Centralized Models

When sports betting is referenced by most people, they’re generally talking about the centralized sports book model. All physical casino sports books and the majority of online sports books (save a few notable exceptions we will mention in the next subsection) operate on a centralized model. This is the most popular type of sports betting at the time this whitepaper was written, but in the future we hope to see a rise of models like ours and the decentralized ones we’ll discuss in the next section.

Centralized sports books use machine learning and big data analytics to create their own odds in-house. These odds are created using advanced algorithms that can predict outcomes better than the average gambler. Studies have shown that these predictive odds are very closely correlated with the actual event outcomes (Lott 2018).

With the existence and usage of models capable of generating odds with this level of accuracy, public odds aren’t created with the focus of balancing bets for the most part. They are created knowing that the bookies have superior analytics to take bets when the gamblers are disproportionately wrong on average (Brycki 2020).

The use of powerful odds combined with extensive marketing outreach has allowed centralized sports betting to flourish with no apparent slowdown in sight. However, their model has problems inherent to most centralized protocols. There are processing delays on transactions, winners get banned, and you need to rely on the bookies and banks for handling your money. These issues along with the growing cultural power and financial pull of Web3 products has created an opportunity for different models to emerge.