The world of online betting is undergoing tremendous change and is one of the fastest-growing industries. The market is worth $67 billion today and is estimated to reach about $93 billion by 2023.
Could the adoption of blockchain technology upturn the entire industry? Adoption of crypto technology could mean a new level of trust and transparency to how gambling is carried out, and could become the main force that makes online casino gambling legal across different countries or states.
The Lack of Trust in the Gambling Industry
Online betting is not always transparent and fair to the players because of the power imbalance. Not to mention the threat of hackers, scams, and fake websites.
The Azuro protocol was inspired by the first-hand experience of Paruyr Shahbazyan, the CEO at Azuro. As a professional sports bettor for 20 years, he experienced the practices, such as not being paid off, that are still present in the online betting world.
“There is general lack of trust and fairness, and generally all the control in the betting process is in the hands of bookmakers, and there’s this almost rivalry between the players and the bookmakers,”
Yordanov shares that the need for transparency was the starting point for the Azuro company, which is now one of the biggest companies that cover sports betting in Europe. By being a mediator between bookmakers and players, the protocol brings trust and fairness to the game.
“We think that business itself will be disrupted by decentralization and the fact that betting can happen in a trustless way and in a transparent way,”
Blockchain can eliminate the facilitation of a central authority when betting online. The technology allows for all the bets placed to be logged, stored, and processed across a network of computers and uses cryptocurrency as a valid form of payment.
Azuro utilizes smart contracts to build a decentralized betting protocol, bringing full transparency to the betting process. The company envisions a community-run betting environment with decreased service cost to players and a commitment to responsibility.
The team believes that blockchain is the answer to democratize the business of sports betting by breaking down the role of the bookmaker into several more minor roles, openly available for anyone to benefit from.
Yordanov explains that traditionally in the betting industry, bookmakers first need to have liquidity, accept bets, and guarantee a payout for the players. Secondly, they need to manage rates properly, set the odds cautiously to be profitable over time, and not go out of business if players are betting on the odds which are not suitable for the bookmaker.
Bookmakers need to deal with the settlement, payout winnings and manage bet losses when certain events end in a particular manner. The bookmaker also owns the relationship with the player, so they make promotions and player acquisition.
Blockchain can take over the bookmakers’ place and build decentralized infrastructure. Azuro protocol ensures decentralized liquidity for betting on-chain. This means that anybody can provide it, not only the central authority.
The protocol also sets the odds for the events. By importing the results via oracles, the smart contracts pay out the winnings to people.
“The fourth part, which is essentially the relationship with the players, is going to happen via, we call them front ends, but you can also see it as apps that are built on top of Azuro protocol and essentially just do promotions, player acquisition and so forth, but they tap into the liquidity, the odds setting and the settlement of the protocol,”
Solving Liquidity Problems
Yordanov sees drawbacks with the current system of providing liquidity, which involves many risks. For a market to be created, someone needs to provide initial liquidity for that market, which is event-specific.
The people providing liquidity are carrying a lot of betting risk because they have a lot of the tokens connected to a particular outcome of the event. It is a significant obstacle to the growth of liquidity and the market itself.
Azuro’s solution provides liquidity, which is not event-specific. After going into one big pool, it is appropriated for different events. The liquidity providers do not have much betting risk because they are spread across many events. This way, the protocol helps to clarify what the expectation of the return on liquidity provision is going to be, also enabling market growth.
On The Flipside
- Changing the status quo of the industry could be a challenging task for any business.
- Creators of protocol have to develop the capacity to deal increasingly with more markets.
Why You Should Care?
Online betting is one of the fastest-growing industries with huge potential. By adopting blockchain technology, players could expect more fair and transparent management of the betting process. By entering this enormous industry, blockchain takes steps further for mass adoption.
You can watch the full interview here next week!