Sports betting in the United States has been undergoing a quiet revolution in recent years. Prompted by a landmark Supreme Court ruling in 2018, over a dozen states have either fully legalized betting or taken steps to do so, while others are preparing legislation.
The scale of the pent-up demand for legal wagering was starkly highlighted by New York. Here, punters staked $1.6 billion in the first month after online betting became legal at the start of 2022. This pushed the state past Nevada and New Jersey to become the capital of U.S. sports betting.
As state lawmakers and regulators put in place legal frameworks around online betting, one of their key concerns is to ensure that consumers are protected from an industry that has a poor track record of policing itself.
A big part of the solution should be to encourage betting platforms that are based on blockchain technology. The opening up of betting in the United States has coincided with the dawn of Web 3.0 technology that provides exactly what the industry needs – platforms that give customers custody of their own funds, are fully transparent and are immune from centralized control and meddling.
Crypto and the betting industry
The idea that anything related to crypto could make the betting industry safer and more inclusive might seem outlandish to many. The past few weeks have reinforced crypto’s Wild-West reputation after the $60 billion implosion of the Luna-Terra ecosystem and a volatile drawdown in token values.
Separate from all that crypto market noise, though, the development of decentralized blockchain-based Web 3.0 technology is moving ahead rapidly. It is creating platforms that allow users to take back genuine control of their data and assets from big corporations. The blockchain allows platforms to be open, trustless, decentralized, and transparent, addressing many of the flaws that have built up frustration with Web 2.0 platforms.
In the betting arena, this empowers and protects consumers by giving them full custody of the assets they have on a platform. Rather than handing over funds to a third party, all they have to do is connect their own crypto wallet to the protocol. Cutting out the middleman in this way leads to a vastly improved, more frictionless user experience. There’s no more handing over of private data, no more exorbitant withdrawal fees, no more concern over manipulation of spreads by sportsbook companies.
Blockchain betting: Unregulated sites Vs blockchain
Despite the legalization of online gambling in some states, Americans still bet billions of dollars through unregulated offshore sites that leave them highly vulnerable to bad actors. These sites have been known to disappear overnight, as well as freeze or steal users’ funds.
Users of blockchain-based betting platforms have no bad guys to worry about. Every transaction is governed by a smart contract, an immutable, autonomous program that operates according to the terms agreed by the user. Platforms like Divvy.bet are raising the bar for online gambling by leveraging smart contract technology to self-regulate. This is in an effort to be readily compliant as gambling legislation catches up and becomes legal across more territories.
At the same time, Web 3.0 protocols give players full transparency into the betting pools they’re using, allowing them to more effectively manage their risks. You’ll be able to see your funds, have full control over them once bets are settled, and know that there’s enough money in the house to pay you out. That’s a big improvement on traditional sports betting platforms, which are effectively a black box in terms of how your funds are being used and how much liquidity is available.
Blockchain betting: Be the House
Perhaps the biggest benefit to users of decentralized betting platforms is the opportunity they have to take bets as well as make them, enabling them to “be the house” and increase their long-term odds of success. They can do this by providing liquidity to betting pools, in the same way that users of DeFi platforms have been doing for years to earn yield.
Betting is an inherently risky pastime and this doesn’t guarantee success. But over time, experience has shown that the house enjoys better odds and comes out ahead.
These innovations give users a level of autonomy, privacy and security they have never been able to experience with traditional betting companies. They are exactly what regulators and lawmakers should be embracing as they build the legal frameworks needed to support the betting industry’s growth and protect consumers in their states.
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