Steecky Thoughts #11: Steemit as a legal betting platform – a fun way to distribute SMD [6 min]

A blog by @ooak
It's  a place for me to give birth to my thoughts. Meta thoughts about   "Steemit", external thoughts about life and experiences. My aim is to   bring value to people, entertain the audience and craft my writing   skills all at the same time. I will write short to medium size blogs   because I believe that today more than ever time is money and attention   is hard to get.

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 Sport  betting is a big billion dollars industry, although it is a highly regulated one. Some countries embrace is, some ban it entirely. The fact  remains that it's part of the sports world and people like to bet as it  contributes to their viewing experience. 

I wrote before about what I think Steemit can become and what industries it can disrupt Here. I think that Steemit can become somewhat of a legal platform for  betting.

In the past I researched the sports betting world. In my  research I encountered the legal definition according to United States  legislation "Unlawful Internet Gambling Enforcement Act of 2006". It  states the in order for an act to be considered gambling or betting you  must have three components: consideration, chance, and prize.

Consideration it the act of risking something of value.

The game has to have a chance component like the results of a game.

Lastly you will win a prize if won.

For example sports gambling if you put money (consideration) on a  Basketball game (game's results can be considered as chance) and you win  a prize at the end. 

During the time I  researched the topic I encountered a betting website that in considered  legal. They give users a small amount of virtual money to gamble with.  They then allow betting on sports event and once you reached a certain  amount of money in your wallet you can withdraw it. They subsidized the  site with lots of ads. Why was it legal? Well it toke the part of  "Consideration" out of the equation, no one risked anything.

Steemit  can serve as a legal platform for betting using SMD. It passes the test  of consideration. users don't need to invest value to gamble on a chance  game.

Let's imagine the process:

• A user who serves as a bookmaker opens a bet -  who will win a basketball game: L.A Lakers vs N.Y Knicks.
• Other users who wants to take part has to do two things: up vote the  post and comment with the result of who they think will win. 
• Few minutes before the game starts the bet is closed. The bookmaker  documents in the parent post the final participates in the bet and their  results to avoid reply editing in a later date. 
• Once the game is finished and after the post receives its SMD reward the  bookmaker splits the reward between the users.
  

Pros:

•  It can add to the experience of using Steemit. We have plenty of posts,  blogs and boobs for ages. This is something different. A "game". A way  to create a community around it. 
• It's legal. No one needs to risk anything.
• A great way to distribute SMD for new users that wants to power up.
  

Cons and solutions :

• We must rely on the user (bookmaker) to transfer the funds.

Solution:  A user that acts as a bookie can only "steal" once. After that no one  will trust him. The incentive to do so is low. The long run is more  profitable here. He profits the SP for every post. We can also you  Steemit reputation system, the higher the reputation the more invested  the user is the less risk in trusting him. We must also understand that no one loses anything. It's just up votes that is lost and the scammer loses reputation. 

• There needs to be many up votes for a good amount of SMD to be rewarded and distributed.

 Solution: There needs to be a use of a dedicated whale/dolphins to help give the  post some funds. Distributing 0.01$ to 20 users is negligible. But 10$  or more can be better for minnows who wants to increate SP. So there  needs to be a user with high SP that can help give higher rewards to the  bet's pot. Also when time passes by more users with higher SP will rise  and contribute more rewards. 

• Open to Sybil attacks – people can open many users and bet two sides of the bet and win no matter what is the outcome.

Solution:

Sybil attacks can be resolved in two ways:

1-  Prize distribution will be according to SP. We can sum all SP of users  who placed a winning bet and they win SMD according to their percentage  of the total SP of the winners. This kind of distribution can thwart  someone from opening many users and can be the incentive to invest in  only one user who has a high SP.

I thought about  the above way of distributing the winning prize. It's good but needs  some tweaking. My second idea is to cap the SP at a certain number let's  say 1000. Why is that? Well if a whale with a 1M SP will bet and win,  it will give him close to 100% of the funds. Nothing will be left for  the minnows. But if we cap it at a 1000 SP the funds will disperses more  evenly than before, allowing for minnows to enjoy some winning too.
Another  thing that can help is to create parlay betting. Meaning a bet where  you need to guess the outcome of two or more events. Given a lower  statistics chance for people to win, so fewer winners but the winners  will get a higher prize.

2- Using the reputation system  built in Steemit to allow users to bet. It's hard to gain  reputation. You gain in while investing time posting and creating  content. Meaning you become more and more invested within the platform  so the incentive to create a "Sybil attack" decreases. Also it allows us  to distribute funds to minnows who want the success of Steemit for the  long run and not users who just want to "dine and dash".

This  is how I imagine Steemit can serve as a betting platform in parallel to  blogging and meming. I will appreciate feedback and more ideas on the  subject.

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Shower Thought: Steemit will fail in "Wisdom of the crowds" because there is no financial incentive in this type of betting. 

@ooak signing out…