Human beings have an inner instinct of always going for growth and success. Thus, in our everyday life, we are looking for ways to complete our tasks in the cheapest, fastest and most comfortable way possible. It for this reason the gambling industry is growing at an unfathomable rate.
In the year 2018, the global gambling industry recorded a growth of 4.1 (CAGR) reaching 449.3 billion compared to 2014. Further, market size estimates indicate this growth will continue to soar and will net $565.4 billion in revenues by the year 2022 which is a CAGR of 5.9 per cent.
Factors leading to this Growth
Several factors are likely to drive this expected growth in the gambling industry. Among these include; rapid urbanization, an expansion of the experience economy, growth of emerging markets and rise of mobile gambling. In fact, in coming years this growth will further be fuelled by increasing use of social media, countries looking into legalizing gambling, an attractive source of revenue for governments which they can no longer ignore. Otherwise, the lack of government intervention will only lead to the proliferation of underground gambling, which is worse due to certain risks. These uncertainties include losing your money either once authorities pounce on your illegal gambling or the risk of losing your money through the gambling company colluding against you. Away from that, perceived global economic growth and changing consumer gambling habits are other factors likely to drive future growth of this lucrative industry.
A Close Examination of the Gambling Market and its Future
The global gambling market is segmented into three different types and these include sports betting, lotteries, and casinos. Sports betting is the fastest-growing segment with a CAGR of 6.9 per cent while the lotteries in the period ending 2018 were the biggest gambling market with a revenue share of $207.3 billion which is 46.1 per cent of the entire global gambling market size. Each of these 3 main categories is further segmented into either offline, online and virtual reality (VR) which is categorization depending on the sales channel.
Going forward, online gambling is poised to be the leading segment in the gambling industry with a market size forecast of $102.97 billion by the year 2025. In fact, this growth is forecasted to happen between 2019 and 2025 with a CAGR of 11.5 per cent. Factors driving the growth of this segment include a surge in adoption and use of smartphones as well as improved access with ease to casino gaming platforms. Precisely, an increase in Internet penetration plus the availability of the affordable mobile application for betting will continue to spur the growth.
Globally, Asia-Pacific is the largest market with 32.7 per cent of the gambling market as of 2018. Regions closely following are America and Western Europe. An interesting market trend, Africa and Asia-Pacific will be the fastest-growing regions for the global gambling market at 7.7 and 7.9 respectively. South America and Eastern Europe will grow at CAGR of 6.13 % and 6.12 % respectively.
Interesting Fact: “Africa and Asia-Pacific will be the fastest-growing regions for the global gambling market at 7.7 and 7.9 respectively”
Blockchain to Play a Key Role in the Gambling and Sports Betting industry
Gambling and sports betting especially those sold by online channels will continue to flourish as aforementioned. However, the gambling industry has its own set of bottlenecks, which could hinder or stall the anticipated growth. Some of these challenges include:
- Lack of Transparency and Trust
- Infective Payment Systems
- Lack of personal privacy
- Huge costs
- Centralization of Prediction Markets
Blockchain technology is witnessing its application in almost all industries at a high growth rate. The technology has been successful in its application in the cryptocurrency domain owing to its important features including immutability, decentralization, transparency and improving data security and safety. Likewise, these features can or already being applied to transform the gambling industry. More so, blockchain technology is proving to be the silver bullet solving challenges listed above encountered in the gambling industry.
- Improving Transparency and Trust
I bet we all know of the statement “the house always wins” meaning online gambling users will lose in one way or another. Even if it means the house using tricks and scams to make more money. Online gambling businesses earn money by having players lose more often. Users are inclined to believe these companies do have a special switch that will occasionally turn the odds against their favour. Consequently, knowledge of these vices from casinos by players has led to many keeping away from gambling. As a result, online gambling sites end up losing money.
Online gambling companies using blockchain technology are harnessing this technology to bridge the gap initially eminent between users and operators. For instance, using blockchain smart contracts aid verification of records and this is available via a shared ledger. Hence, it is not possible to manipulate data the last minute to favour the house against the players, thus, increased transparency.
- Reducing Fraud
Online fraud is a major concern for most gambling sites users. Moreover, it accounts for significant loses in the industry. One possible way of executing fraud is a player acting smart and decide to defraud an operator when withdrawing or even depositing money into the casino. Other possible existence of fraud in the gambling includes fraudsters who hack the gambling site’s system by accessing it through the servers’ back door. Worse still a lot of online gambling sites will require personal information of users and this may be an incentive for fraudsters to hack such systems to access the system and put their hands on such important data which online casinos cannot guarantee of its security.
Blockchain technology is best suited to solve this challenge for the industry through the implementation of high-level encryption used to secure transactions and data on gambling platforms. Further, having the blockchain’s distributed ledger renders it impossible to manipulate anything even by hackers in the system. One such platform with immense levels of encryption and has been successful in securing user’s funds and data is Playbetr.com with its winning automatically calculated and sent to winning users transparently and securely thanks to smart contracts.
- Effective Payment Systems
Traditional banking systems are a major hindrance to the flourishing of online gambling and sports betting platforms. This is because it is possible to withdraw money into a bank account or on a credit card only to have the bank confiscate or block the transaction. More worrisome is the fact a player using traditional money withdrawal options such as PayPal or banks they may have to part with a huge commission or unexpected fees. Again this may not be a guarantee that still the financial service providers will ensure processing of player’s payments. As a result, users have been left to wait for days or encounter other payment delays with no explanation given by the banks.
Gambling and sports betting platforms using blockchain technology such as Playbetr.com have the option of issuing own native cryptocurrency that will be used within their ecosystem. In fact, the Ethereum casino and sportsbook uses its native gaming coin known as Playbetr Coin (a stable coin pegged to the USD). Also, the online gambling platform supports other cryptocurrencies for deposit and withdrawals including Ether (ETH), Bitcoin (BTC), Litecoin (LTC) among others. Thus, allowing fast processing of payments when compared to the use of fiat money or traditional banking systems.
- Introduction of Anonymity
Conventional gambling companies are required by law depending on the country of operation to comply with certain regulations that may impede the realization of anonymity for players. For instance, it is common when creating an account and further during verification to face the challenge of having to supply numerous documents. Not only does this process make the whole exercise of creating account lengthy but also time-consuming this limiting number of players.
Implementing blockchain technology allows gambling platforms to introduce anonymity feature. This means users do not go through the rigorous process of sharing their personal information when creating accounts or transacting. This is an important feature to lock out hackers who may find it attractive to hack such platforms.
However, the need to have user’s enjoy anonymity is being undermined by government intervention through introduction of AML and KYC legal requirements for companies dealing with cryptocurrencies. Hence, lots of gambling platforms will request users to verify own identity before transacting on their platforms to comply with legal requirements.
- Increase Accessibility
A lot of countries around the world are yet to legalize online gambling thus prohibit betting and gambling activities. Therefore, denying gambling enthusiasts access to a game they love leads them to use illegal bookmakers. Eventually, players who use such illegal services end up losing their money often with illegal bookmakers failing to pay because it is not enforceable by law to have them honour player’s payments.
Blockchain technology solves this challenge by allowing gambling entrepreneurs to develop decentralized platforms with a feature of using cryptocurrencies. This use of digital currency makes the platforms accessible all-over the world. Besides, withdrawal is quick, no limits and payments are irreversible and automatic thus no cases of fraud or non-payment.
- Rewarding Loyal Customers
Conventional gambling platforms are known for not rewarding their loyal customers. If a player loses despite their loyalty they end up not receiving any compensation. Eventually, lots of traditional gambling companies are losing their customers whom they could retain with ease only if they leveraged on technology with an attractive incentive scheme.
Blockchain-based gambling companies significantly reduce their operational costs by eliminating the costs of intermediaries and losses initially incurred due to fraud. Therefore, they can use such savings to engage and retain loyal players by returning some portion of money lost to users monthly or even award the gamblers special bonuses.
Playbetr.com is one such company with an attractive loyalty reward program. Each time a user plays on the gambling site they earn certain loyalty rewards. For instance, the casino has VIP benefits namely rakeback, lossback and betback, which are all, based on the user’s status points and what’s more, all these are paid on all wagers.
- Huge Costs
Casinos do take a certain average percentage share (house edge costs) from their players as a strategy of ensuring the survival of the platforms. Incomes realized by casinos using this approach are used to pay employees and profits that go to shareholders.
Gambling platforms using blockchain technology can cut down house edge costs by leveraging on their other operational costs, which are at the minimum because of using this technology.
- Decentralized Prediction Markets
Prediction markets have always been in existence but with centralized structures. Therefore, this centralization leads to many limitations and risks such as lack of global access, a limitation on types of markets to trade or create and having the players place their trust on market operators to resolve markets correctly and not to steal funds. Centralized prediction markets are also costly with some charging fees as high as 10 per cent of profit while others have limited betting options.
Integrating blockchain technology onto a gambling platform improves the opportunity of users to access decentralized prediction markets. As a result, gamblers can use a betting arena to place bets on almost everything. Betting choice range from sports to elections with players also have access to the most accurate data leading to the most probable outcome of events without market operators interfering.