We’ve explained in detail already why we think gambling today is flawed.
There is a fundamental conflict of interests, pulling in opposite directions – with the house looking to maximise profit, and the players seeking a true gamble – with a fair chance of winning. However, because the house sets the rules, gambling offerings remain a universally player-disadvantaged scheme, openly rigged so the house always wins.
But if gambling (in all forms) is part of the human condition, then surely there’s a better way to *truly* gamble value, a way to satiate that hard-wired risk/reward tickle without the house edge exploiting this in a perpetual fleecing racket ?
This is the question we asked ourselves, as engineers, designers, mathematicians and gamblers – can we imagine a better way to gamble ?
Clearly, we ruminated, in a perfect gambling world the thorn of the house edge would have to go. There is simply no place for it, constantly siphoning player funds out of the ecosystem. With no house edge then, there is no incentive for a house to belong in this gambling-perfect ecosystem – so away with the house.
Without the house and its edge, we can imagine gambling games of chance with a true, 100% return, even-money, perfectly fair chance of winning.
But the house performs some fundamentally important functions and services, right ? Without a house in the picture, who will perform these functions ?
The easy and short answer is: the players. After all, they’re all that’s left in this house-less ecosystem!
Now, it turns out that we weren’t just smoking something a bit too strong when we came up with this. It actually isn’t as ridiculous as it sounds for the players themselves to power the entire gambling ecosystem. We happen to live in an age where the perfect storm of technologies now exist to make all of this possible – blockchain, cryptocurrency, and strong cryptographic principles such as Provably Fair.
Let’s examine all of these important functions in a gambling ecosystem, and consider how they might be fulfilled by a player community that has ejected the house:
Fairness: Fairness in the games of chance in the old world was enforced by auditors, regulatory authorities, testing and accreditation laboratories and a bevy of other bean-counting suits each commanding a a fat fee (paid for from the house edge). In the new world we imagine using technology and mathematical principles that are already widely known and in use today. Cryptography can give us Provably Fair games – where it can be mathematically shown that games are perfectly random, tamper-proof, and thus can be proved to be fair. Let technology and mathematics enforce fairness – a perfect system not foul to the human error or influence risks that are present in the old ways. And achieved at zero cost without the army of human checks and balances to pay.
Handling Money: the house handles all the money coming in from players, and going out to the against-the-odds lucky few who win. There’s cash to handle, electronic payment management (credit/debit cards, bank transfers, wires), cheques and so on. Well, to replace that we have cryptocurrency for exchange, blockchain and smart contracts for execution. And all possible at a fraction of the cost, and with almost no human intervention or cost.
House Stakes: when players win big and want to cash out, the house has to cough up from its own stake. This is traditionally done from a small portion of the big pile of cash the house has fleeced of all the other players. For really big wins, typically jackpots, the house sometimes has an insurance policy in place.
However, in a truly 100%-return player-only ecosystem, there is no accumulating pool from the (0%) house edge. While the statistical expectation over the long term is for all games to be 100% return, the reality is that at any given moment that could be greater than 100% (when somebody wins big). For the staking of >100% wins to be done by the players themselves, on an opt-in peer insurance model that earns the staking players the insurance premium could actually work fantastically well – earning players a predictable return on what they stake. More on this later (spoiler alert – it’s brilliant!)
Infrastructure: Internet-based gaming systems (which is essentially where we are going here) need big secure data-centres, lots of servers, networking equipment and storage – right ? All of which takes a major upfront investment from the house. That’s old-world thinking. In the new world we have the cloud, IaaS (Infrastructure as a Service), PaaS (Platform as a Service), SaaS (Software as a Service) and all-encompassing XaaS (Anything/Everything as a Service). On-demand, pay-as-you-go resources provisioned just in time and scaled to demand. No upfront investment. No need for the house.
Engineering and Development: but someone’s got to build all of these great gambling games, right ? And keep them running, improve them over time, make more and better games ? Again, since we’ve only got the players left in this house-less ecosystem, it falls to the players to build the games we want. The open-source bounty model here is an excellent example of how well this can work, as a self-regulating engine the economics of which are perfectly aligned with the wants and value placed on features by it’s users. Bounties for engineering features can be funded by donations from non-engineering players.
A quick word on donations – to run this house-less gambling ecosystem, players ought to be able to donate either their effort (volunteering, performing important tasks to keep the ecosystem running) or their money (in order to pay for the necessities they might not be able to volunteer). The choice of which to donate, and how, is left to each individual player. This will ultimately be self-regulating as well – not enough donations of effort or money, and the ecosystem stagnates and grinds to a halt – indication enough that the players don’t find value in the system worthy of contribution. A good stream of donations and the system flourishes and grows, benefiting all players within.
Marketing: another big black hole that the house edge funds. But what is marketing really , if not just getting word to people who might enjoy and benefit from the product ? Word of mouth could replace big-spending Superbowl ads here, with the community themselves spreading the word. After all, if the product is truly better than the flawed options that exist now, it should be natural and expected that awareness will propagate, driven by the community powering and enjoying it.
Helpdesk and Support: sometimes things just go wrong, or you need the help of another human being to understand or help fix a problem. Community support through forums and other social platforms could fulfil this service, with those community members contributing by helping others rewarded from the donations/bounty pool as well.
So… there we have it – the seeds were truly sown. This might just work. Certainly, we weren’t coming up on any aspects of the ecosystem that couldn’t be powered (often with better results) by the player community instead of the house.
And thus was born…. 8Bet.io. Power to the Players!