1) Okay, thread time! I should begin by saying these are bi…
1) Okay, thread time! I should begin by saying these are bits & pieces from something larger that's TBD. I hope it doesn't come off as too negative, since there's some light at the end of the tunnel. First we may as well get to the elephant in the room.
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2) 162 gambling ICOs, amounting to over $638 million raised according to ICOBench. Initial revenue so far is difficult to track in many cases, or plain impossible. Even assuming best-case scenarios it's clear things are falling short by a huge margin.
3) Users simply are not giving any significant portion of their action to these new networks, instead they are choosing to remain at the more traditional networks and essentially only using btc as a payment processor. Few take advantage of low alt fees.
4) Current marketing strategies are falling flat. Even hiring specialized gambling affiliates has produced virtually no meaningful results, according to Edgeless. At Coinpoker, putting money up directly to users through (unsustainable) promotions failed.
5) Both took seemingly significant losses, particularly the former as it's questionable if they will ever fully recover from it. They're gambling on others' dime, throwing money at what they perceive as their deficiencies…rather than address core issues.
6) It really comes down to getting the incentives right, & approaching things from the bettor's POV. Sure they all say they value their users, while doing stuff like hitting you with high fees or taking the easy way out with a prediction market(no! bad!)
7) Or even worse, abandoning the spirit of crypto completely and designing it in a way that requires KYC. And yet worse - the widespread practice of banning long-term winning users, I can attest that it's extremely frustrating...having it happen to me.
8) Now we may as well cover how some spoof their volume/activity. It generally works much how it would on an exchange, they have a very simple game that has no fee - or a negligible-sized one. Add the option to auto-play ofc, and instant volume/traffic!
9) While I suppose one could argue that it's somewhat of a legit game, it's nowhere near the same league as the professionally-made slots, video poker, etc. Those actually generate a meaningful return and an unrivaled user experience for the end-user.
10) Now some history, since gambling has been around forever. Lotteries were hosted to benefit the continental US in its infancy and poker was commonly played by government representatives among each other. Okay, but now say it's bad for the rest of us?
11) Powerful groups essentially tried to corner the market through various regulatory means. Initially they tried to curb online gambling bc they felt it threatened their investments in land-based venues. They may simply have failed to see the crossover.
12) I don't buy this at all. It was plainly clear to even low-level staff the sheer amount of crossover from online to WSOP events during the initial poker boom. They've been buying time (not agile) by dampening the online mrkt, preparing their entrance.
13) They've been betting huge sums for years by buying up competition/consolidating + borrowing much more for even larger future endeavors - so it's pretty damn safe to say that bettors' interests simply cannot be their highest priority, nowhere near it.
14) Quite opposite in fact, one only has to look at TSG's flagship network PokerStars & the new policies/actions/etc since the takeover...then compare that to their users' feedback. Their approach to sportsbetting will be hardly different wrt end-users.
15) This combined with worse financial regulations is effectively serving as an artificial wall that does little/nothing to address the core problems, only to keep viable competitors out or at least require unnecessary overhead that's prohibitively high.
16) Due to all of these conditions, this industry can benefit immensely from crypto and decentralization in general. Bettors, and the internet as a whole, deserve better than this. The amounts of $ lost to junkware and outright scams is just staggering.
17) It's gone on too long and we're finally starting to get effective tools (and sheer talent). There is 0 reason why we need to deal with these custodial solutions forced upon us, the major networks convert btc directly to fiat anyway, where it sits as.
18) Existing crypto-gambling platforms aren't adequate though. Nearly all are built on a base layer, like ETH or TRX, and subject to various artificial constraints - both now and for the future. It's going to take a dedicated network for optimal results.
19) With a dedicated network a whole new range of possibilities open up that can vastly improve UX, if implemented and maintained properly. The downside currently is that it requires deep experience with both crypto and gambling, the talent pool is tiny.
20) 2nd issue - it's basically a coin, & gets wrongly portrayed as competing w/bitcoin. In reality, it brings a mainly new audience into crypto & gets the btc-to-fiat bettors more active in everything from on-chain betting to running nodes to governance.
21) Before I get into the other 2 types, I'll explain prediction markets like Augur. They will likely never catch on, people simply want to know the odds that they'll get. I suppose they have their uses, but they're limited and the upside isn't good.
22) Sportsbooks! You're betting against a house who price it in on their odds. Winners hurt their bottom line so the small % who do are usually restricted to a few dollars per bet, if not restricted entirely. Opposite for big losers, neither are ethical.
23) Lastly, betting exchanges. P2P, so the house takes a small % of the winning portion of the bet. Much more ethical, but extremely hard to get a critical mass of betting liquidity to sustain itself. Also incentive to convert to a sportsbook for more $.
24) I mention it specifically since it actually happened with a major betting exchange. So ideally we need a decentralized governance of bettors, or those sympathetic to them. After all, 3x more volume outweighs a 50% reduction in fees. The pie is large.
25) A betting exchange itself just won't do the trick though. Certainly not here in this current climate. It's going to take a wide range of proper incentives and high-quality additions. Just relying on current crypto users is a bit of a zero-sum game.
26) This is about as far as I can go for now, though I plan to tie it all together in due time. I felt I needed to get this out there ASAP though, since there is very little material out there on this subject yet & even a lot of it is misinformation.
27) As always, be wary of those who try to infringe upon our digital freedoms. Keep in mind the average bettor, even a small fee reduction creates a surprisingly larger % of net winning players overall. High fees can be so detrimental to these economies.
28) If someone still believes that it can work on a non-dedicated chain, through a custodial solution, here's what will happen in reality - https://www.sportsbookreview.com/forum/sportsbooks-industry/3557348-fairlay-currently-stealing-my-btc-6-figures.html
And right on cue, we get the largest worldwide gambling merger *by far*...the news broke just a few weeks after this post. We're reaching peak centralization.
https://www.igamingbusiness.com/news/stars-group-and-flutter-entertainment-agree-mega-merger