Why blockchain will disrupt the egaming industry

Forget about regulation, tax or even a Game of Thrones-style winter, the nerds are coming for the gambling industry and things will never be the same again.

I’m long on smartwatches, AI and simple mobile UX all being key trends for the egaming industry. All of these right now are short-term trends and pretty much solved equations. In terms of the biggest disrupting trend to the egaming industry, they are all tiny specks compared to the impact that blockchain will have.

So what is the big deal about blockchain and why should anyone care? For the uninitiated, blockchain is the backbone of the crypto currency Bitcoin and there are many different variations, with Ethereum being the second most popular.

The advantages blockchain offers gambling is four-fold. The first is visibility; it is entirely possible to use blockchain as a Random Number Generator (RNG) to power games. This visibility into the RNG creates a situation where “provably fair” casino and poker games can be offered to players. Overnight the number of “you’re rigged” messages to support teams could disappear as players can individually verify each game round was a fair deal. Take a look at onetouch.io which is by my guess the market leader in the provably fair space.

The second area is smart contracts, this will make it easy to decentralise sports betting allowing the automatic placing and settling of sports bets, with the results independently verified by a number of independent “oracles”. With every bet publicly auditable and settled automatically, it counteracts the risk of being ripped-off by a dodgy backroom bookie in an unregulated market.

“More than $200m in funding for software projects has been raised in the last 12 months using the initial coin offering process”

The third key area and the most important is that blockchains by their very nature are open and in the long run in the software industry, and wider world even, open always beats closed. If we look at how Linux (and its variants), MySQL, WordPress, Firefox and even Android have competed and won significant and mostly dominant market share against closed source rivals, there is no reason why that in time blockchain-based egaming cannot take significant global market share.

The final advantage that blockchain offers is the ability to issue your own “altcoins” (think shares) in your project and raise funding through an “Initial Coin Offering” (think IPO). This allows an easy way for projects to be crowdfunded online with minimum transaction, banking or legal costs. More than $200m in funding for software projects has been raised in the last 12 months using the ICO process. Within that, I count at least six gambling related projects which combined have raised more than $30m.

In the last few months, we’ve seen PeerPlays.com raise more than $3.5m and is planning on launching a sportsbook exchange app in late 2017. Wagerr, another decentralised betting platform, has raised millions in the first few days of its ICO. On the table games side of things edgeless raised $3.5m for zero edge table games and VDice raised $1.3m for a dice games website.

The appetite for developers to build gambling products using blockchain, the large number of investors willing to back them, and the large pool of players in unregulated markets looking for a safe way to gamble will be enough to kick start the nerd egaming revolution. Brace yourself!

Managing partner of consultancy firm Revenue Engineers, Fintan Costello’s previous roles include senior industry head at Google and leading the online marketing departments for PokerStars and Paddy Power