iGaming Business magazine iGB 112 Sept/Oct 2018 | Page 84

Feature
FunFair’s business strategy and marketing consultant Stefan Kovach
argues that, while the casino can’t claim to function on a totally
trustless, or decentralised, basis, it is closer to that end of the spectrum
than conventional casinos.
A completely trustless ecosystem removes any middlemen within
whom trust has to be placed to make a transaction. In the case of
blockchain, it means that crytocurrency can be passed from one
individual directly to another, without any banking or transactional
intermediaries at all.
“As a provider, we
promise that every
spin of a wheel or roll of a die is fair
and you have a ‘provably fair’ button”
FunFair isn’t able to operate as completely trustless, but the
casino’s ethos is that by operating on a blockchain they can make
all transactions ‘provably fair’ and in doing so build their players’
confidence in the brand.
“As a provider, we promise that every spin of a wheel or roll of
a die is fair and you have a ‘provably fair’ button,” says Kovach.
“It’s a bit like Intel in that no one really knows how a processor
works but you know it makes your computer a bit quicker and
you’re happy to spend £300 more on it”.
As a first mover in the crypto casino market, FunFair may
succeed in creating brand loyalty through its crypto USP.
Kovach says many of the casino’s ‘community’ are early crypto
investors themselves; they are blockchain natives. It is harder
to know at this stage whether crypto in and of itself will have
mass appeal.
On top of that, if truly taking the middleman out of the picture
is what modern punters are looking for, then being only partially
trustless seems at odds with the concept. But some tech companies
are working on ways to do it.
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iGamingBusiness | Issue 112 | September/October 2018
Professor of health and life sciences at Surrey School of Law
Ryan Abbott highlighted the opportunities for entirely trustless
gambling in his presentation at iGB Live! in July. Abbott suggested
that decentralised prediction markets (DPM) could be the future for
igaming. “Instead of going to William Hill and betting on the outcome
of the World Cup, you find another bettor or gamer and make the bet
directly with them on the blockchain,” he explains.
Unlike existing prediction markets, which have been in operation
for some time, DPM removes the middleman or trusted intermediary
completely and makes the process totally peer-to-peer.
Abbott outlines several benefits to this model: no single entity
governs the market, all transactions are transparent on a blockchain,
and anybody can participate pseudonymously to either open a new
market or place bets in an existing one.
These may be benefits for the punter, but for operators used to
acting as that middleman, this model is arguably less ideal.
Tech companies and suppliers, however, may have an opportunity.
Abbott namechecks three businesses looking to occupy this space.
Hivemind uses bitcoin for its DPM and is currently in the R&D
stage, while Augur, which launched this summer, and Gnosis are
doing the same thing with ethereum. There is the potential for
bitcoin to be used later on both platforms.
Abbott says all three are examples of how distributed ledgers can
fundamentally alter a gambling offering. And while operators may not
be involved in the transactional side of betting on DPMs, Abbott points
out that “traditional gaming companies would use them to hedge bets
and to predict markets”.
He is clear that this technology could pose both opportunities and
threats to the existing industry and suggests now is the time to shape
the future of DPMs or even obstruct them if necessary.
“Regulators may be receptive to cries of foul play – in the name of
consumer protection, and protection of a tax paying industry,” he says.
Ultimately DPMs’ arrival on the scene could place more pressure
on operators to distinguish themselves through more imaginative
and innovative offerings. They will need to exceed a peer-to-peer
gambling experience. Just adding crypto to their offering may
not be enough.