Sports can be a bit more fun when there’s some money on the line. What the decentralized peer-to-peer sports betting application ZenSports seeks to do is give punters a safe, secure and easy-to-use space where the betters themselves have control. Co-founder and CEO Mark Thomas explains, “We are a market place bringing together makers and takers of bets and this gives users a lot more flexibility in the types of bets they can create. They can set their own odds and their own terms so they are not beholden to what a bookmaker says they have to do.”
Cutting out the bookie
An avid sports fan who has enjoyed sports betting for the last two decades, Thomas sees ZenSports – which launched its sports betting marketplace on Sept. 13 – as a way to overcome the dangers and limitations of existing sports betting systems. “There are a lot of issues in placing bets with traditional book makers, be they online or offline, issues including funding your account, trusting that the bookmakers will hold your funds safe, that they’ll pay you out when you win, and the fact that they always set the odds in their favor,” he says. “They also don’t generally offer a wide variety of bets because they don’t have the technology to do so.”
Recalling his own experience with sports betting, he says, “I was worried that if I fund a betting account with some online offshore sports book that they might just run off with the money and do something nefarious with it.”
With ZenSports, there is no centralized bookmaker. It does not create bets, nor does it set odds. Decentralized and peer-to-peer, the service creates a marketplace where users themselves generate bets, giving them total control over the odds and conditions.
The structure of the service allows for limitless flexibility, says Thomas. Users can create bets before, during and towards the end of games and on all sorts of non-traditional subjects. You can create a bet on how many threes LeBron James will nail in a season, or how many he will hit in the last two minutes of a specific game. While you’re watching an NFL game, you could wager that the next play will be a running play to the right, or that the next field goal the kicker kicks will hit the left upright and go in. These are things traditional sports bookmakers cannot do, says Thomas, because they cannot predict the scenarios or come up with appropriate odds. “Well, there’s no better person to know what the odds should be than the person who is creating the bet themselves,” he says. “So by having it be user-generated bets from the betters themselves, the possibilities really are endless.”
Incentivizing dispute resolution
When disputes arise, ZenSports employs a decentralized resolution process that incentives all parties to play nice. Bet makers set aside an escrow fee equal to 10 percent of the bet for in case the bet taker raises a dispute. Takers, too, set aside five percent of the bet if they raise a dispute. The service then takes the dispute to the marketplace for a vote. Voters are selected semi-randomly based on factors such as regular use and dispute history.
The dispute is resolved based on a simple majority of the voters. “It’s pretty cool because the majority side of the voting marketplace gets half of the losing side’s escrow fee, and the prevailing side gets the other half of the escrow fee,” says Thomas. “So the maker is incentivized to provide correct results because they stand to lose an additional 10 percent of their bet if they have a dispute and the taker is incentivized not to submit and erroneous dispute because they can lose an additional amount as well. And the marketplace is incentivized to vote correctly because they only receive a payout from the losing side’s escrow if they vote alongside the majority. So it really is a close to foolproof system for a decentralized disputes process.”
Blockchain and beyond
ZenSports is working to introduce new features, including accepting partial bets and allowing takers to make counter proposals. Its most pressing project right now, however, is integrating ICON’s blockchain technology into the DApp, a process that should be completed by the end of the year. Thomas says, “What we launched last week was the fiat version of our app, and so we want to get the product into users’ hands and get them using and loving it, but the cryptocurrency and smart contracts integration, which will add the digital element of a trustless system will be coming in Q1.”
“This will take it to the next level and make it difficult for anyone else to compete.”
ZenSports has no plan to expand its marketplace to non-sports related betting – say, wagering on the outcome of the next U.S. presidential election – as this would dilute the sense of community and focus the service is trying to cultivate. The ZenSports team is, however, interested in branching out into esports, things not traditionally considered sports such as poker, and betting on recreational sports.
This last one also brings ZenSports back to its roots. The service launched in February 2017 as a way to bring recreational sports players together for individual and group matches, sometimes for fun, but mostly for money. Users – including users in jurisdictions where regulations against sports betting are in place (see below) – can still make use of these recreational sports features, which include brackets, standings and live streaming.
Making the regulators comfortable
Though ZenSports has launched its marketplace worldwide, it has yet to offer service to Europe, the United States and Australia, where regulatory hurdles still remain. Efforts are underway to satisfy the legal requirements in those jurisdictions, says Thomas. Recent changes in the legal environment are making things easier, too. In the United States, for example, the Supreme Court struck down in May the federal ban on sports betting. Six states have already taken steps toward legalization and several more will likely soon join them.
Though regulations pose a challenge, at least in some regions, they also present an opportunity, says Thomas. “It’s a good news, bad news sort of thing,” he says. “The bad news is that those are regulatory hurdles we have to go through. The good news is that those are regulatory hurdles that competitors will have to go through. So we really feel that as we go through this, we’ll be able to build some moats around us.”
The advances in technology may also put regulators’ minds at ease. Thomas explains that many of the regulations currently in place date from a time when the sports betting scene was decidedly dodgy. For instance, the U.S. Federal Wire Act of 1961 was passed when organized crime controlled much of sports betting in the United States. “Already, the regulatory bodies are easing up on the regulatory requirements for this kind of thing,” he says. “That’s going to only become even more so over the next one, two, three years. And because the products coming out are very decentralized, it’s going to be tough to monitor that really closely. The biggest thing that the regulatory bodies care about is that you’re not defrauding customers. That’s the No. 1 thing they’ll come after you about. So of course we’re not. That’s the exact opposite of what we’re all about. Everything we stand for is trust and security.”