There Are Deep Trust Issues in Online Gambling - Does Blockchain Promise a Solution?

Given the growing online gaming industry and the issues which still plague it, author Aubrey Hansen discusses whether blockchain can be a solution.

Gambling is possibly one of the best-regulated industries out there. Frankly speaking, there should be little cause for players to worry. There have been isolated incidents, such as Absolute Poker stealing up to $1 million from its players over ten years ago, but such high profile cases are few and far between.

So why is it that trust is so hard to come by? A British Gambling Commission study on gambling behaviors found that two-thirds of respondents do not think that gambling is fair and can be trusted, with 41% thinking that gambling is associated with criminal activity.

This is quite clearly a perception issue that is not helped by the fact that people cannot see the inner workings of a gambling website. In fact, Absolute Poker’s scam was only revealed following a community effort and some major slip ups by the cheating parties.

With real money on the line, users expect trust and security to be of paramount importance for the gaming operators.

Absolute Fraud

In 2007, AbsolutePoker hosted a tournament carrying a first prize of $30k. They had held many similar competitions of this kind in the past so there was no real pretext for suspicion or alarm.

But, after losing to what he considered to be unusual gameplay, 21-year-old runner up Marco Johnson decided to contact AbsolutePoker for the precise details of his hand history.

What Marco got instead shocked him: whether in error or from a whistleblower, he received an email detailing every single hand played at the tournament, along with all participants logged into each table. Looking into the data further revealed that the player who won the tournament showed consistently irrational play.

This was no smoking gun, but the document also included player email addresses as well as IP addresses. The suspect player, Potripper, could be seen to win big at each table alongside the presence of User #363—a player who was invisible to all others at the table. Potripper in fact barely ever folded a hand while #363 was present at the table.

The findings after this were even more shocking; the IP address of #363 pointed directly to Kahnawak Gaming Commission, where AbsolutePoker’s servers were hosted. Some estimates place the cost of insider rigging from the company as high as $1,000,000 and they were ordered to refund $1.6 million to customers.

So How Can Blockchain Foster Trust?

A central feature of blockchain technology is that trust is built into the system due to the transparency of the confirmations based on the distributed ledger system.

User #363 in AbsolutePoker’s tournament clearly had insider access to a degree where they could see each player’s cards. Decentralization is an effective solution as it means that all of the game’s functions would have to be verified by users themselves.

It would in essence remove the theoretical ability of game operators and admins to use back-end gaming mechanisms to advantage themselves. As highlighted already, this is more unlikely in today’s climate, but removing all doubt would make the world of difference to the wider perception and trust in online gambling.

Clarity is key to more trustworthy online gambling platforms and that can be offered on blockchain.

Who Is Developing Online Gaming on Blockchain?

Major potential in the burgeoning technology for online gambling has not gone unnoticed in the startup world and several have popped up with proposals for casino-related platforms on blockchain.

One of these is Zeroedge, which offers a 0% house edge system that exclusively uses their own cryptocurrency, Zerocoin. The concept hinges on users buying the platform’s native crypto tokens and then playing casino games; it’s a nice idea, but it seems to place the burden of risk on players who may see their funds fluctuate in value as they are locked into using Zerocoins for their gambling.

Qlear Protocol is a more general blockchain gaming platform which aims to create trust in any online gaming environment. This extends naturally to casino games, but they also bill themselves as a solution for online eSports tournaments. This seems good—Qlear appear much more focused on allowing developers to very easily integrate these trust functions than on any lofty concepts.

Funfair meanwhile want to develop a sort of open casino platform whereby licensees can pay to set up their casino on the blockchain-based network. Similarly to Zeroedge, they exclusively use a native token (FUN), but their business model seems more plausible due to the fact that other revenue streams are coming from various fees on the platform. Crucially, they do not seek to solely rely on the value of their cryptocurrency.

Online Gambling Could Be Transformed Forever

The gambling industry is crying out for change as general user trust continues to falter. New games and ways to play online are also coming into the fray which makes it vital that the wider player base is able to trust in the platform that they choose.

Blockchain technology offers a comprehensive solution and, should this be effectively implemented, for the first time ever trust in online gambling might actually be beyond question.

This must be the ideal for online gambling; it should be the most trustworthy process possible, and with blockchain this may just be about to become a reality.

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