The Future of Payment Processing in the Gambling Industry
Perhaps the single largest improvement that GAMBL can make to the online gambling industry is in the area of payment processing. Currently it is very inefficient, costly for operators, a big hassle for users, and full of serious potential security issues. Our previous article highlighted some of the most recent issues in both the regulated and offshore segments.
For many users, just the fact that their payments are not being handled by the operator they are engaging with is surprising news in its own right. Operators outsource the payment processing, which shifts the responsibility and liability out of their control. Sensitive user information is now being stored with both of these and typically in multiple locations at each one. This creates a lot of potential for things to go wrong, and we see examples of this happening much more frequently and widespread than it should be.
Many of the security issues stem from using an email/password combination for authentication, which can be bypassed fairly easily when weak or reused passwords are used. In the case of one major payment processor, they only required a few pieces of personal info that are rather easy to obtain. Multi-factor authentication adds another layer of security, but it too can be bypassed in some cases. It is important to note that adding layers of security also tends to create more friction for users. Both payment processors and operators are reluctant to add too many options for security, and they frequently make trade-offs that improve ease-of-use at the cost of security.
Another major issue is that gambling is generally deemed a high-risk industry. This leads to payment processors charging much higher rates. Operators are quoted as high as a whopping 10% for the service. These inflated costs of payment processing are ultimately paid by the users of course, through lower payouts on their bets.
GAMBL eliminates these third-party providers and gives users control of their own funds at all times. Shifting away from email/password authentication to blockchain is a big change for many, and a bit of a learning curve, but there are significant security benefits in doing so. Users’ personal info is better protected and their funds are more secure, when implemented properly.
It’s also simply a much more efficient solution. Users won’t be waiting long periods of time for deposits and payouts to clear. In the case of payouts especially, as they often take days or even weeks and have long been one of the largest complaints of users. And last but certainly not least, not having to pay the outrageous processing fees allows GAMBL to pass on the savings to users in the form of higher payouts. Bettors will appreciate this since they are quite sensitive to how much sportsbooks keep and they are quick to shop around for the best price.
Offshore sportsbooks are mostly the only ones to utilize cryptocurrencies at this time, and only just as an option for payment processing. They miss out on a lot of the benefits while still retaining many of the security issues and other problems from traditional systems. Users also still have to wait long periods of time to withdraw in many cases, and their funds are not in their control. As we have seen with the FTX situation recently, the FullTilt fiasco, and so many others over the years – this often leads to disastrous results that harm large numbers of people.
GAMBL will finally allow both bettors and operators to take full advantage of the benefits that crypto can offer. It is important to note that this is not just the current benefits either, as GAMBL is well positioned to take advantage of even more crypto-related benefits as they become available. This is a massive advantage that will become increasingly apparent as crypto continues to grow and develop.