Can Blockchain Really Help Regulate Online Gambling?

Date Created: Nov 20
Written by Jerico

The past decade has seen the gambling industry go through a whole lot of changes, ranging from the introduction of 3D slots to mobile compatibility of games all the way to live dealer gaming.

But in spite of all these new bells and whistles, the online gambling industry has, by and large, remained the same in that gambling websites run privately and the information related to the results is kept restricted. Simply put, players do not have access to the internal side of the results, forcing them to place their faith in casino and poker websites to deliver fair gaming.

The entry of blockchain technology into the equation, however, can change all that, and potentially turn the industry on its head in the years to come. Just how would it be able to do that? Keep on reading below why blockchain can be such a game-changer in regulating what was once such a one-sided industry.

What is the Online Gambling Industry Like Today?

Gaming websites often license software packages from a provider. These packages include most or all of the following:

  • Platform – Lets the site to manage their operation internally.
  • Games – The games/bets that are being offered by a casino, poker, daily fantasy sports (DFS), or sports betting operation.
  • Front-end – The external product that clients see when they visit.
  • Payment system – Manages the system of payment options (for example Visa, PayPal) that players utilize to deposit or withdraw money.
  • Affiliate program – Manages the program that’s used to monitor affiliates and their commissions.
  • Licensing – Some software providers even set up licensing for their clients.

As you can clearly see, none of these elements have an option that allows players to verify bets. All operational matters are just between the betting site and the software provider.

As it is, gamblers and players have always had this innate fear of being deceived because of the nature of how gaming sites function. These firms operate privately and do not have to share results and other kinds of information with their clients. This kind of system can make losing gamblers very suspicious and believe that they’re being cheated. However, third-party auditors do provide some assurance that players are being treated fair and square.

An auditor tests games and software to make sure that fair gaming is being conducted. For example, these labs test online casinos to guarantee that their random number generators (RNGs) are functioning properly. Gaming Laboratories International, eCOGRA, and iTech Labs are just some of the primary and most trusted auditors in the industry. These trusted names act as impartial third parties to guarantee that gambling sites operate fairly.

Particular jurisdictions mandate that their licensees go through extensive auditing. The UK Gambling Commission (UKGC), for example, necessitates operators to have their software tested on a consistent basis. Other gaming sites just choose to undergo audits to give players the assurance that they’re operating fairly. They can even put an auditor’s trust seal on display as proof of their fairness and impartiality.

This system has helped relieve players’ fears of being tricked or cheated. However, the skepticism has still remained amongst gamers, especially when they suffer prolonged losing streaks and are left looking for answers that unfortunately, they would never ever get until another system is put in place. That system could quite possibly be, blockchain technology.

What is Blockchain Technology?

Blockchain keeps information across a network of computers. Anybody linked to the network can both utilize and help run it. A public blockchain gives everyone the chance to see information as it moves across the network. A private blockchain, however, only allows parties that have been given an invitation to participate.

Public blockchains are totally decentralized, which means there is no one person or entity that controls the network. Decentralized gaming sites utilize public blockchain for account registrations and verifying bets.

Blockchain makes use of cryptography to virtually ensure that records can’t be counterfeited or changed. This feature paves the way for trust to be developed in such a setting given that with this kind of technology, it would definitely be impossible to modify financial transactions, bets, or anything else that is on a network.

What Advantages Does Blockchain Have to Offer to Online Gambling?

Blockchain has become a really contentious topic that has been discussed and argued over by a lot of people from different kinds of industries in the last couple of years. The rise of Bitcoin and other cryptocurrencies has tilted attention to their underlying blockchain.

But just how crucial would having this technology be to the gaming industry? Take a look at the list of advantages the gaming industry could possibly glean from using blockchain technology:

1) Lets Players Verify Bets

“Probably fair” casinos, which gives players the chance to verify bets, are becoming the norm in the gaming industry. Probably fair operations demonstrate the power of blockchain. A player would no longer be forced to lean on third-party auditing to guarantee fair gaming. They can do it themselves.

The one issue, though, is that this verification process won’t initially feel natural. A gambler must go through a number of steps to verify wagers. However, a lot of players would appreciate that they would now have the option to manually check bets compared to the traditional gaming world where gamblers have no means or methods to go about doing this.

2) Inspire Trust in Sites

Online gaming sites either have a house edge (like that of casinos) or take a cut of the action (like poker & sports betting). This is one way that they can stay profitable. The house edge or cut really isn’t very large. For example, online blackjack usually has less than a 1% house advantage. Internet slots feature a larger house edge that usually goes from 3% to 5%. But most players would agree that this figure isn’t dreadful on a per-bet basis.

Nevertheless, it’s hard to rule out the thought that casinos are tricking you during a long losing streak. You may have extended periods where the losses keep on coming, which leads to suspicions about the gambling site.

Fair sites, however, completely put this notion to rest. You’ll be hard-pressed to even consider that a casino or poker site is cheating you when it’s possible to evaluate every wager. Verifying wagers through the blockchain isn’t easy. However, gaming sites would be crazy to cheat when anybody can check a bet for themselves.

3) Peer to Peer Transactions

A lot of countries have enacted online gambling laws in the last 10-15 years. Some of these rules and regulations have established legal internet gaming settings. Other legislation, such as the United States’ Unlawful Internet Gambling Enforcement Act (UIGEA), is geared to hinder the activity. The UIGEA keeps American financial organizations from accepting unregulated online gaming transactions.

This law hasn’t totally put a stop to Internet gambling in the United States. Some sites have found ways around the UIGEA to keep on serving American clients. But it has pushed a number of quality operators out. Blockchain offers a distinct way around such off-putting laws.

Bitcoin users make transactions with the help of miners. The miners can’t see or judge the nature of a transaction. They merely complete computational puzzles to facilitate transactions and earn a small fee for themselves. Only the two parties exchanging Bitcoin (or any kind of cryptocurrency) know what the payment is for.

Compare this to banks, credit card companies, and eWallets. Each of these financial intermediaries can intercede in transactions at any time. The existing financial system makes it extremely difficult for people to gamble online in particular countries. A lot of credit card companies actually deny or reject Americans’ deposits at gaming sites.

However, cryptocurrencies would not encounter such problems. These virtual currencies can be used at any site without third-party judgment.

4) Low Transaction Fees

When making deposits with any kind of financial instrument, you are required to pay fees. Some banks and credit cards tack on extra-large fees for Internet gambling transactions. Again, Bitcoin and other crypto do not discriminate. Miners don’t need large fees just because you’re depositing at a gambling portal.

Of course, cryptocurrencies have encountered issues in the past with shifting costs. At one such point, Bitcoin transaction fees went as high $55 during the crypto bull run of 2017. But cryptocurrencies and blockchain are nascent technologies. Developers continue to tinker with them in the hopes of improving them so that they would work more efficiently.

Bitcoin has undergone a “Lightning Network” upgrade since the market’s last bull run. The network now runs a lot smoother, making it unlikely that fees would ever get close to $55 again.

Cryptocurrency fees are usually cheaper than traditional payment options. You may deposit hundreds of dollars at a gambling site and only pay a few cents worth of crypto fees. Some currencies like Nano even pledge peer-to-peer transactions without fees. However, “altcoins” like Nano need more adoption before they’re become as reliable or as trusted as Bitcoin.

5) Better RTP

Probably fair casinos deliver higher RTP than conventional online casinos on average. For example, some probably fair slots deliver over 99% payback. These websites don’t have to pay auditors or even acquire licensing in some cases. They can, therefore, afford to deliver higher payout percentages without taking a hit to their bottom line.

Standard Internet casinos only feature really high RTP on rare occasions. Goblin’s Cave, Ugga Bugga, Nemo’s Voyage, and Ooh Aah Dracula are among the only regular online slots with over 99% RTP.

Unfortunately, many probably fair gaming sites are basic in comparison to the rest of the industry. Games such as blackjack, roulette, and slots run on fundamental platforms that look and feel like they are from the 1990s. But the average gaming experience would most likely improve on blockchain-based sides. Eventually, you won’t be able to tell when you’re playing at a probably fair site or a regular one.


The online gaming industry is doing fine as it is. It continues to display and experience year-over-year growth and there are no signs that it would be slowing down any time soon. However, in spite of its steady growth, there remains much to be desired in the trust department especially coming from the players’ side.A lot of gamblers remain very leery about the possibility of being cheated by a casino or poker site.

The current system features third-party auditors. These labs test online casino games and poker rooms to guarantee that their RNGs are running properly. This setup works very well when it comes to an audited site with prestigious licensing. However, not all online gambling markets are so well regulated. Many countries have grey markets. As a matter of fact, some websites don’t have to undergo auditing and prove fair gaming in these jurisdictions.

This is where blockchain came come in as it can allow gamblers to verify bets on their own. Probably fair casinos are already practicing this because they have systems in place that let players authenticate bets. These gaming sites also tend to have higher RTP. These casinos can function without incurring massive overhead costs by not having to pay auditing costs and other expenses. They can pass on the savings through the form of better payback.

Cryptocurrencies, which run on a blockchain, also offer benefits to the industry. Bitcoin and other currencies feature peer-to-peer transactions and lower fees on average. Of course, it’s also very crucial to understand that blockchain won’t immediately turn the industry around. This tech doesn’t automatically make players win, eradicate cheating, or legalize gaming everywhere. Needless to say, blockchain would certainly fill specific needs in online gambling and it could very well be the next big thing in this industry.