It’s been estimated that over a minimum of $145 billion is wagered each year on sporting events in the United States, and that’s the number that the American Gambling Association (AGA) is entirely sure about. In fact, the AGA believes that sports wagers made on the “illegal” marketplace — which includes wagers placed in fantasy sports leagues among friends, office betting pools, or any other “peer to peer” betting activity could be more than 5 times that $145 billion number.
The ruling by the United States Supreme Court in May of 2018, which struck down the federal law banning commercial sports betting, changed the entire sports gaming landscape. Because the court indicated that the federal government could not supersede the rights of states to create their own sports betting laws, it’s now just a matter of time before more and more states legalize sports betting within their own borders (given the fact that it’s a highly lucrative source of income for the state itself).
But within the context of sports betting, expect to see the rise of “Peer-to-Peer” (P2P) sports betting. P2P sports betting shifts our paradigm of making wagers based on fixed odds and allows bettors to make competitive wagers head to head against each other. It makes plenty of sense, considering it’s the most traditional sense of betting, to begin with.
But with the forthcoming rise we expect to see in gaming as a whole, combined with the rapid pace of technological innovation we’re sure to see in this endeavor, here are seven reasons why P2P sports betting could very likely become the new norm:
Greater Proliferation Of Sports Betting
From a “socio-economic” perspective, P2P sports betting is going to be a byproduct of the idea that “a rising tide raises all ships.” In other words, because sports betting is going to become more accessible (and less “taboo”), more people are likely to partake in sports wagering of all types; that includes P2P betting as well.
There’s already an enormous level of participation in P2P sports betting, through things like Daily Fantasy Sports (DFS), which operates on a “winner takes the pot” premise, as well as fantasy sports, which usually operates with people making offline bets amongst friends or colleagues in their league, and the winner getting the pot at the end of the season. With sports betting being legalized, the entire money management system will become more accessible online, just like everything else in today’s world.
Generation Z Embraces Peer-to-Peer Everything
Whether we’re ready or not, “Generation Z” — the demographic of individuals born somewhere between the mid-1990s and mid-2000s — are quickly overtaking millennials as the ground of consumers who will redefine the way we look at business transactions. It’s been estimated that, by 2020, Generation Z will comprise approximately 40% of consumers in the United States.
But in reality, Generation Z is already redefining the general marketing paradigm, as they’ve shifted focus away from companies and “corporate” brands being seen as the center of subject matter expertise, and instead choose to consume — and trust — content from “real people.”
That trust also extends to P2P payments. According to a 2017 report from Accenture, approximately two-thirds of “Gen Zs” are interested in making instant P2P payments, and one third indicated they’d be interested in making payments through social media. We already know that services like PayPal and Venmo are heavily utilized by millennials and their younger Generation Z counterparts. P2P betting might not necessarily operate on those payment methods, but it proves that the concept of receiving monetary payments this way is already engrained in the demographic that’s going to be placing the most bets in the coming year.
Blockchain Technology is a Peer-To-Peer System
Most people think of Blockchain technology within the context of cryptocurrencies such as Bitcoin and Ethereum (among others), but the benefits are so much greater than that. Blockchain technology enables the need to validate each person in the transaction and their funds, allowing for a transaction to take place between one or many people without having to deal with a middleman (more on that in a second).
If you’re still skeptical about whether this is a practical form of payment, the members of your tribe are thinning out. The major banks are already starting to look into how they can integrate blockchain payment into their services; in May of 2018, JP Morgan Chase & Co. filed a patent for their P2P payment system based on blockchain technology.
Simply put, many believe this is the group that could one day operate without any wallet in their pocket.
Fewer Costs For Making Wagers In Peer-To-Peer Betting
In gambling, we’re taught that if you play long enough, “the house always wins.” But what if “the house” wasn’t involved with the bet in the first place?
Instead of online casinos being the entity you’re betting against, or the one facilitating the bet, they’re merely going to turn into the conduit for two (or more) people making a wager. P2P sports betting builds on the disruption model that’s been popularized by companies like Uber and AirBnB: instead of paying someone for a service, you’re simply using the service as a way to connect with someone else.
As more and more companies casinos vie for the bets made by gamblers, by simple economics, any costs that are associated with utilizing their service and/or placing bets are going to reduce. Many believe that the future of online gaming involves these casinos not profiting whatsoever from the P2P bets made, but rather making their revenue like everyone else on the internet: through advertisements, product placements, and trying to “upsell” other goods & services.
Eliminating The Middleman
Many startup companies looking to capitalize on the coming sports betting boom are looking to disrupt the entire gaming industry by giving casinos a run for their money. Because of their technological background, they’re already well-positioned to facilitate bets using payment forms like cryptocurrency.
But from a macro standpoint, these startups — or the casinos who can adapt to the new world of online sports betting — are going to benefit from the sheer fact that people don’t have to jump through all sorts of hoops to sign up with offshore betting sites. If you don’t have a bookie with whom you can place bets, with the previous sports betting restrictions, you’re stuck with trying to sign up for an offshore betting site, go through the hassle of hoping your debit or credit card isn’t declined (even though it happens all the time), forcing you to go through another considerable hassle to validate and receive payments.
When gaming services offer P2P betting, they’ll be able to do so in a way that eliminates so many of the drawbacks and hassles we face when trying to place bets today.
Sports Leagues Could Profit From P2P Betting
The dirty secret — which isn’t much of a “secret” — is that the professional sports leagues couldn’t be more thrilled with the Supreme Courts decision to strike down the federal law(s) against betting. Just like the aforementioned potential state-by-state revenue streams, professional sports leagues are going to heavily invest in ways to make gaming an essential part of the sports viewing experience.
Because of the efficiency in making bets, and the future patterns of potential bettors making all their wagers through online means, expect sports leagues to pioneer and implement all sorts of ways in which wagers can be made against fellow sports fans, and allowing them to make these wagers at and during the game itself (for a small fee off the top, of course, as a “cost of convenience” for making the wager at their venue).
It Will Allow For More Than Just Sports Betting
At the risk of associating sports gambling with another dangerous vice, P2P sports betting could be a “gateway drug” into P2P betting on a myriad of events outside of sports.
How many times have we heard the joke (or maybe it wasn’t a joke?) about people setting up an office pool to wager on which one of their co-workers get fired first? Or what about those pools among friends about which particular contestant might win (or lose) a particular reality television show?
Those people who are already making wagers on sporting events could extend the activity to other areas, and across much larger audiences. You can set up wide-scale betting pools — or just make bets among friends — around things like the outcome of political elections, the winners of a particular movie or music awards show, or even what the weather will be on Christmas morning. And through the P2P wagering avenue of choice, you can manage the entire exchange of funds electronically.