The precise origin of gambling is unknown, but games of chance are historically evident in many societies. The first known European gambling house, was the Ridotto, established in Venice, Italy in 1638. In American history, early gambling establishments were known as saloons, where like minded people could gather for drinks and cards.
Today, whole cities have dedicated their existence to people wanting to test their odds against the house. Las Vegas emerged in Nevada’s Mojave Desert in 1905. It soon became a recognised safe haven for card players and more when state legislature legalised gambling at the local level in 1931.
The city is now thriving, with around 104 casinos. The Nevada Gaming Control Board reported the state’s casinos won US $11.3b during the last calendar year. Slot machines accounted for 63.6 percent of the total . Revenue from the Las Vegas Strip casinos alone totaled about $6.3 billion. Yet, Vegas is still only a small piece of the pie. The global industry for casinos and gaming has a net worth of over US $450b.
Microgaming is one of the largest casino and slot game developers in the world today, and considered pioneers of online gambling. The companies leap into the world of virtual casinos was taken in 1994. Online gaming was worth over a billion dollars within 5 years. The first live dealer casinos appeared in 2003, courtesy of Playtech, and the industry is now a multibillion dollar enterprise with over a thousand online casinos and growing.
Within this market is the online casino and gambling market, a fast growing sector. According to Statista, an online statistics portal, the sector was worth US $24.73b in 2009, and is predicted to exceed US$56b by 2018.
Most of a casino’s profits come from the House Edge, a term used to describe the mathematical advantage that the gambling game provides the commercial gambling venue. This advantage results in an assured percentage return for the house, and is an assured percentage loss for the player.
The house edge pays for the gambling experience. Casinos in Las Vegas provide free drinks, free meals, entertainment, travel deals and many more benefits, such as instant cash deposits and withdrawals. However, online casinos typically provide a much more sparse experience. You don’t get good travel deals or free meals, and players pay more for the raw experience of just the gamble itself.
While the mathematical house edge is the same in both environments, online casinos often charge for extras, such as depositing money and withdrawal fees. Furthermore, there is usually a delay with regards to withdrawing and casinos usually take 2 - 3 days to send you the money.
Cryptocurrencies can alleviate more than one of these issues. The first bet on a Bitcoin gambling site, Satoshi Dice, was processed on the 18th April 2012. SatoshiDice.com now claims to be the world's most popular Bitcoin casino site. Over 4,000,000 BTC has been won and over 6,000,000 individual blockchain based bets placed.
The platform returns bets in less than 20ms and employs a provably fair system, an algorithm which is used to analyse and verify bets on games offered by a service provider.
SatoshiDice has a house edge of 1.9%, and users can choose to play as the house. In 2012, the online gambling platform reported profits of over US $500,000. Erik Voorhees, the founder of SatoshiDice, sold the company in 2013 for 126,315 bitcoins, which was the equivalent of US $12.4m.
“The new SatoshiDICE is pretty amazing. The provably-fair legacy continues!”
- Erik Voorhees, SatoshiDice Founder
Later in 2013, Vitalik Buterin proposed Ethereum, an open-source, public, blockchain-based distributed computing platform featuring smart contract functionality. Development was funded by an online crowdsale in 2014.
Smart contracts are applications with a state stored in the blockchain. They can facilitate, verify, or enforce the negotiation or performance of a contract. Ethereum contracts can be implemented in various Turing complete scripting languages. The Ethereum system has been described as a single shared computer that is run by the network of users and on which resources are parceled out and paid for by Ether. As the contracts can be public, it opens up the possibility to prove functionality, e.g. self-contained provably fair casinos.
A new project call Edgeless Casino is designed to run on the Ethereum blockchain. All of the key operations will be regulated by smart contracts, giving users a fully transparent experience. The real power of smart contracts is that if games implemented them properly they will act each and every time how they are supposed to.
Edgeless states in its whitepaper that the creation of the Ethereum smart contract is a game changer for online gambling, a truly-flawless technology that all casinos could implement should they choose to do so.
“That’s a next generation gambling product which is the best in a current market and does not exist. Yet.”
- Edgeless Casino
The Edgeless Casino draws it’s name from two key games targeting a 0% house edge: Edge Blackjack and Video Poker, two games which combine luck and skill. Blackjack typically has the lowest casino edge if played perfectly, 0.6%. To compensate for this edge, the house gives additional bonuses to the player, such as 1 to 3 payoff in the case of blackjack, and the ability to double bet if casino has a bad card. These additional bonuses reduce the Edgeless Casino house edge to 0%.
However, this won’t necessarily happen for the average player. Blackjack provides a variety of decisions to the player and they can increase or decrease their chance of winning. On average, a player makes mistakes which are equivalent to 0.83%, providing Edgeless with a source of income.
Edgeless is also betting on ‘gambler’s ruin’ which refers to a player with finite wealth who will eventually go broke. “It’s quite simple; a larger bankroll can absorb higher levels of variance. And small bankrolls can’t. That means a small player would bust more even if the casino has a 0% edge,” states Edgeless.
Edgeless will also be offering other betting options that will consist of Micro Limits dice with a 0.05% house edge and sports betting. Sports betting connects two players against each other, and Edgeless will take a 5% fee for processing facilitation.
On the 28th February 2017, Edgeless will be launching a crowdsale to develop the project further. 440,000,000 Edgeless tokens will represent ownership rights to the dividends of Edgeless Casino. The crowdsale will end on the 21st March 2017, or when the total amount of Edgeless tokens have been purchased. Any remaining tokens will be burned according to the smart contract.