The first record of sports betting dates back to more than 2,000 years ago. Betting on the ancient Olympics was where it started. Fast forward to the 20th century betting moved to casinos In Las Vegas in the 50s and then widely throughout the world with tens of thousands of betting shops. The true catalyst though was the internet which made betting possible anytime, anywhere. Today about 2.5bln people worldwide place bets on sporting events, which is >50% of adult population. In 2019 the industry was estimated at $262bln and annual growth continues at >11%.
Despite its spectacular size and explosive growth today’s betting industry is plagued by lack of transparency & trust. The fundamental problem that the player and the operator (bookmaker) are adversaries takes various negative shapes. Very similar to the “Lemons Market” problem with the second hand automobile industry in the US in 1980’s described by Nobel Prize winner George Ackerlof (that almost destroyed the industry), the lack of trust is a problem for betting which inhibits its growth, even as impressive as it is.
Bookmakers stand on one side setting odds, providing liquidity for bets and handling players’ money. On the other side are players betting on the listed events. Their gain is the bookmakers’ loss and vice versa. Limiting or stopping successful players’ accounts is an industry standard, while declining pay-outs & incorrect odds are common. Disputes between players and bookmakers are broadly decided upon by the bookmaker.
However, bookmakers themselves also suffer from issues like liquidity limitations (having to deal with liquidity in-house for each event), costly payments (commissions on deposits can go as high as 10%) and KYC problems.
Various blockchain solutions
Each bet is a contract between the player and the bookmaker. Using smart contracts to handle betting is an obvious choice. And there are already various projects which approach the problem from different angles.
One sub-sector is prediction markets which take a very broad brush at betting. The benefits of prediction market protocols are that there is absolute freedom in creating events, but that comes at a cost. Most prediction markets’ odds change retroactively which means a bettor cannot determine their risk/reward. More, odds are represented as token/share prices and the overall UX is alien to a regular sportsbettor.
Then there’s p2p betting protocols which match bettors with each other, or in groups. The UX is closer to what bettors would expect, and odds are clear (they don’t change retroactively), but the technological solution of matching bettors leads to low liquidity on events and poor odds.
A third group is centralized bookmakers accepting cryptocurrency, but there’s no novel solution there as crypto is simply a payment method.
All in all — blockchain and smart contracts are already showing great potential for delivering decentralized betting experiences, but the real utility for mainstream bettors is very limited due to the fore-mentioned issues with prediction markets & p2p betting platforms.
Azuro — the solution
Here’s comes Azuro — a decentralized betting protocol with DAO governance, to become the base infrastructure of betting dApps in the future. Azuro’s solution revolves around two important new pillars — importing odds & results via oracles, and utilizing 1 main liquidity pool, from where liquidity is allocated to different events based on popularity.
Importing odds via oracles allows for competitive initial odds for events, in line with general betting expectations. The odds for each bet are clear (there is no change for the bettor retroactively), and the odds do fluctuate as more bets are made to protect liquidity providers.
Liquidity can be added by anyone, and is not event-specific which ensures more events get ample liquidity and allows for safe profitability for the liquidity providers over time.
Last but not least — the experience for Azuro’s users is tailored to sportsbetting and is natural to any bettor in the world.
Then, comparing with traditional bookmakers — Azuro’s solution introduces full transparency, and allows for bettors money to stay with bettors, as transactions are handled via crypto-wallets. There is no risk of declined payouts, or limitations of accounts.
In delivering this experience to bettors, Azuro also breaks down the role of the bookmaker into smaller bits, democratizing the business of betting as a whole. Liquidity is decentralized and can be added by anyone. Odds & event results are imported via oracles. Anyone (approved by the DAO) can build their own front-end and utilize the odds, liquidity and settlement of the protocol.
Betting can be transparent, fair, fun & responsible.
The business of betting can be inclusive, sharing more value with the community: