Attracting Tech-Savvy Bettors: How BetDEX utilises Crypto and Blockchain
In an interview with Gaming Eminence, Varun Sudhakar, the CEO and Co-Founder of BetDEX, unveils the transformative potential of cryptocurrency and blockchain technology in sports betting. Sudhakar delves into BetDEX's strategic utilisation of the Monaco Protocol and Solana blockchain, highlighting the advantages that set the platform apart from traditional betting exchanges and sportsbooks. As the crypto-betting landscape grows increasingly competitive, Sudhakar shares the unique attributes that distinguish BetDEX and the innovative strategies in place to maintain a leading position. With recent forays into cricket markets and ambitious plans for expansion across South America and Asia/Oceania, Sudhakar unveils BetDEX's growth strategy, leaving readers eager to discover the company's approach to these burgeoning global markets.
GE) How do you see cryptocurrency and blockchain technology impacting the future of sports betting, and how is BetDEX leveraging this to attract tech-savvy bettors?
VS) With the rapid rise in popularity of cryptocurrencies over the past five years, crypto has already had a significant impact on the global sports betting market by providing bettors with alternative payment rails. Traditional payment models make it incredibly difficult to place a bet, with some credit cards classifying gambling transactions as high-risk and some countries, such as Australia, banning credit cards transactions for gambling entirely. Other traditional payment options such as direct links to bank accounts, using PayPal, or depositing with cash at a physical location are equally arduous. With crypto, a bettor can simply send the cryptocurrency or stablecoin to the custodial sportsbook (or smart contract in BetDEX’s case) and it removes the middleman.
As to the perceived volatility of crypto, all bets on BetDEX are accepted and settled in USDT, a stablecoin that is backed 1:1 with fiat and attested to by third party audits, eliminating volatility. BetDEX is built on the Solana blockchain so the transaction fees are paid in the native token, SOL, but those fees are so minimal they will remain fractions of one cent even at high prices, e.g. if SOL was $200 the gas fee would only be ~$0.001/transaction. In contrast, transaction fees on the Ethereum blockchain can range upwards of $20-$30 per transaction, making Solana the faster, more efficient option to operate a betting or prediction market.
This has been key to the success of sportsbooks like Stake.com where users can deposit their cryptocurrency into the platform in the same way they deposit fiat currency. While cryptocurrency provides bettors with more flexibility in their choice of payment, it is only one small use case of blockchain technology as a whole.
The next major opportunity for blockchain technology is to enable wagering that is fully non-custodial and transparent. Non-custodial meaning that instead of users a) having to trust a site to let them withdraw their funds when they win and b) running counter-party risk of the site or sportsbook disappearing with their funds, the bets are all settled on the blockchain without the book ever touching player funds. BetDEX has seized this opportunity and never controls or holds player funds. All wagers are held on transparent, audited, and public smart contracts on the blockchain and, upon settlement, the smart contract immediately remits funds to the winner’s wallet.
The challenge of advancing the industry forward and embracing blockchain technology is one of adoption and education. Most bettors are blissfully unaware of the hidden fees and deceptive tactics employed by legacy centralised sportsbooks. The goal of traditional sportsbooks is to maximise earnings by making money off of losing players. Furthermore, they will do everything they can to increase player funds on the platform, limit withdrawals, and prevent sharp bettors from using the platform. If you are a smart bettor the book will drastically limit the amount the player can bet, or ban them from the platform entirely. Traditional sportsbooks also make it difficult to withdraw your funds. Even on fully regulated books like FanDuel, deposits are instant but it takes days to withdraw. On Bovada, withdrawals can still be issued via a physical check, delaying the process further.
These factors add up to a degraded user experience and we at BetDEX ultimately believe. that bettors will seek out platforms that provide trust, transparency, and ease of use. The co-founders of BetDEX all come from traditional sportsbooks so we saw firsthand the gaps in the traditional model and knew there was a better way to build a user-centric sports betting platform. BetDEX has designed its exchange with these core principles in mind and has leveraged both blockchain and cryptocurrency to achieve these ends.
GE) Can you explain how BetDEX's use of the Monaco Protocol and Solana blockchain gives it an edge over traditional betting exchanges and sportsbooks, and what benefits this provides to users?
VS) BetDEX is a licensed and regulated sports betting exchange built on top of the Monaco Protocol. The Monaco Protocol is a matching algorithm and order-book which pools liquidity using the Solana blockchain.
The Monaco Protocol offers a number benefits to betting exchanges such as BetDEX and their end users, specifically:
1) Non-custodial - all wagering is managed by smart contracts, allowing uses to remain in control of their funds at all times. Smart contracts are “if this, then that” agreements that are coded in software, codified on the blockchain, and executed instantly when all conditions of the contract are met. For example, a BetDEX user wagers $20 on Team A to win the match and another BetDEX user wagers $20 on Team B to win the match. The BetDEX Exchange pairs these two bettors and formalises the bet via a smart contract. Once the match is finished, $20 is automatically debited from the losing side of the wager and deposited in the wallet of the winning side. At no point does BetDEX touch or hold either users' funds. Players do not need to try to ‘withdraw’ any winnings from the centralised sportsbook, nor do they need to worry about the sportsbook disappearing with their money. They just have to rely on the smart contract.
2) Open source and permissionless - The Monaco Protocol is open to all developers to build on. We believe that democratised access will result in new ideas, platforms, and designs that will ultimately benefit all Protocol users. In contrast to legacy betting platforms, operators (such as BetDEX) don’t need permission to build on the Monaco Protocol. Similarly, they can’t be kicked off the Monaco Protocol like they could if they built on top of a centralized exchange. Over time this encourages builders to compete on product and user experience rather than marketing a short term promotion. This competition on user experience as opposed to monetary gain will result in sportsbooks building better betting venues and an increased variety of options for bettors.
3) Hedging - Monaco offers sportsbooks a fast and low cost way to manage their risk as books will be able to hedge any excess exposure onto the Monaco protocol. Under the existing industry structure, when books want to hedge their risk they have to find other venues to accept the opposite side of the bet. Often those exchanges may not have enough liquidity for the trade, so exchanges need to hedge across multiple partners. When Monaco becomes a permissionless and liquid marketplace, books will be able to hedge automatically without needing to find willing partners.
4) Ultra low fees - Currently, the Monaco Protocol doesn’t charge any fees but when fees are introduced they will be significantly lower than the centralised competition. Traditional sportsbooks have fees as high as 10%, in addition to the average credit card fee of 2%. Fees on the Monaco Protocol will be a fraction of that.
5) Pooled liquidity - Applications built on top of the Monaco Protocol can contribute to and access a shared liquidity pool, providing their end users with tight spreads and great prices. Since Monaco provides the backend infrastructure and matching engine for these applications, the user is able to access much better odds in their favour. For example a traditional sportsbook may be able to offer odds of 2.0, while the Monaco Protocol, and BetDEX by extension, would be able to offer the user odds of 2.2 once the ecosystem has enough liquidity. A traditional sportsbook has one seller - the sportsbook. A decentralised sports betting exchange with pooled liquidity can have multiple sellers increasing the likelihood of better prices for bettors. All bettors, but particularly serious bettors of size, want to receive the best odds possible and will seek out those venues.
We conducted a thorough review of core metrics when selecting a blockchain for BetDEX, including speed, transaction costs, and throughput. Solana was the superior choice in all three categories. When operating a sports betting exchange, speed is paramount, particularly when introducing features such as in-game live betting. Solana can handle over 60,000 transactions per second, providing BetDEX with the ability to manage the high inflow and settlement of wagers and the extremely low transaction costs on Solana allow’s BetDEX to pass those savings on to its users.
The additional benefit of building on Solana is the expansive ecosystem of projects building and growing on the network that are expanding the web3 ecosystem daily. While this wasn’t an immediate selection criteria, being part of this ecosystem has undoubtedly had a positive impact on our development as a company.
GE) What sets BetDEX apart from other crypto-betting exchanges, and what strategies does it have in place to continue standing out in a crowded market?
VS) Sports betting and blockchain have been two of the most rapidly evolving industries over the past decade, with both entering the mainstream in parallel. The intersection of crypto sports betting platforms accelerates this innovation but also requires companies to match this speed in order to maintain a competitive advantage.
BetDEX is proud to be the first fully-licensed, regulated sports betting exchange built on blockchain technology. Regulatory clarity is critical to the success and trustworthiness of crypto sports betting platforms. This alone gives BetDEX a significant advantage against new market entrants. BetDEX is fully licensed and regulated through the Isle of Man Gambling Supervision Commission (GSC) allowing us to offer our product to ~50% of the world’s population, largely in international and emerging markets. With the global popularity of sports betting exploding, BetDEX can respond to the demands of emerging markets and provide users with a platform that they can trust is approved to operate in those regions.
When reflecting on the growth of legacy industry players like Fanduel and Betfair, it was not long ago that these companies were considered disruptors deploying exciting new products like mobile sports betting. We believe BetDEX is in a similar position today that these companies were in only a short time ago. The blockchain technologies that are now considered novel will soon be seamlessly integrated into everyday life and BetDEX will remain on the forefront of that deployment.
The BetDEX team is comprised of key personnel from FanDuel, Betfair, Betdaq, and BoyleSports and the majority of the engineering team were very early at FanDuel. This deep industry knowledge and expertise cannot be matched by the competition and has allowed BetDEX to address the issues with legacy sportsbooks and build the leading web3 sports betting exchange.
In terms of product, BetDEX being built on the Solana blockchain gives it unparalleled speed and the ability to outpace the competition in terms of processing betting activity. Additionally, BetDEX has developed, documented and open sourced the core back-end technology, the matching algorithm and order-book, in the Monaco Protocol. As these two platforms continue to grow we anticipate a positive feedback loop of increased liquidity and enhanced features and offerings for bettors, providing an industry leading web3 wagering experience.
GE) BetDEX has recently expanded into cricket markets, and you have plans to expand into new global markets, particularly South America and Asia/Oceania. Can you share more about BetDEX's expansion strategy and how you plan to approach these markets?
VS) At BetDEX, we have taken a ‘customer-first’ approach to expansion. I email every single customer personally when they onboard and conduct customer interviews if they are open to it. We also receive feedback from Discord and BetDEX’s in-app support helpdesk. Put simply, we are adding inventory and markets based upon what our customers ask for.
Football is the most popular sport in the world, which made the World Cup a natural starting point for the BetDEX Exchange, followed shortly thereafter by the English Premier League and European leagues. We recently added cricket in response to demand from the Asian market and have seen a significant uptick in wagering activity since launch.
The challenge of any new market expansion is raising awareness of the new offerings and meeting the needs of the player base in each region. We knew the Indian Premier League was a top priority for APAC bettors based on feedback from local territory managers. We also know that bettors in Asia prefer to place wagers on ‘Asian handicap’ markets and that is an offering we have added to the future markets roadmap. In the near future we expect to a) further expand our football offering b) launch new sports such as tennis and c) expand our product offering via in-play markets. We are also excited about the potential for esports and political markets as betting markets continue to evolve.
About our contributor
Varun Sudhakar is the CEO And Co-Founder of BetDEX, developer of the BetDEX Exchange, a sports betting exchange built on the Monaco Protocol allowing for peer-to-peer wagering. The Exchange is licensed and regulated under the jurisdiction of Isle of Man via the Gambling Supervision Commission. Prior to co-founding BetDEX, Varun held a senior level position at FanDuel. Visit https://www.betdex.com/