disclaimer, this is not investment advice
Peerplays looks interesting, after being very skeptical I think that the sports betting platform being built called "Bookie" is going to be very useful for sports bettors. Today I am going to describe what a sports betting exchange is and how you can not only bet on it but also trade on the exchange just as you trade crypto coins. I will also go though a short list of major advantages and some things that need to be figured out with the project.
Peerplays is building software that allows people to use a peer to peer betting exchange. You will be able to run the software "bookie" on your own machine and connect with the betting markets. In simple terms instead of going to a website to place a bet you open a program in order to make a bet. Bitcoin and other crypto currencies will be supported. Holders of peerplays tokens will get a cut of the fees that are collected from the bets.
What is a betting exchange? Peerplays is building software that allows people to use a peer to peer betting exchange. You will be able to run the software "bookie" on your own machine and connect with the betting markets. In simple terms instead of going to a website to place a bet you open a program in order to make a bet. Bitcoin and other crypto currencies will be supported.
What is a betting exchange?
Imagine that when you place bets. You are making or filling orders in the same way that you trade on an exchange. Let´s take a look at an example.
Person A wants to bet that team Lyon will win the game vs. team Ajax. Person A then makes an offer Lyon win 1.70 odds. They are looking for someone else to take the other side of the bet which would be Ajax 2.30 odds. You could take his offer or put another offer on the exchange, for example 1.72 for Lyon win and hope that someone will take your offer.
If you are not a fan of sports, you do not understand sports betting or have never been interested.
you can trade bets like you trade coins.
Using our above example lets say we did get 1.70 Lyon. Later in the day the market really likes Lyon and the current offers are starting at 1.63. We can then take the other team Ajax at 2.37. This means regardless of the outcome of the game we have a profit of 0.07. If the bet was for 100$ then this would represent 7$ of profit. This is a simple example of how trading on the peerplays exchange could look like.
Advantages of using Peerplays platform "Bookie"
Platform Risk
Currently there are betting exchanges but most do not accept bitcoin and you have platform risk. If the site is hacked or the operators commit fraud then you can have a hard time getting your bitcoin back. By using the Bookie platform you reduce the platform risk significantly.
Regulatory Arbitrage
In some countries it is not easy or legal to bet on sports. It can also be difficult to get funds to and from sportsbooks when they touch banks. Using the Peerplays Bookie platform that is p2p can help get around such regulations.
Better Odds and Reduced Fees
The system should help provide better odds for players. There will be a fee that is taken from each bet. This will be based on volume and not which side the winner is. Typical at sportsbooks is a built in 10% fee. For example the odds are not 2.00 (even money) they are 1.90. In countries where sports betting is legal there can be taxes on top of the odds. For example in Germany there is a 5% tax on all sports betting. With added fees the effective odds are reduced and to be a profitable bettor your performance must increase. If you are used to trading then just think of this as the spread. If the spread can be reduced then typically that invites more volume which in turn creates better opportunities for people betting or trading on the betting exchange.
Added Utility for Crypto Coins and Tokens
With the peerplays platform you will be able to use a wide range of crypto coins and tokens. This will in turn add utility to these coins. There is a potential for a positive feedback loop when a coin becomes popular on the betting platform. A coin that had no real world use suddenly can be used by anyone that is using the Bookie software to bet on sports. While this may seem like a simple and primitive use, this is where things get started.
Things to think about
Where is the volume going to come from?
As with any market you are going to need market makers that provide liquidity. In many cases these volume traders get reduced or zero fees for making markets. Some kind of bonus system for liquidity providers could help get the volume going.
Fees
As stated above, good odds are going to be one of the key attractions to the platform. Generally speaking the higher the fees the less volume and in turn worse odds. Although token holders are going to want to get their cut of the betting volume people need to consider keeping this low in order to attract volume.
Connected Transactions
I encourage everyone to read "APPENDIX 4 – PBSA DIRECTORS CONNECTED TRANSACTIONS".
It is located at the end of this document: https://www.peerplays.com/docs/Peerplays_Bulletin-Feb_2017.pdf
Simply put the non profit peerplay company PBSA is going to lease 2,700 square feet from 1 March 2017 to 31 December 2022 for US$5,625 a month and a contract for US$10,600 in which DSN provides: internet access, server hosting, data storage, hosted VDI, managed setup, configuration and support services to the PBSA. Peerplays co founder owns both "Fallout" where the 2,700 square feet is leased and DSN. You can decide for yourself if this a good ro bad thing. One of peerplays co-founders gets over US$ 15,000 in contracts monthly from PBSA.
Oracles
Oracles or "Witnesses" are going to be grading and providing data feeds for the bets. Although the system seems that it can not make an error it would be easier than you think to grade a bet incorrectly. When all the oracles use the top 3 api feeds from the main providers then there is not much of a point in having so many oracles. Also as the platform scales out and the bet amounts increase there is going to have to be a method that incentives being an honest oracle and not one that can be bribed. Many think the idea of bribing an oracle is far fetched but it is a real thing that needs to be though about carefully and not simply dismissed as "FUD".
Conclusion
Peerplays has a huge potential to make p2p betting more accessible. You will be able to bet in bitcoin and other crypto coins which makes such a platform as useful or more than any other sportsbook that takes bitcoin currently. If this starts to catch on we could see many similar platforms like this popping up everywhere. Keep an eye on this project
Whitepaper: https://www.peerplays.com/docs/Peerplays_Whitepaper.pdf
nice post!
How would this work with regulation though? As you state in countries like Germany you have a special tax, and in some countries it is even forbidden.
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