Things augur well for the US sports betting industry, not to mention a new eponymous online prediction betting platform.
Sports betting is a hot topic in the United States right now, as sports leagues seem to be warming to the idea and states, New Jersey in particular, are challenging the 1992 Professional and Amateur Sports Protection Act that has restricted the practice to just four states.
But others are looking in a different direction for the future of sports betting, with the technology behind Bitcoin being a possibility for how to grow the industry online.
That’s the concept behind Augur, a new online gambling platform that is expected to be launched this fall. It’s based on the same blockchain technology as popular cryptocurrencies, meaning that all of the work behind the exchange will be decentralized.
Augur Will Function as Prediction Exchange
To the average user, the plan is for Augur to look like any betting exchange. Bettors will bet on the results of sporting events, as well as potentially other markets like elections or other political questions, with the odds being determined by what gamblers as a whole are willing to give and take.
In other words, Augur will function more like a prediction market in the vein of the defunct InTrade or PredictIt, rather than a William Hill sports book. And the makers of Augur are promoting it as a prediction market that takes advantage of the wisdom of crowds, rather than as a way for gamblers to make a quick buck while predicting who will win a football game.
“Imagine an Early Warning System for everything that tapped into the collective awareness of humanity,” reads a message on the Augur website. “Imagine better forecasts about politics, commerce, technology, entertainment and more.”
There’s certainly reason to put faith in the ability of markets to predict future events, though their efficiency in doing so can sometimes be overstated. The Iowa Electronic Markets (IEM) famously did a better job of predicting presidential elections than polling firms when looking more than 100 days in advance, for example.
However, few would claim that polls taken that far in advance are attempts to make predictions about an election other than by measuring the temperature of public opinion at the time they are taken.
Government Reaction to Prediction Markets Mixed
Such prediction markets have sometimes been targeted by the Commodity and Futures Trading Commission (CFTC). For instance, the CFTC forced InTrade to end trading, saying that it was violating rules governing how Americans could buy and sell predictions on commodity prices (both the IEM and PredictIt feature strict limits that allow them to be classified as academic research tools).
But by using the blockchain to distribute the work of Augur, the market might be virtually impossible to take down: there are no servers or employees that could be rounded up to stop Augur from operating. Instead, everyone in the peer-to-peer marketplace would be doing their own part to help keep the system running.
That aside, lead developer Joey Krug believes that the CFTC is unlikely to even attempt any action against Augur.
“Our friends in Washington, DC say the CGTC will probably just dismiss Augur and say it’s not a big deal,” Krug told Reason.com.
Augur’s Alpha build has already been released on the Ethereum blockchain network, allowing users to try out the software and suggest improvements. The beta release is expected later this year, following an upcoming sale of “reputation tokens,” which will allow people to share in the fees collected in the market by acting as reporters who verify the results of events.