Smart Contract Casinos
The internet kick-started a massive evolution in the way people gambled. Online gambling brought about a more convenient way to bet against the house and other players, but the industry has since been plagued by unscrupulous actors and fly-by-night operators. Whilst regulatory bodies like the UK Gambling Commission have done a lot to protect players, complaints relating to online betting operators continue to persist. Aside from the issue of being scammed, the antiquated payment systems layered on top of these sites have also led to enormous delays in withdrawals, and minimum deposit limits have kept micro-stakes players out of the industry. For these reasons, online gambling is far from perfect, but the blockchain and in particular – smart contracts – are paving the way for a new era of trustless casino betting that could dramatically transform the industry. In this article, we’re going to look at the basics of smart contract betting as well as introducing some of the most renowned operators in this space. Use the navigation below to jump straight to a section in this article:
- What is a Smart Contract?
- Ethereum Smart Contract Casinos
- Withdrawals and Deposits
- Affiliate Programs
- Risks Associated With Smart Contract Betting
What is a Smart Contract?
A smart contract is written as code, and executes automatically once certain conditions are met (the roulette ball lands on red). With a smart contract, there is no room for error as the code with which it runs is immutable in the blockchain. Smart contracts, in their current state, are limited to determining outcomes which do not require any human interference i.e. a smart contract cannot interpret an individual’s judgement. However, this is not a problem for the casino industry, as winning and losing bets can be easily computed; if the roulette ball lands on red, any player bets on red are automatically paid out. There are a number of advantages to placing bets via a smart contract:
Benefits of casinos with a smart contract
- No deposit/withdrawals: bets are paid directly to contracts and winning bets are paid out immediately to your wallet address with no middlemen
- Auditable: contract code is publicly auditable on the blockchain
- Low cost: the cost of operating a smart contract is comparatively low, and these savings are passed onto players through a low house edge
Currently, smart contracts are mostly linked to the Ethereum blockchain – specifically the Ethereum Virtual Machine (EVM). Rootstock, a layer being developed on top of the Bitcoin blockchain, will also enable smart contracts, and we expect many other blockchains will implement smart contract capabilities in the coming years.
Ethereum Smart Contract Gambling
Not all Ethereum gambling sites operate with smart contracts; in fact the majority do not. Most Ethereum casinos will just allow Ether to be used for deposits and withdrawals, in much the same way that Bitcoin gambling sites do. Here is a list of the currently available Ethereum smart contract gambling sites. Whilst this technology will undoubtedly be the most secure form of gambling in the years to come, some of the technology is experimental so we advise betting only small amounts for now:
Smart Contract Casinos
Smart Contract Games
This article focuses predominantly on smart contract gambling, however there are also a number of smart contract games which include gambling elements:
Withdrawals and Deposits
When betting through a smart contract, there are some processes that feel a little unfamiliar. For example, there is no such thing as a withdrawal or deposit. Any bet placed through a smart contract is held within the contract and paid out based on the outcome of the game (a spin of the roulette wheel, or a turn of a card). This means that at no stage does any individual have access to your funds, or have any authority to freeze them. Bets are entrusted to the code, and if the code says that it will pay out winning bets, then you can be certain that winning bets will be received.
To make a bet in a smart contract, the player sends their desired bet amount to the contract address. The payment is received and confirmed within 20 seconds and the random number generator gets to work. Depending on the outcome of the RNG, the payment is then either sent to the house or to your specified wallet address – meaning no withdrawals and no deposits are necessary. At this stage, the user interface and experience for these sites is somewhat clunky as the technology is still nascent. However, smart contract gambling sites are likely to become the leaders in the industry as the tech matures.
Demonstration of SmartRoulette.io
The traditional Bitcoin and Ethereum gambling industry has been propelled by affiliates who promote operators on their behalf. This promotion has been integral to the growth of the industry, however this marketing strategy has been missed by smart contract applications. As a result, smart contract gambling apps have been severely under-promoted, possibly with good reason at this stage, but for the industry to succeed they will need affiliates onbaord. This section will list the available smart contract gambling affiliate programs as and when they appear.
Risks Associated With Smart Contract Betting
It’s been stated earlier in this article, but it’s important to recognize that using such new gambling technology does come with risks. Fortunately, the risk of not receiving the payout of a winning bet is close to zero, so long as nothing catastrophic happens to the blockchain on which the smart contract is operating. The single major risk to players is in poorly written and unaudited code. Some smart contracts can become enormously complex, and of course the code cannot be audited by the average player with little to no experience of the Solidity programming language. For this reason, it is important to do your research on the smart contract gambling site in question, and to find out whether the code has been audited by a respected security expert in this field. Of course, if you’re unsure about the code, the best way to mitigate risk is to bet tiny amounts – which is made possible through the (virtually) infinitesimally small amounts of Ether or Bitcoin that can be used to wager. The industry is young still, but we believe that smart contracts are set to revolutionize online gambling on the basis that they provide fair and transparent bets as well as lower costs for operators.