Esports arena: Taking the chance out of esports betting (security)

Esports viewership has skyrocketed in popularity over the past decade, with over 496 million people watching both online and in-person. With this has also come a rise in esports betting; 8.5% of UK adults have placed a bet on esports, and the gross gaming revenue (GGR) – which tracked at $343m for 2020 – is projected to surpass $862m by 2024. This kind of growth is great for the industry, but it does come with some concerns. The problem of match-fixing in the industry means that the legitimacy of esports betting is being called into question. Secondly, esports’ rapid growth means that betting has been hard to regulate, meaning there is concern around the legitimacy of bets themselves.

As a result, betting providers are being driven to innovate and explore emerging technology. One such technology is blockchain. Blockchain’s transparent and secure nature means that it can help secure and regulate esports betting. To help the esports industry – and in turn, esports betting – deal with its issues, innovative technologies like blockchain play a huge role.

Securing bets

Match-fixing has been a problem in esports for some time and continues to plague the industry, as we saw with the FBI probe into match-fixing and illegal betting in Counter-Strike matches. As a young industry, esports is vulnerable to this exploitation. Managers can pressure or bribe players to lose matches, or they can fix a match’s outcome. This in turn affects betting, with individuals fixing matches to ensure collection on certain bets. This is a serious problem tainting the integrity of the industry and can dissuade potential viewers or gamblers from getting involved.

Blockchain can help to legitimise the industry, and prevent match-fixing. The main way matches are fixed in the industry is by managers pressuring their players to throw matches, which strips players of their autonomy. Blockchain can address this by giving autonomy back to players. The technology cuts out the need for intermediaries, as smart contracts can be executed automatically as transactions on the blockchain without the need to involve intermediaries, or additional third parties. Examples of these contracts include the distribution of prize money, rights licensing, player/team contracts and more. The lack of intermediaries gives players back autonomy, allows them to get better visibility of their contracts, making them less reliant on managers, which in turn helps to mitigate the risk of players being pressured into match-fixing.

Provably-fair betting is also possible with blockchain. By providing a permanent record of verifiable and unchangeable transactions on a transparent digital ledger, blockchain lets users  demonstrate a fair system for both placing and claiming bets, and reduces the risk of fraud. Any irregular transactions would immediately be spotted due to blockchain’s transparent nature, where everyone on the blockchain has a copy of the transactions. The blockchain is also updated as events happen, meaning bettors can verify that betting has been fair in real-time and hasn’t been manipulated by the casino or a bookmaker. Similarly, with blockchain no one party is in control of the data on the chain, and thus, are unable to change or overwrite the data. This means that betting is provably-fair, while the cryptographic and decentralised nature of the technology ensures that data is immutable and safe from manipulation.

Smart contracts

Blockchain-based smart contracts are another way that esports betting can be secured, helping to prevent fraud. These smart contracts, which can programme payments to execute automatically upon the completion of pre-defined terms, mean that transactions become transparent, automatic and free from tampering. This essentially means that any bets made can happen without the risk of manipulation. With payments automated to occur at the execution of terms, there’s no chance for bookmakers or malicious actors tampering at the point of payment, which means that payouts become more secure.

The automation that comes with smart contacts also means that betting companies can automate a number of processes, removing the need for intermediaries to authenticate transactions. This creates a more efficient and secure system where fewer people are involved in the transactions. This is important for minimising betting fraud. With fewer people involved, there are markedly fewer opportunities for bad actors to tamper with the process, adding an extra layer of security for gamblers. Not only this, but smart contracts also reduce the costs incurred through intermediaries, making esports betting more efficient overall.

As the esports industry continues to grow, esports betting will continue to grow alongside it. Although there may always be those who wish to tamper with bets and fix matches, the industry can turn to innovative technologies like blockchain to help secure not only matches but bets too. Blockchain’s transparent nature and its support of smart contracts can add an extra layer of security to esports betting, making it provably-fair, and thereby helping to make the process safer and fairer for everyone.

Lars Rensing is CEO and co-founder of enterprise blockchain services provider Protokol. He has more than four years’ experience in the blockchain industry, helping to lead and co-found Ark; the open-source blockchain platform which underpins Protokol’s blockchain services. He is passionate about helping everyone from start-ups to enterprises unlock the opportunities of blockchain technology for their business, and as a result currently also serves as an adviser for a number of start-ups leveraging blockchain technology. He leads the overall strategy and direction for Protokol, which is helping businesses across the world solve real challenges though custom blockchain solutions.