Why the blockchain is not a gamble for iGaming operators
Why the blockchain is not a gamble for iGaming operators
Online gambling operators claim to be cutting-edge and innovative, but, in reality, most rely on stale and ageing technology to power their sites and brands. That is the view of Matthew Stafford, CEO of BlockChain Innovations Corp, who says state-of-the-art blockchain technologies are the future of iGaming.
He talks to TotallyGaming.com about some of the challenges associated with migrating to the blockchain, how they can be overcome and why tier one operators should make the move now or risk being overtaken by their nimbler, more tech-savvy rivals.
Totally Gaming: Online gambling operators now have a wide range of platform providers to choose from. Is this good for the industry? Why?
Matthew Stafford: Although gambling operators have a wide range of conventional platform providers to partner with, their options narrow significantly when it comes to available blockchain and crypto-currency solutions for wagering, and that lack of viable partners is certainly bad for the industry.
This technology is a low-cost alternative or complimentary platform for operators. It has the ability to create a frictionless betting environment and eliminate bad debt, such as chargebacks and counter-party risk, while accomplishing multiple tasks in a single solution traditionally performed by various parties, technologies, and systems.
That set of advantages over today’s conventional platforms has enough substance to make blockchain a must for the industry because it greatly improves player experience and the day-to-day processes for operators.
TG: A lot of these platform providers claim to be innovative. Do you agree? If you disagree, why?
MS: There is a certain amount of innovation coming from conventional platform providers, but that innovation is limited by the abilities of technology that largely hasn’t improved from the dot.com era. One can’t expect truly innovative or disruptive products for today’s modern operator if its proposition and product is built on yesterday’s technology.
Largely, what is currently in the crypto/sports betting marketplace is simply wagering with cryptocurrency like a new form of fiat or a more efficient payment provider. While new, it is not a source of sustainable innovation to move the industry forward because these sites or blockchain providers sacrifice core benefits of a crypto/blockchain solution.
They either require users to deposit fiat/or crypto into an escrow account, charge commissions at or above prevailing rates in the conventional space, require players to participate in a complicated share scheme or other contrivance for the allocation of winning wagers, or centrally determine the outcome of the event.
TG: In your opinion, what has led to a lack of innovation in recent months and years?
MS: The ability to innovate has been limited in two ways over that time-period. Largely, it’s stale or aging technology nearing the end of their useful lives along with the entrenched process or systems that grew up around it. And more recently, the lack of viable alternatives to either the technology or the processes and systems.
TG: What is the solution?
MS: Disruptive technology, like blockchain, packaged up as a compatible solution to today’s conventional platforms. Some companies have, and others will choose solely to operate on a blockchain based platform in the coming months. In the years to follow, however, we recognize that our customers will continue to develop and supply or utilize conventional platforms while the adoption of crypto-currency and use of blockchain technology spreads across all industries.
BCI built its crypto-wallet and smart-contracts wagering technology so that it seamlessly integrates into an operator’s current systems. BCI gives an operator the ability to embrace innovative platform technology for payments and betting without having to make the perilous decision of an enterprise-wide migration.
TG: What are the key benefits of online gambling operator using the blockchain to power their sites?
MS: Any blockchain must offer the benefits I mentioned earlier: a frictionless environment for wagering; the elimination of chargebacks and counter-party risk; run as a significant cost-improvement to today’s conventional platforms and be compatible with existing conventional platforms.
Additional benefits to using blockchain include: zero trust – no one has access to funds ever, there is no opportunity to steal funds, and every winning bet is guaranteed to get paid under blockchain rules. What’s more, the blockchain is transparent - which bets are being traded and at what price and in what quantity can be public information. It also offers superior compliance; this includes the assignment of specific player addresses that have met AML/KYC requirements with a full history of all activity associated with that specific address.
TG: What challenges does this present? Is it easy for operators to migrate from traditional platforms to the blockchain?
MS: The biggest challenge to an operator comes from the change in the way its business operates as opposed to the technology itself, so the challenge is running a business that looks the same on the outside but whose internal operations are different.
Operators will be doing the exact same thing as today except that our solution accomplishes or does away with many of an operator’s back-office functions because it’s deposit-less and doesn’t require any additional party to settle the bet, properly account for the payment of winnings, or pull other transactional reporting.
TG: What regulatory hurdles, if any, need to be cleared?
MS: The regulation that exists or is being proposed should be quite familiar since the objectives and framework are identical or very close to those governing conventional gaming platform suppliers and traditional payment processers, such as AML and KYC functions or technical testing requirements.
What operators should consider is that the current regulation/licensing frameworks being adopted by proactive regulators want industry participation in the process to ensure regulatory mandates and objectives are satisfied, but also to ensure that the broad capabilities of this new technology are realized within the industry.
TG: How long will it be before we see the majority of tier one operators using blockchain to power their sites?
MS: As I mentioned, it’s not likely that a tier one operator will chose to abandon conventional platforms and solely operate on-blockchain. Because the advantages blockchain provides, adoption by a tier one operator of an on-blockchain smart contract eco-system, like BCI’s solution, as a complimentary or alternative platform should be expected sooner rather than later.