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Wednesday, May 31, 2023

Why Is Sports Betting Losing Its Popularity and Which Alternatives Are Available?

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[dropcap]T[/dropcap]his article explains why sport betting is becoming less popular comparing to new coming and digitally advanced industries. Blockchain is taken as an example to show all privileges of a new technology that outstrips the giant betting services.

First of all, we need to explain this title a bit, because statistics show that the sports betting industry is actually growing. But when we pay attention to the details, we find an interesting situation: the reason for this growth is the online and innovative sports betting types.

We will discuss this in more detail below, but for now, let’s state that e-sports betting and exchange bets are the main reason why the industry seems to be growing. In other words, the part of this industry that includes “classic” sports betting is not actually improving at all. In fact, it gets smaller and smaller. This also affects sports bettors as the number of old-school players is decreasing day by day.

So, what is the reason for this? More importantly, is there an alternative to classic sports betting? In order to answer the first question, we need to explain briefly how traditional sports betting works.

Is Placing a Sports Bet a Boring Job with Minimum Returns?

Sports betting is quite different from casino gambling, and, for example, the services offered in a casino website like Emu Casino. If you want to bet on a sporting event, you must first find a “bookmaker”.

People or companies that accept bets, determine odds, and make payments are called bookmakers. The bookmaker accepts your money, gives you a ticket, and if you win, it will refund the money you paid and make an extra payment based on the pre-determined odds. This traditional system works exactly like this on online betting sites too. In other words, classic sports betting always needs a third party, which leads to many problems. For example:

  • Each bookmaker offers different odds. Although the difference between these odds is not so great, bettors like to take advantage of even the smallest opportunities, and they spend a lot of time trying to find the best odds.
  • Because of the bookmaker share known as “vig”, there is a certain limit to the payout you can get even if you win the bets. You almost never make as much money as you deposit.
  • For example, a $25 bet will pay up to 22.50 USD. There will always be a “loss”. This is because the difference is a source of income for the bookmaker. It will take a long time to explain but know that bookmakers can make money regardless of the outcome of a sporting event, thanks to this “difference”.
  • The whole process is very slow and boring. Bookmaker tables or online betting charts are no different from an Excel sheet, and even professional bookmakers find it hard to understand what’s happening on the screen. It’s almost impossible to place bets simply and quickly: a classic sports bet is like a tedious and difficult task at the DMV.
  • But the most important problem is monopolisation. The bookmakers have unrivalled dominance over the sports betting market and literally set the rules. They can easily keep certain bettors out of the system and determine in advance how much odds you can get for a specific sports event.
  • For them, players are merely a walking wallet, and their sole purpose is to increase profit rates. Forget the old-time bookmakers who wrote the names of bettors in a small notebook: Nowadays, bookies are international companies, and they are traded on the stock market.

In short, the classic sports betting industry needs a change badly, but the industry doesn’t want to accept this. In spite of the digital revolution, we still bet like 50 years ago. And because of the unrivalled industry dominance of bookmakers, the necessary changes are not likely to be made.

This discourages casual bettors, while the number of old-school players is gradually decreasing. So, what’s the solution? More precisely, is there a solution?

The Digital Age of Sports Betting

Actually, the solution we have been looking for has been in our lives for a long time. Blockchain technology, like many other things, has the potential to change the sports betting industry from start to finish. Moreover, it does this in a very simple way: by removing bookmakers, which are third parties in this equation, it makes sports betting much more simple for players.

We need to explain this a little. You can think of blockchain technology as an “autonomous database”. All kinds of data can be stored on this database, and every transaction can be coded as a “smart contract”. When the terms of this contract are met, the blockchain automatically executes the predefined orders. For example, it is possible to upload all the files of a sports betting site onto the blockchain. This provides the following advantages:

  • Operating costs will be reduced as there will be no need for a physical server and a license. These are the highest cost expense items and a license, for example, can cost hundreds of thousands of dollars each year.
  • There is no need for a “real” bookmaker as the betting site operates autonomously according to predefined conditions. The community determines the odds and each member of this community can open a betting pool for any outcome.
  • The vig (bookmaker share) mentioned above is almost completely out of order or falls to very small figures, such as 1% (in classic sports betting, the average vig percentage is 10%).
  • Each bet acts like a smart contract, and if the player scores a win, the payment is made instantly and automatically by the blockchain. It is not possible for bookmaker to “hold the payment, verify the identity of the member, or charge a processing fee”. Since the payout of that bet is already on the blockchain, all payments are made instantly.

In this context, you can think of the blockchain as a kind of bookmaker that doesn’t demand any share: players create their own bets and thus, it becomes possible to get a variety of odds. In order for the system to work, the person offering a bet has to store the entire payout on the blockchain in advance; otherwise, he cannot initiate the bet. After this stage, even that person has no access to the stored payout, and the rest of the transactions are carried out entirely by the blockchain.

blockchain technology block chain disruptions modern world

These are not all futuristic dreams: Betting exchange sites work exactly the way explained above, and they represent the future of the sports betting industry. If blockchain technology sounds too complicated, you don’t have to use it. Some of the traditional bookmakers offer the betting exchange service via their websites. But of course, this is not as advantageous as the ones that run on a blockchain, because you still have to pay a certain vig.

Simply put, this system, where players bet against each other, makes betting enjoyable, easy, and profitable again. But most importantly, it eliminates monopolisation in the industry: It is not possible to limit this system against certain individuals or control it completely. If you don’t like the current odds, you can start a new betting pool by setting your own odds. The exchange system gives everyone the chance to create a fair sports bet.

sports betting console
A man watches a baseball game in the sports book at the South Point hotel-casino, Monday, May 14, 2018, in Las Vegas. | AP Photo/John Locher

The betting exchange system is available for all sports, but is most preferred for e-sports betting. We can say that almost all of the new generation sports bettors prefer exchange sites. They have no reason to use the classic bookmaker services because they realise that they will get much lower odds and can’t find all of the e-sports events they want. Instead, they choose to create their own odds and accept/place bets for any event they want. They are aware that they can make more profit by disabling the middle-man, and that is why bookmakers are not involved in the future of sports betting. This industry is about to change from start to finish, and we look forward to seeing what the future will bring.

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