Sports betting has always been the industry on the cutting edge of tech development. This was noticeable in how quickly it started using advanced statistics and cryptocurrencies to provide a better experience to its players.
At the same time, sports betting has employed smart contacts with the same goals in mind. In this article, we will dive deep into how smart contracts work and how the sports betting industry is using their benefits.
What Are Smart Contracts?
Smart contracts are self-executing contracts with the terms and conditions of the agreement directly written into code. They automate the process of executing the terms of the contract. This means that when it comes to sports betting, the payments are made as soon as the outcome of the event is clear.
Smart contracts are based on blockchain technology, also used to power cryptocurrencies. That's why they are used by sports betting operators that use Bitcoin or Ethereum as their payment method of choice.
The Role of Smart Contracts in Sports
Sports betting is a perfect choice for the use of smart contracts. The players place bets on live events, and therefore, the outcome of the game changes over time. In many cases, the players bet on a specific event – such as a particular player scoring a goal or the number of assists in a basketball game.
This is where smart contracts come in, allowing the players to get their payments as soon as the terms are met. At the same time, using smart contracts provides players with a sense of security when using a sports betting casino worldwide.
What are the Key Features of Smart Contracts?
There are a few key features that the smart contracts provide and that the players can't get when using other, outdated methods of betting. These are all based on the technology behind the contract, which is based on blockchain.
Automated Transfers
The main reason to use smart contracts in sports betting is the automated transfers. That means that the payment is made as soon as the terms of the contract written into the code are met. Players need to trust the betting sites they are using, and since all of these sites are based abroad, it may be difficult to verify how trustworthy they are. Automating the payment puts everyone at ease. It's also important for players making many small bets on the same event – this way, the payment is made individually for each bet.
Decentralization
Blockchain is a decentralized network, meaning it doesn't depend on any traditional and centralized structure, such as a bank or government institution. It's one of the main qualities that appeal to the players when it comes to smart contracts.
The ability to operate without the control of the government and traditional financial institutions provides the users with a certain freedom, as well as with lower costs and better service.
Immutable Records
The transactions made with cryptocurrencies and with blockchain technology are recorded and immutable. This means there can be no mistakes and no fraud, as it's easy to keep track of the transaction.
Again, it's a useful feature for those who can't get to the casino, especially if a sports betting casino has no physical location.
An Example of How Smart Contracts Work
For instance, players that use operators accepting bets on NHL and utilizing smart contracts can simultaneously make wagers on several events. They can bet on the outright winner. They can also bet on the number of goals that will be scored and who will score them.
The payments made in crypto will execute as soon as each of these outcomes is reached. That way, each of the several bets is treated individually, and each of the payments is executed immediately as soon as the right amount of goals is reached.
At the same time, smart contracts use mechanisms to predict the outcome of the game in real-time and, therefore, change the amount the player can cash out for each event as soon as it's available.
Downsides of Using Smart Contracts
The players should be aware of the downsides to using smart contracts in sports betting. These are partly about how the contracts are set up but also about the changes in the public attitude towards crypto.
Immutability
We've already mentioned immutability as a positive, but the same thing can be seen as a negative, depending on how you want to look at it. The fact that the records can't be erased means that there's a permanent record of every transaction. The record still exists even though it allows the players to make the transfer without providing a real name.
Code Vulnerability
Since the whole process is based on and written into the code, the code itself can become vulnerable and jeopardize the transfers. The hacks are a real concern for players, even though they are rare since they can lose everything when they happen. The betting site provides a variety of security measures that the players should be aware of and know how to use.
Security Measures in Smart Contracts
There are several important measures that the sports betting sites employ to make their smart contract bets safe. Before using a certain sports betting site, the players should carefully study their smart contract measures and decide whether it is safe.
Code Audits
A sports betting site needs to establish regular code audits. These should happen on a regular basis regardless of how well the site is operating, but also after an event that may have compromised the safety of the transfers – such as a hacking attempt. The audits need to be done by third parties.
Use of Libraries and Frameworks
Utilizing well-established and widely used libraries and frameworks can contribute to the security of smart contracts. That's because the libraries and the widely used frameworks have already undergone extensive testing and scrutiny by the community that uses them.
The Changing Legal Framework
The legal framework behind crypto casinos that use smart contracts is rapidly changing. This is because cryptocurrencies are now widely adopted, and almost every betting site allows. With a wider player pool, there are also much more regulations involved. It's partly already noticeable with the introduction of "know your customer laws" that require the players to provide an ID to set up an account.
At the same time, the sports betting sites are going through more strict processes needed to get the license to operate as one. This will increase the costs of setting up a betting site and make the sites safer.
Conclusion
Smart contracts have been used in many industries ever since they became widely available. The sports betting industry uses smart contracts to ensure that the transfers made from betting are safe, fast, and easy to track. The blockchain technology can be used for all of these purposes.
There are also some downsides involved in using smart contracts, including the risk of hacking and the ways the records are kept. The users and the sports betting sites are also facing new regulations that have their purpose but are also a burden. For instance, betting without providing an ID may become more challenging.
