How does the current online casino industry work? A new start-up, Sp8de seems to think that a lot of improvements can be made using the blockchain technology and is here to fix it.

The casino industry is a  wellspring of degeneration. Casinos operate in emotional manipulation: making you think you will win it all on the role of the dice, only to have you slinking back to the ATM and sliding deeper into debt. But the thrill— the hope, the potential— is too tempting for many, especially in times of hardship when one is down on their luck. (In fact, casinos “thrive amid economic misery.”) This human urge for the highly unlikely but still (infinitesimally) possible chance at big fortune coerces 1.6 billion people a year into the eerily timeless and overstimulating venues. In our digitized world, the new(er) breed of online casinos allows people to forego the other tempting entrapments (alcohol, live music, small talk with the dealer, more alcohol) of the traditional gambling funhouse for the comfort of their screens. The essential thrill is still there, and there are seemingly limitless venues to forfeit your cash. You can travel to Macau from your touch-screen!

But one thing that the online gambling industry lacks (and this might not come as a surprise) is trust.

In a dark irony, the place you can trust least with your money depends on your trust to make their own, and so the gyre turns. Unlike their land counterparts— where you can see the roulette ball spin, the cards being shuffled— online casinos rely on a random-number generator (RNG) to create the same odds. But can it be trusted?

While competitors in the online gambling industry might be quick to point fingers, the general consensus is that this is certifiably false. Believing that the system is rigged against you is an attractive thought when the cards don’t fall your way, but casinos are, at their core, businesses that need their customers to feel safe and protected in order to turn a profit. Part of the reason players may believe that the games are “rigged” is because of the house edge— a mathematical advantage in the game that guarantees the casino will come out ahead in the long-run. The house edge is the percentage made by the casino out of the total wager.

Take, for example, a slot machine: if the house edge is 12%, the player will be paid back 88% if they win with the casino keeping the remainder. Theoretically, the casino would make a profit of $12 out of every $100 put into the machine. Or, if you bet $1 on a roulette, you will get back 95 cents back if you win, and lose it all otherwise. This means the house edge is about 5%.  (The house edge doesn’t apply resolutely to games where there is some skill involved, like blackjack or poker, because optimal play can negatively affect the casinos’ chances and increase yours.)  Although there is a perception that online casinos have a higher house edge, this is also false— online and offline games have the same house edge. And, in certain games like online keno, the house edge can drop as low as 10% compared to 25% at a live casino.  

So the simple answer is no, online casinos are not rigged. Like any online industry, there are instances of scam and fraud, but these are few and far between. (To avoid falling into these schemes, be sure that the online casino is licensed and has not had its credentials revoked.) But while the online gambling industry is mostly above the books, it can still benefit from increased transparency. The world’s most talked about technology— blockchain— is entering the industry to provide just that.

Blockchain, the immutable decentralized ledger, is coming in handy once again. Incorporating this new software into online casinos will have many benefits, including increased transparency, smaller fees and instant deposit times. Blockchain startups like Sp8de are ready to make these benefits a reality. The group recognizes that because a blockchain is decentralized, no single user can alter any data, making it nearly impossible for anyone— casinos or users— to cheat the system. This will help to eliminate any outlying instances of fraud and bind customers and the casino in a mutual trust. Further, instead of trusting the casinos to issue a fair lottery or a logical gameplay, smart contracts can be programmed with algorithms that ensure fairness for all— and they can be instantly viewed by players. So, for anyone who doubts the provable fairness of online gambling, playing with Sp8de is the safest bet. Provable fairness will likely be a massive money maker for the entire online gambling industry, as doubters will be put at peace, and more players will be brought into the fold. Sp8de also plans to use programmable smart contracts with the cryptocurrency Cardano to make game logic transparent and accessible in real time. Similarly, random-number generation (the source of much skepticism online) will be clearly viewable, allowing players to verify fairness for themselves— and not, as the current system dictates, rely on regulators to do the same. Finally, the efficiency of blockchain will help expedite prize distributions. In the same way, this new technology is reshaping the financial services sector, blockchain will allow online casinos to pay players near-instantly, without relying on any third parties (like banks or credit cards) or inducing any additional fees. Some online casinos hold money for up to three days while bets are being settled and verified— with Sp8de, and new blockchain-based online casinos, this will become seconds. Further, any requirement for an intermediary operator to access participants money, record bets and payout winnings is eliminated, as this can be done entirely through smart contracts.

Through its ability to completely reveal the mechanism of randomness in online gambling, blockchain seems like a sure bet for both casinos and their customers. While there may be some regulatory challenges to come (in a decentralized system, who has jurisdiction over casino licensing?), blockchain seems to be as relevant and productive a technology for this industry as it has been for so many others. Companies like Sp8de are ready to obliviate the skeptics’ perception of online gambling as a shadowy place where the casino always cleans up a house, creating a better environment for players to try their luck. Although everything online these days appears to be a gamble, Sp8de and others are placing their bets on the blockchain, and it could just be this industry’s ace.