Web3 vs Traditional Sportsbook Platforms: Key Differences

What Are Web3 Sportsbooks? 

Web3 sportsbooks are decentralized sports betting platforms that allow the use of NFTs and cryptocurrencies for wagering. They run on blockchain technology and are known for encouraging transparency, anonymity and speed, which improves user experience. Players also have more control over the process of betting. These platforms enable direct P2P (peer to peer) betting, which results in better odds and lower transaction fees.  

Through decentralization, they place control in the players’ hands and allow P2P transactions by removing the need for any operators or intermediaries. Blockchain technology ensures that all bets and transactions are recorded and can be verified by players at any time to ensure fairness. Cryptocurrencies like Bitcoin and Ethereum are becoming popular transaction methods as they have global usage and reduced transaction costs.  

These are the features that define Web3 sportsbooks.  

How System Architecture Sets Web3 Apart From Traditional Sportsbook Platforms 

Traditional Sportsbooks 

Traditional sportsbook platforms have a centralized system that brings in uniformity by consolidating all systems, such as data and payment. This puts control in the hands of the operators and makes the platform easier to maintain as software updates are simpler and security can be enhanced.  

It also adds complications as traditional platforms, having a single point of control, are more vulnerable to cyber attacks. These systems can also experience a bottleneck, which slows operations. Due to its control, the platform also has the power to manipulate odds and place restrictions on players. Users also have no say in where their personal details are stored.  

Data such as player info, betting history and transaction records is stored in a singular location, which is usually a central server that is accessible only for the operator. Unfortunately this limits transparency, as the players do not have access to all the data and therefore have no way of verifying the fairness of games. 

Web3 Sportsbooks 

Web3 platforms operate on decentralized applications known as dApps that are built on blockchain technology. Players bet with smart contracts that automatically self-execute the payouts based on the outcome of the bet while acting as an immutable record of the wager. This approach minimizes human error while also being extremely fast and cost-effective. 

To bring in some structure to the platform, Web3 sportsbooks may be governed by DAOs (Decentralized Autonomous Organizations). All players that are members of this can collectively vote and take decisions on protocols, revenue shares, etc. Because the systems and operations of Web3 sportsbooks are spread across multiple nodes and transaction records are secured through cryptography, this makes it difficult for hackers to attack or breach the systems. 

Using blockchain technology these platforms ensure transparency by recording every move, outcome and transaction. This information is recorded in immutable ledgers, and players can verify transactions and check the outcome of every game to ensure the fairness of each bet.  

Major Differences 

Player Experience 

In order to verify a player’s identity, traditional sportsbook platforms require extensive personal information and the uploading of documents like government-issued IDs and utility bills. These ensure that the person trying to create the account is not an underage player or a hacker impersonating someone. However, this lengthy registration process can take one or two business days to complete, which may result in potential users losing interest and abandoning the process altogether. 

On the other hand, players can register on a Web3 platform through a much simpler process; some platforms require only an email address. This is a more desirable option for players as they do not have to waste time with a lengthy and redundant registration or wait long to gain access to the platform and can simply begin after linking their crypto wallet. 

All iGaming operators place an emphasis on the mobile-first approach, which has specific requirements to ensure usability for mobile device users. However, traditional and Web3 sportsbooks approach this matter in different ways. Traditional sportsbooks usually rely on native apps, which need regular updates and have to comply with app store policies.  

Web3 platforms often use progressive web applications (PWAs), which provide an app-like experience and ensure smooth functioning across all devices with cross-device session syncing. These support blockchain features like instant payments, real-time odds updates and seamless wallet integration. While both methods support live betting and streaming, Web3 platforms generally enable faster transactions and offer more diverse payment options like cryptocurrency. 

Web3 platforms also offer a wide range of betting options beyond the basic props bets, over/under, moneylines and points spreads. They are taking live betting to the next level by enabling real-time micro-betting on specific game events and custom bets based on live game triggers. Players can receive instant payouts as soon as the bet is fulfilled, which improves user satisfaction. 

Payment Systems 

Traditional sportsbooks make cross-border transactions more expensive due to the use of intermediaries like banks and payment processors, which place additional charges such as conversion and processing fees on the payment. These payments also take a long time to be processed, ranging from one to five business days. They typically take care of payouts through manual bank transfers and fiat currencies, which also imposes verification processes and certain banking regulations like minimum withdrawal limits, which prevent players from placing larger bets. 

On the other hand, Web3 platforms, through smart contracts, allow faster transactions with minimal fees and the ability to place high-volume bets as there are no intermediaries. The funds are automatically transferred to players’ crypto wallets. Cryptocurrencies enable borderless payments and eliminate currency conversion issues. These transactions are also encrypted and decentralized, leading to stronger security. For players, this means low costs and quicker and safer payouts from anywhere across the world.  

Data Safety and Fairness  

Traditional sportsbooks collect players’ personal information through KYCs, and this information is stored on their central system. The information includes sensitive details like full name, address and financial records, which are vulnerable in case of an attack or breach. These details can be used by bad actors for identity theft, financial theft and other malicious purposes.  

Web3 platforms do not require these processes and instead use decentralized identity (DID) solutions, which ensure that users have control over the data they provide and how much they provide while complying with regulations. Some softwares also enable users to link their identities across multiple decentralized networks, which gives them better control.

Traditional platforms use specific algorithms to calculate betting odds. These algorithms are stored on a centralized server, which means players do not have access to it and therefore cannot verify its fairness. This leaves a chance of manipulation or human bias and the only measure of transparency are third-party audits. The lack of verifiability makes it difficult for players to trust the platform. 

Using blockchain technology and provably fair systems like cryptographic hashes and multiple seed sources, Web3 platforms record the transactions and odds adjustments on a public ledger that cannot be manipulated so that players can later verify the fairness of the odds. Smart contracts automatically handle bets and determine winners, which eliminates the need for trust in the face of proper evidence. 

Dispute resolution is a frequent issue for decentralized platforms as centralized sportsbooks have a specific department and established system for these situations. DAOs are typically the go-to for resolving conflicts, but they cannot ensure impartiality. Smart contracts are a new solution that makes things easier. With the combination of an automated process and transparent and verifiable ledgers, these disputes can quickly be resolved while ensuring no bias. 

Why Web3 is the Future 

Traditional sportsbooks have long had the spotlight, but now they are giving way to crypto-based decentralized Web3 sportsbook platforms. 

The decentralization of sports betting is one of its most appealing aspects as it allows players more control over platform operations like payout accuracy and odds calculation through the formation of DAOs. Players divulge minimal personal data to create accounts and this information is not stored on a centralized system, which ensures privacy and security. The systems of this platform are also not stored on a centralized database, which ensures more security as hackers will not be able to cripple the entire platform just by finding a single opening. 

Web3 sportsbooks are also known for their transparency. These platforms use blockchain technology to document every single bet, outcome and transaction on an immutable ledger so that players can later on make sure that the process was fair. Smart contracts single-handedly determine the odds and the winner, act as a record of the bet and automatically transfer the payout to the winner upon fulfilment of the wager.  

The use of cryptocurrencies is another of Web3’s defining features. This mode of transaction ensures more fast and cost-effective payments. Cryptocurrencies, unlike fiat currencies, are not subject to conversion rates or processing fees through intermediaries; for this ease of cross-border payments, they are becoming globally popular, which allows crypto users to make payments to and from anywhere in the world.  

As there are no intermediaries, payments do not have to undergo lengthy or obsolete processes. This dramatically reduces the time required to complete transactions and players can receive instant payouts. There is also no restriction or limit on these payments, which allows users to place high-value bets. Transactions can also be carried out through NFTs (Non-Fungible Tokens). 

By introducing all these new changes, Web3 platforms are already beginning to transform the industry. As new features and upgrades are developed, the industry will be completely revolutionized. 

Final Thoughts 

While Web3 sportsbook platforms are the future of sports betting, they also pose some challenges for operators and experience hurdles in terms of adoption. 

These platforms are not as easily scalable as centralized platforms because their systems are spread out across multiple nodes. This results in reduced processing speed and potentially higher costs of transaction during peak usage due to the limitations of the platform.  

The use of cryptocurrencies for betting, while on the rise, is limited to younger, tech-savvy players. Figuring out how to navigate blockchain-based platforms and crypto-wallets is difficult and time-consuming for most players.  

The legality of blockchain-based betting is still under question in most regions as there are no clear regulatory frameworks or guidelines. There may also be varying stances on the use of crypto-currency according to region. This makes it difficult for such platforms to lawfully operate in these regions. 

For several traditional sportsbooks looking to transition to Web3, the cost and commitment required to make such a move may not be feasible. New technology must be implemented and a new team hired to make it happen. This is also a process that requires a lot of time as the sportsbook is almost completely being rebuilt.  

While fully crypto-based platforms may take a while to fully establish themselves in the iGaming industry, sportsbooks are starting to incorporate features like smart contracts and cryptocurrency.

Check Out KodeDice’s Web3 Sportsbook 

KodeDice is an industry-leading business that provides casino and sportsbook development solutions and related services. The company offers several services and solutions for sportsbooks. 

KodeDice’s Web3 sportsbook solutions utilize a robust finance module that enables smooth and quick transactions with cryptocurrencies and a DeFi (decentralized finance) system. Using real-time data processing, the betting odds for live sports matches are automatically updated and in-play trading can be used to fit odds modulation during live events. Players are aided in accurate real-time decision-making for profitable outcomes. 

Progress analytics and user data help operators with business decisions and reports and immutable smart contracts allow agreement-based bets execution and payouts. The blockchain betting app provides controlled margins and suspensions to improve the chances of winning bets. Operators will easily be able to tailor the UI/UX design of the platform to fit brand identity and operators’ preferences and adjust the platform to suit geo-local regulations and preferences. Use our automated security protocols to protect the platform in case of breaches and cyber attacks.  

Book a meeting with our experts for a chance to partner up with KodeDice and explore Web3 platform opportunities.  

FAQs (Frequently Asked Questions) 

• What is a Web3 sportsbook?  A Web3 sportsbook is a decentralized sports betting platform that enables peer-to-peer betting using a blockchain system and smart contracts. Web3 sportsbooks guarantee greater transparency, security, immutability and control and are overshadowing traditional platforms. 

• What’s the difference between Web3 and traditional sportsbooks?  There are several differences between the two: 

  • Traditional sportsbooks rely on centralized systems that place the control in operators’ hands while Web3 sportsbooks are decentralized platforms that provide users with more control over funds.   

  • Web3 sportsbooks use smart contracts to set betting logic, payouts, and other executions whereas traditional platforms rely on centralized systems.  

  • Since all transactions and outcomes are recorded on blockchain, Web3 sportsbook platforms are more transparent and auditable than the traditional sportsbook.   

  • Web3 sportsbook operate on cryptocurrencies, whereas traditional platforms use fiats.   

• What are the benefits of Web3 sportsbooks? 

Web3 sportsbooks have numerous benefits: they are decentralized and run on blockchain technology, which enables smart contracts benefits, risks-managed services, transparency and fair play. The use of cryptocurrencies ensures lower fees and commissions, global reach and faster payouts.  

• Are Web3 platforms completely legal? 

While certain countries are updating their regulatory frameworks to encompass Web3 platforms, operators may face issues due to region-wise inconsistent legalities and unclear regulations. This makes it necessary for them to stay up to date on local laws.  

• How do smart contracts work?  Smart contracts automate the betting process in Web3 sportsbooks. Here’s how: 

  • Smart contracts record the details of the bet such as odds, teams, bet amount, etc. on the blockchain as soon as the user places a bet.  

  • If the bet is won, the smart contract automatically launches payouts for the winner. 

  • Web3 sportsbook developers can create smart contracts with custom rules and conditions, which provides a flexible betting experience.   

• How much does it cost to develop a Web3 sportsbook? 

The cost of developing a sportsbook depends on factors like level of customization, smart contract development, backend development and integration, infrastructure and security tools.

Contact us to know the right cost estimates in the quickest time.  

• Why should I choose KodeDice?  

KodeDice’s Web3 platform solutions offer various benefits such as a robust finance module, in-play betting for live sports events, AI-powered analysis and predictions based on user data, full customizable UI/UX and blockchain-based smart contracts, to name a few.  

Contact us to book a consultation.