The article discusses the growing relationship between gambling and cryptocurrency, highlighting how crypto payments have lowered barriers and increased global access for gambling companies. It also explores the emergence of smart-contract peer-to-pool betting and concentrated liquidity as significant trends in the industry.
• Gambling companies now want to accept crypto payments. • Crypto payments have decreased barriers to entry in the gambling industry. • Crypto has led to the fragmentation of the gambling industry, with thousands of new operators globally. • Traditional gambling has also penetrated the crypto industry. • Smart-contract peer-to-pool betting and concentrated liquidity will have a significant impact on the gambling industry. • Azuro has proven that pooled liquidity can be used for real-world betting markets. • Azuro allows anyone to create a working sportsbetting app with no upfront costs or ongoing costs. • The onchain way of gambling has significant advantages over the traditional way. • The gambling industry is on a path of fragmentation through crypto adoption and open access to build applications. • Three secular trends are driving the shift towards onchain gambling: the need for open access and certainty of ownership, the natural trend for fragmentation, and the importance of affiliates in the industry. • The protocol that wins in onchain gambling will be the next significant value creation moment in the industry.
The article is about two things that really like each other: gambling and crypto. It says that a long time ago, gambling companies didn't care about crypto, but now they really want it. Crypto helps them take money from people easily and it makes everything faster. It's like a love story between two famous friends. And it also talks about a new way of gambling called "GambleFi," but it's not real. It's just pretending to be something it's not. So, the article says that gambling and crypto are becoming closer and closer, and it's changing the way people gamble.
6–7 years ago most gambling companies did not care about crypto…
Today there’s no operator that doesnt BURN to take crypto payments. Not all can, some are too vanilla having their regulated business too big to allow them to take the plunge as of yet. But they all WANT to.
Crypto payments decreased the barriers to entry in the industry by effectively loosening restrictions on the gambling companies to take deposits from the users. It created a direct avenue of connecting the service to the users, thus alleviating pressure on 2 of the biggest friction points for the industry — payments & regulation. Before crypto there was mostly credit/debit cards (expensive, and not working for gambling in most parts of the globe).
After crypto — well, u know — it works, and it’s cheap. Now, the gambling company doesn’t have to pay the bank, the card issuer and the payment processor for EACH transaction, anymore. And they get direct access to peeps with big $$$ globally. Repeat — globally. Voila!
https://www.gpwatimes.org/issue56/30/
So, crypto started a process of fragmentation of the gambling industry…
7–8 years ago i remember there was like 20–30 operators in any bigger geo/continent. There was only a handful global ones. Now there’s thousands globally. Most new are either crypto-only or crypto-mostly.
Moreover, 2 new entrants have entered the global top operators: Stake.com (top 3) & Rollbit (top 15). Many believe Stake.com is the biggest single global operator already. And they’ve achieved it in virtually NO time (by comparison to how long it took others before).
Crypto has penetrated the gambling industry, and there’s no turning back. It is the ONLY big, global industry with that level of crypto adoption.
But also — it went the other way around too. Traditional gambling did penetrate crypto…
U know “GambleFi”…?
When bear market struck and “speculating” on coins and jpegs wasnt fun, then u know — crypto man’s gotta do smth. So not only did crypto man gamble gamble, but crypto man invented a narrative so that he can gamble on “GambleFi” tokens too.
But, GambleFi is a NARRATIVE LARP. There’s no such thing. Its Fugazzi.
It’s just gambling and crypto payments with a token sprinkled in. Its custodial, opaque, and the Fi part isnt more than buyback and burn memes with an unknown decision maker on how much to buyback and to burn and when.
On top of it all — most of the ones who proclaimed themselves decentralized, turned out to be grifters and rug-pullers. Arcadeum, RiskonBlast, Zkasino, just to name a few. It’s much easier to jump on a narrative than to build for a new reality.
So what the trad industry calls crypto operators, all us narrative larp-suckers call GambleFi. Bleh
Now, fast forward to crypto today — new narratives are at play, fake Gamblefi is mostly a non-topic, not because its fake but because there’s new narratives around.
And just like how few years ago the gambling industry didnt yet care abut crypto, today nearly no gambling operator cares about smart-contract, peer-to-pool betting and concentrated liquidity.
And by large — crypto doesn’t either. And why should they?
I argue that how crypto payments already affected the gambling industry is how smart-contract peer-to-pool betting and concentrated liquidity will affect the gambling industry in the coming years, and then some. It is THAT significant.
But what is it?
What’s happened in the past nearly 2 years since Azuro (azuro.org) went up in mainnet is essentially 2 things:
1. It has been proven that pooled liquidity can be used for real-world betting markets with known time of resolving.
What falls into that category is sports-betting & casino-like games. The first is the user-acquisition tool for the global gambling industry. The second is the (even) higher-margin cash-cow. Different estimates put this industry in the hundreds of billions in revenue per year. Noone needs convincing how massive it is.
Now, this is huge because blockchain’s peer-to-peer approach of the olden days failed completely when it came to those markets due to fragmented, essentially non-existent liquidity. Despite Polymarket’s growing success with a few hundred longterm idiosyncratic social markets — it doesn’t work and it will never work for sports or other predominantly shortterm betting markets.
It was thought that it is nearly impossible to have an AMM-like pool acting as the counterparty on open, permissionless markets as it would lead to losses for the LPs consistently. And it was thought that such a problem could not be dealt with onchain due to the oracle problem (making sure that front-running is avoided while not having obscene latency, gas fees and congestion because of constant queries to the oracle). HOWEVER, Azuro’s Liqudity Tree pool & hybrid oracle/AMM approach to pricing the markets have so far proven to solve it. All of it.
2. The DeFI in “GambleFi” is finally real and is brought in play in a way which makes a BIG difference.
Azuro is setup as a base layer where the liquidity, pricing and resolving of the markets is happening. But ANYONE can actually create an app, build a product or widget or integration with the markets openly and permissionlessly. Azuro acts as the onchain backend for gambling applications, abstracting all the core tech and liquidity needed, leaving them to do only Marketing and (IF they WANT to) — UX & product variations or derivatives.
Already today — on Azuro, anyone can create a working sportsbetting app in a few hours. An app which works end-to-end. No upfront costs. No running costs. No liquidity/capital needed.
The idea of outsourcing services is not new to the gambling industry. In fact most new operators get their sportsbetting product from a big B2B company, their casino games from several game providers (or a big B2B aggregator company again) and so forth. Although most of these companies are private (SoftSwiss, SportRadar, BetConstruct and others — they all are multi-billion businesses).
In his cult book on entrepreneurship Peter Thiel argues a core point: You need to be >10x better than the alternatives to create the most powerful businesses — unique “Zero to One” moments that lead to the biggest economic value-creation, aka. hidden monopolies (Meta, Google and so on). For the thousands new gambling operators starting up every year now — how it stands today is: they need to pay $50–200k in upfront costs to the B2B service providers, and they need to pay $20–40k on top of the revenue sharing monthly. Beyond that come licences costs, payment provider costs (in case of setting up fiat payments and the lot). And it takes several months to go through the setup. The comparison is startling. Free setup, no ongoing costs, and a few hours or days to setup. It’s well beyond a 10x improvement.
That said, the gap in feature set between the “trad” way explained above and the onchain way (via Azuro) is still very significant. Trad has more sportsbetting markets, more casino games, more features, etc. But the gap on sportsbetting is closing quickly (the biggest missing piece “live/in-play betting” is in mainnet alpha and going up fully on Azuro in May), while casino games will take longer, but are on the way.
Full parity is not to be achieved anytime soon, or ever. But it is not needed to make the shift significant already, now. Onchain allows for new idiosyncratic features and products by way of portability & composability. It wont be the same. But it will be powerful.
The industry is already well on its fragmentation path just thru crypto adoption, and now it has rocket fuel for the acceleration of this process — open, permissionless, free access to build applications at ease and at will.
True DeFi allows for a new set of protocol monopolies (e.g. Uniswap’s pools are behind 60%+ of all token onchain swaps) which provide base layer technology & concentrate liquidity. Azuro falls exactly into that category although with way more options for capturing value than Uniswap has on the volumes it underpins.
There’s 3 secular trends coming together blowing ever stronger winds in the sails of the protocol which gets the upper hand in running the base gambling layer onchain:
- need for open access, freedom and certainty of ownership (at the user-level that is vastly what crypto is all about). In the case of gambling this need is exacerbated by a history of abuse on the side of the operators limiting, banning and withholding money from players.
- Natural trend for fragmentation at the business level as the barriers to entry are reduced significantly. Historically an industry with very high barriers, gambling is now on the verge of unprecedented tech democratization. This trend is a general tech trend underpinning what we see across all our lives, particularly across media, where the web2 protocols (facebook’s, youtube’s and the likes) monopolized content creation, while fragmenting content sources. Case in point — the decline of trad media and trad news outlets in favour of Tucker Carlsons, Joe Rogans, Mario Nawfal’s and your influencer of choice for news, cooking, clothes, fitness, lifestyle, crypto and everything else. Just as the more successful influencers have their own brands, products, news outlets and what not — some will have their own betting apps. It’s just too easy. GainzyBet.com anyone?
3. A third trend very specific to the gambling industry: “affiliates”. In the trad industry — getting the users happens predominantly via so called affiliates (websites , streamers, influencers and other online sources) which direct their traffic to the operators and get paid for that. This is so significant partly due to the fact that in many places direct advertisement is prohibited or restricted, which leaves operators inevitably relying on these traffic sources.
The affiliate industry is a BIG industry of its own, and if there is one thing each affiliate ACHES about is — is the fact that they are 100% at the mercy of the operators. Although the accepted way of payment is revenue share from the revenue derived from the players they brought for the lifetime of the user, even the biggest affiliates have no visibility of what they are getting paid for by the operators, ever. Hence they get “shaved” (term for cutting commission payments by the operators via doctoring the payment reports) or just stop getting paid altogether at the sole whim of the gambling companies. They burn for transparency and certainty more than the users do.
And there’s millions of affiliates worldwide. Each one of them — from the smallest to the biggest, would like to have certainty, or start their own operator. However until now they were faced with months (time) and hundreds of thousands of dollars to get going (money) as barriers. Not anymore. Not onchain.
In summary, I argue that the gambling industry will continue to fragment, and that the onchain solution is the PMF for the 3 secular trends mentioned above. There’s no escaping those forces as they get channeled into whatever gives way. And with recent advances in ACTUAL REAL GAMBLEFI via smart-contract peer-to-pool betting it’s clear to me what that’ll be.
And I argue that the protocol that wins is the next significant Zero To One value creation moment that we will observe in crypto and in gambling alike. A tech monopoly. A true base layer.
For good or bad the embrace between the industries is getting tighter. Only this time many on the trad operator side will not like it or embrace it as they did embrace crypto payments before. But their users and counterparties (like the affiliates) will, thus fragmenting the industry further.
