This is What Happens in an Online Casino and this is why the Industry Needs Blockchain
Blockchain enthusiast developer and writer. My telegram: ksshilov
Gambling can be traced back to the earliest stages of human civilization, but casinos have only been around since 1638. Is it really necessary to have a casino for us to play against the odds? Which, by the way, are
stacked in the casino’s favor through the built-in advantage called the
“house edge”. All casinos have this biased slant, so is there any way
for us to have a truly fair gaming experience?
For a very long period of time, people just gambled with one another and
there was no “house” to win the majority of the games. Over time,
though, gambling inevitably evolved and left us with three different
categories based on who’s sitting at the table:
- Gambling against friends, family, and strangers.
- Gambling in a casino against the house.
- The newest version of gambling being a combination of the two: gambing against strangers while being regulated by a blockchain.
Casinos are only a blip in the entire history of gambling, so is it possible
for us to return to a time where the player, not the business, always
Online Casinos Join the Game
In order to understand how the future of online gambling can change, we
need to first understand how current online gambling works (a good example to start with: litecoin betting sites
). In that
regard, let’s quickly break down the key principles of an online casino
and how they differ from a physical establishment.
At a brick-and-mortar casino, you’d have to exchange fiat money for
physical chips, whereas at an online casino you have to deposit money.
The casino will hold onto your money until you either lose it or you are
done gambling. There are often huge incentive bonuses to deposit more
money (more money = higher bonus), and deposits are typically not easily reversible
(like they would be at a physical casino).
Place a bet
This is the main way that online casinos differ from their physical
counterparts. In the real world, the odds are generated and designed
into the game, and the randomness factor is automatic. Imagine spinning a
roulette wheel, dealing shuffled cards, etc. These all have randomness
built into these actions automatically.
There still needs to be a random factor for online casinos to ensure fairness, which is why they rely on what is called a pseudo random number generator
(PRNG). The PRNG uses an algorithm to generate a long stream of numbers that seem random but isn’t truly such, since computers are incapable of generating true random numbers
without external input.
These PRNG’s are used to determine the result of the game (where the roulette stops, what cards are dealt, where the slots end up, etc.), and the
players have to trust that the PRNG was fair.
Since players cannot see a history of the resulting randomly generated
numbers, they have to rely on an external regulator to verify that the
casino is playing fairly. More importantly, the odds aren’t provable.
Online casinos don’t have to prove the results of any specific gamble to their customers, instead they use a regulatory body (of which there are 15+
) to check their software for fair and honest programming. To give you an idea of how well that works out, Casino.org keeps an extensive running list
of online casinos that have been found to be fraudulent in one way or another.
Can we take the House out of the Casino?
The blockchain is definitely well known for its many applications in
attempts to revolutionize various industries, so it was only a matter of
time before blockchain companies aimed their sights at the 50+ billion dollar industry
. Many online casinos started using the blockchain to either process their payments or, in some cases, run smart contracts to lock bets
during events and games. It wasn’t until companies like YOUnited, dgeless, and Funfair came around that they really started to fully harness the power of the blockchain in online gambling.
To understand how exactly the blockchain can help, let’s look at some
specific parts of online gambling where the players could benefit from
more transparency and immutability.
The fact that “the house always wins” is a common English phrase is a prime example of how prevalent losing at casinos actually is. And online
casinos are no different; they still rely on precisely calculated RTP
(return-to-player) formulas to ensure they make money. Remember, casinos are still a business with lots of taxes to pay
. The house edge, which is added to the odds of the house winning, can vary between 3–15% at a typical online casino. This means that instead of you and the house each having a 50/50 chance of winning, you might have a 35% while the house as a 65%.. Blockchain casinos like Edgeless and Funfair have done a decent job reducing this house edge since they have lower overall costs. But what if we could remove the house all together?
The idea of returning to a gambling style where it is simply player vs.
player and a player always wins is definitely exciting. It is also the
driving factor behind YOUnited, a house-less blockchain casino. A house-less casino means that a player always wins, and instead of stacking the odds in its favor, YOUnited splits the winnings among players.
We’ve already seen this working in the sports and event-betting sphere, where Bitbook.ag is allowing individuals to create bets on blockchain against other players, and a player always wins while Bitbook only takes a small cut for their service.
Better Betting Odds
The odds are, of course, one of the most important aspects when it comes to gambling. After all, you probably wouldn’t take on a bet that you had a
99% chance of losing, right? With that in mind, why do customers of
traditional online casinos continually return to a place where the odds
are never in their favor?
True blockchain casinos keep an immutable record of every bet, every
roulette spin, and every randomly generated number that players can look
back through to verify there is nothing suspicious going on. Think of
it like this, would you rather take your car to a mechanic that is
“certified” by a random company, or would you rather take your car to a
mechanic who has video recordings of every repair they have ever done?
After all, a mechanic who is willing to show video recordings of their
repairs to anyone who asks probably has nothing to hide.
In the same way it helps prove the odds, the blockchain is being used to
verify the winnings of gamblers and ensure they are being paid out
accordingly. Since everything is being written onto the chain there can
be no mistakes, and companies can’t claim you won $100 when you really
Payouts, Penalties, and Prices
This pro-player system is of course innovative and fair, but businesses
still need to make money to survive. So how do they do this?
With blockchain-based casinos, such as BitBook and Funfair, where there is
still a house that has a higher chance of winning, the answer is
obvious: the RTP (return-to-player) rate at these casinos is still
favorable for the house, meaning that they will make anywhere between
1–5% of all the money spent and won on the platform.
YOUnited doesn’t have a house to make money for it, so it instead relies on
making slightly less money per customer with the hopes of having more
customers. Overall, their main source of income comes from the
blockchain fees — these are 0,1% transfer fee, and 1% smart contract
execution fee applied to the post-game winnings.
The fee is paid in UNTD coins, their native currency that’s powering their platform and the underlying custom blockchain. YOUnited team will offer an exchange and wallet for customers to buy, sell, and store this currency for convenience.
Gambling needs Blockchain. Period.
When the first casinos were built in 1638 they removed the need for people to trust other people while gambling, and they instead had to trust the house (and that trust cost them a lot of money
). Today, the blockchain has given us a way to remove the house from the equation all together, since this technology can ensure no one cheats.
No matter which way blockchain companies choose to approach online
gambling, the bottom line is that the blockchain brings a certain degree
of trustless trust that the industry desperately needs. Sure, it’s neat
that on YOUnited you can gamble directly against other people, but even
if you are losing to the house on Edgeless at least you know you aren’t
being cheated out of your money. Losing feels bad, but it’s 10 times
worse if you lose because you were cheated.
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