❓FAQ
What's wrong with the sportsbook/bookmaker model?
If you’ve consumed any type of media in the past year, it’s highly unlikely that you have been able to avoid the plague that is sports betting advertising. Everyone and their grandmother is trying to become a bookie, but few are addressing the underlying issue associated with the bookmaker model. When users bet at a sportsbook or through a bookmaker, they are implicitly agreeing to pay something called the vig, or the edge that the house bakes into the odds to ensure that they always win in the long run. While baking in fees to the betting odds is not an inherently bad thing to do, it does create a fundamental conflict of interest between the sportsbook and its users. It can be put quite simply: sportsbooks win when their users lose. What happens when a sharp bettor comes along and starts winning bets at a consistent rate? The sportsbook limits them and if the ‘problem’ continues, they bring out the banhammer.
What are further implications of these misaligned incentivizes?
The aforementioned conflict of interest is further highlighted by the not-uncommon breaches of trust that are regularly seen from centralized sportsbooks. When the house is your direct counterparty, they are incentivized to add tricky maneuvers and fine print that allows them to be the sole arbiter of truth when it comes to any dispute over settlement of a bet. Even the biggest names in the space like Fanduel and ESPN Bets are engaged in these less-than-transparent tactics and often find themselves under fire on social media for not honoring bets displayed on their platform.The other aspect of trust associated with centralized platforms generally is trusted custody of user funds. Betting at a sportsbook or centralized sports betting exchange mandates that you place your trust in a third party, where your funds are beholden to their judgements. While users are accustomed to centralized escrow models in the Web2 world, cautionary tales like FTX highlight the need for decentralized alternatives, where users custody their own funds and interact only with permissionless smart contracts.
How does Bookies solve these issues?
Bookies is a peer-to-peer sports betting exchange built on a permissionless blockchain in order to tackle the aforementioned shortcomings associated with centralized platforms. Bookies is kind of like the stock exchange but for sports betting where users can place bids and ask on odds of a game. If you think about an orderbook, where bids and asks exist at different price points that converge on the market value, Bookies does the same with betting odds.
The exchange model aligns incentives between the platform and the users, rather than a traditional sportsbook that solely acts as users counterparty and wants users to lose. By eliminating the house, this model will drive a competitive market that will cut into the betting costs which will lead to users winning more per dollar compared to a traditional sportsbook. Furthermore, because of the aligned incentives, we can provide tools to help users win more, including but not limited to a sports betting AI chatbot, advanced analytics, and access to predictions from experts in the industry.
How can you assure trustless settlement of bets?
Bookies leverages UMA Protocol's optimistic oracles, which facilitates the connection between on-chain smart contracts (eg. a bet on Bookies) and arbitrary off-chain data (eg. the score of a sports game). Using this architecture, all bets on our platform are settled permissionlessly. If a user feels that the outcome of a certain event is incorrect, they can dispute the proposed result and an independent third party (UMA stakers) will resolve the dispute to the best of their ability.
What are the risks?
Every Web3 platform is exposed to smart contract risk, which refers to the risk of a technical bug in the protocol's code. That being said, Bookies takes every step possible to minimize this risk through constant review and auditing. Each contract associated with the platform is public and can be viewed here. Upon mainnet launch, a Bug Bounty program will be created to further ensure that proper scrunity of the codebase is taken.
Sports betting carries inherent risks that can lead to losing money. There is no guarantee of winning, and you can lose all the money you bet. The outcome of sporting events is unpredictable and uncertain. Even if you bet on the favorite team or player, there is always a chance they may lose or underperform. If you find that sports betting or gambling is becoming an addiction or interfering with work, relationships, or finances, please reach out to one or more of the following organizations:
Call 1-800-GAMBLER
Why build on Ethereum Layer 2?
The thought process behind this reason resided in the “Security vs Scalability” dilemma. While certain alternate layer 1 blockchains provide high throughput and can process, they make a marked tradeoff in decentralization of nodes in the network and often struggle with things like downtime. Ethereum, while providing meaningful assurances in security and decentralization, often suffers with congestion which drives the price of gas to unreasonable figures. If Bookies is to be successful, users need to be able to make small (<$5) transactions without having to worry about a gas fee that is anywhere near that figure.
What's next?
Please refer to our Roadmap section for future plans and updates.
Last updated