The Unlawful Internet Gambling Enforcement Act was passed after its announcement in 2006. The government ruled out the possibility for the US players to place online sports bets, whereas this industry was estimated in Gross Gaming Revenue at approximately $5.6 bn. However, the outcome of the adopted measures fell short of expectations. Soon the offshore iGaming products appeared just on Facebook, offering real cash wagering, moreover free-to-play ‘social casino’ became popular among the players. That was a reason for the rapid growth of multi-million offshore companies who never paid taxes depriving the US of possible incomes.
The Act served as a timely response to unregulated gambling threat, it also resulted in a great number of employees losing their jobs as well as in developers stopping to produce gambling products, leading to relocation of this whole IT sector to Europe. The loss of US state budget is easily affirmed with the following data: in 10 years from 2005 to 2015 the igaming sector had witnessed the growth at a rate of 328% with the annual net profit of $17 bn after tax.
Сertainly, tax inflow from gambling industry may form a huge part of any state budget. For example, in Switzerland, income tax may reach around 90% while maintaining the profitability of the casino. For the US, tax revenues would have enriched the State treasury in the amount of $20 bn dollars per year along with the wide range of vacancies to appear. This would be equivalent to building 4 brand new airports. During 11 years the situation in the iGaming market was remaining ambiguous: with several companies trying to launch unlawful offshore betting and poker web sites, players faced the impossibility of withdrawal. Often a player places $100 and wins $1000, but such companies take charge for the money transfer in the amount of $800-900, so the winning becomes practically the same as the bet. Obviously, such kind of betting is not beneficial.
Nevertheless, March Madness brackets remain legal and state approved. Last March, the total amount of sold tickets comprised approximately 70 million equal to $10.4 billion. Purchasing the brackets, players are confident in the fair game and guaranteed payout. On the other hand, the picture is quite reverse with illegal offshore sites, where the bettor has no guarantee or lawful support. Moreover, all winnings in the US must be declared as income, in accordance with legal laws and IRC regulations.
However, a chance to legalize online betting appeared on the horizon, and this solution might be Blockchain technology. This can be applicable to both sports betting and brackets. So, how is the new technology supposed to work and what is the essence behind it?
Bookmaker makes an inquiry to the US Bank and IRS, the bank checks bookmaker’s liquidity. Next, the particular amount of iGaming company’s funds is converted into cryptocurrency, namely Ethereum, the same happens to the players’ deposits. All these operations are made similar to the conversions of standard currencies, implicating no additional fees or losses. Then let proceed to the bet itself. It must be well secured, and is to be paid out instantly after the scoring data is submitted. All of the abovementioned is ensured by the Blockchain technology and the liquidity of the bookmaker.
Blockchain provides another great feature which ensures probity and accountability. This is Smart Contract. Smart Contract grants the ‘bookmaker – state – bettor’ line legal status and is signed by all its parties digitally with the help of computed hash. Secure and anti-corrupt, this contract is deemed to be fulfilled immediately after the scoring data is submitted and paid out on demand of the bettor by any bank or certified agency. IRS is eligible to track all bets and players since the moment account was deposited. Thus, players are guaranteed with the odds and payouts fixed in the Smart Contract, whereas the bookmaker serves as the so-called Odds Provider. That’s it!
Being a promising start-up, based in Malta, Stakers is the first to deliver Smart Contracts to their customers. Stakers Sportwetten does not operate on the territory of the US. This material is for educational purposes only.
Live Bitcoin News is a cryptocurrency news service that covers bitcoin news today, technical analysis & forecasts for bitcoin price and other altcoins. Here at Live Bitcoin News, we are dedicated to enlightening everyone about bitcoin and other cryptocurrencies.