The lottery industry has always been perceived as a gaming product, but it is also a high-volume industry that can be referred to as a commodity. Lotteries are different from other gaming products as players risk a small amount of money against very long odds to win a large prize, with the net proceeds going to the public good. In 2014, the global lottery represented an annual growth rate of 4.3% over ten years, increasing from $187.1 billion in 2004 to $284.3 billion. However, with the growth of the digital economy, the industry faces challenges like the lack of transparency and fairness. The world demands more transparency and fairness with advanced technologies like blockchain. The distributed nature of blockchain promises innovation in the lottery industry.
Challenges Faced by the Lottery Industry
Fairness
It is essential to ensure the integrity of the games to avoid the risks of manipulation or fraud. Lottery players doubt the fairness of lotteries and ask the following questions:
- Are the deal and ticket real or not?
- Is the random number generation (RNG) method secure and random?
- Are the prizes paid on time?
- Is the jackpot winner real?
- Is the money accumulated in one pool and used for social causes?
Since traditional lotteries fail to answer the above questions, lotteries lack fairness in the system. Manipulation in the lottery industry has been prevalent in the past, as seen in the 1980 Pennsylvania Lottery Scandal (The Triple Six Fix) and the Hot Lotto Fraud Scandal (Iowa Lottery Case). Therefore, it is essential to bring fairness to the lottery systems.
Availability
Due to the smaller size of the domestic market, users from different countries cannot get involved in the biggest lotteries in the world. They are restricted to participating in smaller local lotteries. Though new online solutions enable players to purchase worldwide or US lottery tickets, the service charges and risks of fraud and mismanagement are higher. As of now, state and law regulations control the way lotteries are carried out in different corners of the world. Not more than 50% of funds gathered from ticket sales are issued to the prize pool on average, and lottery participants have no control over how much money should be collected from ticket sales. Lottery winnings are also taxed in some countries.
Distribution of Funds
Lotteries are served as funding for charity and other social projects. However, in many cases where countries have high levels of corruption, players can question the fair distribution of funds. Since there is no way to get information about the distribution of funds, it could be the biggest challenge for the players to build trust in the specific lottery association.
Blockchain Lottery Platform Solutions
The blockchain is a distributed ledger technology with a secure write-forward authentication system that can add data without the risk of a single point of failure. Every node involved in the blockchain network has a copy of the ledger, making it more transparent and fairer.
How a Blockchain Lottery Platform Utilizes Technology for Fairness and Transparency?
Lotteries have been around for centuries, but the introduction of blockchain technology has revolutionized the industry by adding a layer of transparency and fairness. Blockchain-based lottery platforms have gained popularity due to their decentralized nature and the ability to ensure that the game is free from manipulation. In this article, we will discuss how blockchain lottery platforms work and the technology components involved in the process.
Technology Components Involved in the Blockchain Lottery Process
A blockchain lottery platform utilizes the following technology components:
- Public Blockchain
- Android/iOS App or Web Platform for Players
- Web Platform for Admins to Deploy Smart Contracts
These components work together to ensure that the lottery game is fair and transparent.
Step 1: Players Sign Up to the Lottery Platform
The first step in participating in a blockchain lottery is to sign up for the platform. Players are required to provide their name, wallet address, email ID, and phone number during the sign-up process. Once registered, players receive alerts and notifications related to ticket openings on a regular basis.
Step 2: Admin Announces Ticket Openings and Deploys Smart Contracts
The admin announces the ticket openings on the platform, and the notification is sent to the users. They also deploy smart contracts that contain pre-defined rules for the lottery game to ensure fairness and transparency. Smart contracts ensure that the information is shared only with the relevant stakeholders, providing privacy and disclosure of data.
Since players can buy tickets with cryptocurrencies, their identities remain anonymous. The transactions are recorded on a public blockchain, allowing traceability and making it easier to resolve disputes/scandals related to lotteries.
Step 3: A Random Number is Generated and Recorded on the Blockchain
The random number generator used in a blockchain lottery platform is based on the blockchain, relying on recent random blockchain transactions. It pulls a specified amount and order of numbers to generate each winning number sequence.
Since nobody is aware of the next transaction in the blockchain, the lottery platform adds an extra layer of randomness to the selection process. Once the random number is generated and matched to the player’s ticket number, they are awarded, and the money is automatically sent to their respective wallets. The funds to be distributed to players are defined in the smart contracts, ensuring that commissions and funds are paid out to every player on the platform.
Furthermore, the smart contract code is available publicly on the platform, allowing players to check the rules defined in the contracts to confirm if the funds are distributed fairly.
Step 4: Players Can Trace Back the History of Transactions
Since the transactions are recorded on the blockchain, players can trace back the history of records to know who has won the jackpot and if the commissions and wins are paid out as defined in the smart contracts.
Blockchain and the Lottery Industry: Enhancing Transparency, Accessibility, and Fairness
Blockchain technology is no longer a buzzword in the tech industry. Its impact can be seen in various industries, including the lottery industry. With its ability to bring transparency, accessibility, and fairness, blockchain technology is a game-changer in the lottery industry. In this article, we will explore how blockchain can enhance the lottery industry.
Improving Fairness with Smart Contracts
A smart contract is a digital agreement between parties that is enforced by computers. It brings transparency to any transaction and ensures that the rules are legible to all parties and can never be altered. With an online blockchain lottery, no centralized authority is there to govern the game. As a result, there will be no concerns related to winnings. The player’s funds can directly go into the contract without the interference of intermediaries.
In addition, smart contracts can also eliminate the risk of fraud and manipulation. Since smart contracts are immutable, once the rules are set, they cannot be changed. Therefore, all participants in the blockchain lottery have the assurance that the game is fair and unbiased.
Privacy and Accessibility
The use of cryptocurrency for gambling has become a popular solution for casinos, either as an alternative to fiat currency or as the primary payment system. With cryptocurrencies, users can gamble anonymously, without the need to submit copies of documents. This is particularly important in countries where online gambling is not legal, as it enables players to bypass strict regulations.
Moreover, cryptocurrencies can make online gambling accessible as it offers a low entry barrier to new players and enables them to avoid gambling regulations applied to fiat currency. Therefore, blockchain technology has the potential to make online gambling more inclusive and open to a wider audience.
Traceability
One of the most significant benefits of blockchain technology is traceability. Since all records are stored on the blockchain, players can have a transparent and traceable view of the saved transactions. This means that they can easily verify their transactions and track their winnings. In the event of a dispute, the blockchain can provide evidence to resolve the issue.
Examples of Blockchain Lottery Platforms
Several software development companies have implemented blockchain technology to enhance the lottery industry. Here are some examples:
Firelotto: Firelotto is a decentralized lottery platform backed by Ethereum and its smart contracts without any human intervention. The platform offers two types of lottery games: a draw lottery and an instant win game. Players can buy tickets with cryptocurrencies and fiat money.
Kibo: Kibo is a smart contract-enabled gaming Ethereum platform that brings a new level of availability and transparency in the lottery market. It connects players from any part of the world, and players can participate using cryptocurrencies.
Quanta: Quanta is a fully licensed blockchain lottery platform developed on Ethereum. It offers credibility and safety to players and operators and enables people to participate in the lottery regardless of border or economic status. Every transaction goes through the blockchain, ensuring that there are no foul plays or lottery scandals in the ecosystem.
Conclusion
Blockchain technology is transforming the lottery industry, bringing transparency, accessibility, and fairness to the games. Smart contracts, privacy, accessibility, and traceability are some of the significant benefits of using blockchain technology in the lottery industry. The examples of blockchain lottery platforms, such as Firelotto, Kibo, and Quanta, demonstrate the potential of blockchain technology in revolutionizing the lottery industry. As more companies implement blockchain technology, we can expect the lottery industry to become more inclusive, transparent, and fair for everyone.
