for their systems.

Increasing Trust

With the blockchain helping online gambling companies prevent fraud, businesses can ensure a fair distribution of winnings among players. It means that players will always be sure in operator’s honesty. This significantly increases trust among players and encourages them to use services of those companies that appreciate their customers. In addition, the more gambling businesses will adopt such decentralized systems, the more trustworthy will be the industry in general.

Saving Operational Costs

Due to a decentralization principle and verification of all bets within the blockchain network, gambling businesses have no need for intermediaries to monitor the gaming process. Therefore, the online gambling industry can reduce its operational costs using a blockchain-based platform.

In this way, both cryptocurrencies and the technologies that stand behind them, are reinventing numerous aspects of the online gambling industry. Both gamers and businesses can benefit from the decentralized systems since they all can be sure in the fairness of game results and transparency of payouts.

If you need additional information regarding this topic our experienced team, Intellica, has a deep expertise in building blockchain-based systems and will gladly provide you with a qualified assistance. Create a huge loyal community of gamers with Intellica!

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