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Author Topic: Proposal: Trustless No Account Sports Betting Run By Automated Open Source App  (Read 2189 times)
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April 17, 2014, 07:30:59 PM
 #1

Originally from http://bitcoin-betting-guide.com/james-cannings-blog/proposal-trustless-no-account-automated-sports-betting/

The Concept

The operator programs an app to gather data from APIs and feeds to create a home address and an away address for every game in a sports season. Customers send bitcoin to the addresses as bets on the outcomes they represent.The app then gathers the data of who won the event and pays out 99% of the balance of both addresses to anyone who bet into the winning address back to the address the bets came from proportionate to their size. The remaining 1% of bitcoins wagered go to the operator.

This betting model is called pari-mutuel betting or the totalizer also known as the tote. The addresses will need a function to return 99% of any bets that it receives after the start of the game.

The app populates a website with all betting options and calculates the projected odds at all times. All the betting options are public addresses anyone can bet into and receive payouts from so there is no need for accounts and no need for the operator to perform customer’s key management and security. The app can be open source so people can be sure payouts will happen as they should.

The Advantages

This disintermediates the majority of the functions of a fiat sportsbooks, being the creation and settling of betting markets, customer account management, and banking. Leaving only marketing, IT and customer service.

Australia’s biggest totaliser, the TAB, takes about 16% of the pool. The best odds sportsbooks in the world have a 2.5 % edge. Customers of this service would get the best odds in the world and friction free betting with anonymity, no tax reporting, no legal restrictions or ID verification, no banking fees or transaction delays and limits, no betting limits and no limiting of winning bettors.

All betting data would be open and publicly available for customers to see and verify in real time or after the event on the blockchain.

Potential Problems

-Competition
The concept is easily copyable, and undercutable. The operator will need to stay at the cutting edge in marketing and product development.

-Hackers
If hackers caused a loss of customer’s bitcoin or the unavailability of the service the operator will suffer reputational damage. However if all reasonable precautions were taken the operator would not be legally liable for any bitcoins lost as per terms of service.

-Legal
It’s not. There is no way to do KYC/AML or restrict users from certain counties with this model. Nor should anyone want to.

-People want fixed odds
This model would give the best odds in the world on every market overall but not on every selection as the odds are determined by everyone’s else’s bets a user does not know what the odds are until betting has closed. The operator could show indicative odds representing the bets that have been received up to the current point in time but punters would rather have certainty.

This is where a betting exchange comes in but a lot more liquidity is required to run an exchange. This same model could work with fixed odds but they would need to be worse value odds.

That’s my Idea!

Although I thought of this first I was not the first person to think of it first. Most obvious URLs to host this on such as bittote.com are already registered and there are a couple of websites doing something like this out but they are not doing a good job of it yet and so are not getting traction.

So the opportunity to be the first is gone the opportunity to best of bread is there. If it takes off I will be the bitter onlooker complaining that he got Zuckerberged Smiley

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April 17, 2014, 10:13:07 PM
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There is one flaw that might prevent this concept from taking off :

At the beginning, liquidity will be low, and as a result the odds will not be efficient. Those who place the bigger bets will usually end up with much worse odds than they could get in a bookie or betting exchange and those that will bet smaller on the unfavorable side will profit greatly from them.

Sooner or later, arbitrage bettors and bots will kick in right before the start of the event. As a result, the odds will be much more efficient, but it will not solve the problem completely. These last minute bettors will be able to time and size their bets in a way that will favor them by getting above market average odds. Eventually, they will win all the money from those who bet earlier in the dark without any clear estimate or indication of the final odds.

The current model that is applied by bookies and betting exchanges is better because you are getting fixed and efficient odds that are determined based on world wide betting in opposed to betting on just one site. Yes, their fees are higher, but in the long run you will lose more by betting in the dark without knowing the odds to the bots that will place the final bets.

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April 18, 2014, 02:37:43 AM
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Everyone who bets on the same selection gets the same odds no matter when they bet.

The arbers are exactly what will make the odds in line with market consensus only better because of the lower take.

You will make more money betting against a 1% edge than you would against a 2.5% edge.

However what you say is indeed a problem, not because its correct (its not) but because a lot of people will think it is correct or they don't particularly care but they prefer fixed odds.


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April 18, 2014, 06:09:58 AM
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Everyone who bets on the same selection gets the same odds no matter when they bet.

That's true, but the point is that those who place the final bets will have an edge over those who place bets earlier because they will be able to better estimate the final odds and take the bet only when the odds are better than they should or skip it otherwise. As a result, in the long run, they will win it all at the expense of those who bet earlier.

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April 18, 2014, 03:07:35 PM
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Sounds like a good reason to be a customer of this model hahaha Smiley

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