Why do sportsbooks ban or limit people? (And an introduction to web3 sports betting.)
To make more money. That’s the short answer. The long answer goes a bit like this:
For 99% of readers, every single bookmaker or sportsbook you know bans customers. On top of that, they probably only accept users from a limited number of jurisdictions. This usually relates to their licence conditions or the laws of other countries. For example, a UK bookmaker will not let someone from the USA sign up on their website. New users to most traditional online gambling websites must complete KYC (know your customer) checks before being allowed to bet. Again, this relates to their licence condition and the laws of the country in which they operate. In recent years, some “cryptocurrency bookmakers/casinos” have become popular. These generally also have limits on their jurisdictions but these can be easily avoided with the use of VPNs since they do not need to use traditional banking rails to accept deposits and pay out winnings. But do not be fooled: these venues are not the saviour of a free and open global sports betting scene. They are still private companies with complete control over user funds who prefer to make money rather than lose it.
Pick any traditional or “cryptocurrency” bookmaker and look up reviews for them. In almost all cases you will find a story of someone who claims to have had their withdrawal request rejected and have had their funds seized. However, legal, licenced bookmakers have a regulator whose rules they must abide by and questions they must answer. Unlicensed (or Curacao licenced — but that’s for another time) “cryptocurrency” bookmakers have almost no one to answer to. They are much more likely to withhold funds.
In almost every country in the world, it is completely legal for bookmakers to refuse to take bets from whoever they want. The modern way of doing this is not to close user accounts (god forbid that they prevent you from playing slots or roulette), but to reduce the maximum stake you can place on a bet. This is known as getting limited. Bookmakers do this to users who they think will be in profit over the long term by winning more than they lose — meaning they are unprofitable to take bets from. While this might seem almost impossible, or purely luck to some bettors, there is a worldwide community of highly skilled and/or professional sports bettors who know methods and tactics to beating the bookmakers at their own game. If you want to learn some things, join the Purebet discord: https://discord.gg/stPns8uA43.
If bookmakers only limited accounts which were in profit, they might accidentally limit many users who won a few bets on some Premier League or NFL games they were watching or got lucky and won a nice accumulator/parlay. Over the long term, these accounts are likely to give back their winnings and some more. To weed out the users which are likely to make profit over the long time, there are a number of methods used.
- The first, and easiest, is identifying users who consistently place pregame bets which then go on to become shorter odds (higher implied probability) by the time the event kicks off. This is known as getting closing line value (CLV). General gambling theory suggests that if you do this over a long period of time, you will be in profit since markets should be generally efficient in evaluating the true implied probabilities of an event by the time the odds close, since all the information is priced in, and everyone has had their chance to make their bets. When you get CLV, the probability of your bet winning is greater than the implied probability of your odds, you will win more than you lose. Of course, there are many caveats to this technique for betting which I will happily discuss in our discord but overall, it is a good way for bookmakers to differentiate good bettors from the average long-term loser.
- A second reason accounts can get limited is to consistently be on the same bets as other accounts. This, of course, does not apply to major sports leagues — but when betting on small leagues and niche sports. This can indicate you are part of a syndicate who is using multiple accounts to get higher stakes on bets than the bookmaker would allow for a single account; or it can indicate that you are part of a group where one or many people are sharing good bets, potentially having inside information. These groups can exist as paid groups run by tipsters who have a long record of profiting off their information or from their knowledge of their niche like Turkish volleyball or Spanish 5th division soccer. You must be aware of scammers when seeking these out though. Almost anyone you find will be trying to take your money and give you bad bets with a fake history of their tips. There are also closed groups where you can only join by invite — usually gained through displaying that you have information or skills as a good bettor. Again, there are many groups out there but most that you will find will be people sharing their opinion on the upcoming NBA playoffs and the weekend soccer headline games. Groups like this will not get you limited and will not make you money.
- An account could also be limited for placing a bet on a single game which the bookmaker has noted and plans to limit almost everyone who bets on it. This could be a game where they deliberately or accidentally set incorrect odds and know that almost anyone who takes advantage of their mistake is likely to know how to profit long term. It could also be a game where there was information that was not accounted for in the odds but was shared around private groups, allowing in-the-know bettors to get odds well above what should have been offered. Fixed matches are also likely to trigger account limiting, especially if you bet on more than one. In major events, the rate of match fixing is very, very close to 0. However, in smaller leagues carried by most online bookmakers, match fixing is much more prevalent. I won’t discuss this much more here but there is plenty I could talk about if you bring it up in our discord. An account which has been unprofitable for a long time and happens to bet on a match like this is unlikely to get limited but a new account or one which has flown under the radar for a while and looks like it might be making money would be very likely to get limited after betting on a match like described above.
Now you know why bookmakers, including “cryptocurrency” bookmakers, limit you (if you can even sign up to start with), what can you do about it? Since, with on-chain betting, a winning bettor could just create a new wallet address, on-chain bookmakers must think smarter than traditional bookmakers who just encourage losers to lose more and prevent winners from playing. We are currently seeing something of a web3/on-chain sports betting Cambrian explosion. New protocols are popping up every month to try to make their mark on the scene. For the purposes of further discussion, this does not include the likes of stake.com, Rollbit, or any similar websites where you are just sending BTC or USDT or any other cryptocurrency to their wallet and being credited on the website which is run like any other traditional bookmaker. The key element of being considered an on-chain bookmaker is that user funds are in a self-custody wallet (to which the user holds the private key) at all times except when a bet is pending.
The original implementation of on-chain betting was simply as an exchange, where the protocol would create markets and allow users to match bets against each other at the odds they chose. The main issue with this is that the average user would be turning up to almost no liquidity if no market maker was active. It is especially impossible to find liquidity on the first generation of these protocols since they were launched on Ethereum mainnet and the gas fees to place a bet could be higher than your profit. The only usable protocol of this design (and probably the oldest that will get mentioned here) is SX Bet (previously sportX.bet). They were on low-cost EVM chains and recently moved to their own Polygon Supernet (similar to Avalanche subnets but this isn’t a blockchain technology discussion. Just know it is their own separate blockchain, only used for their betting exchange). They seem to have an active market making community so there is always liquidity available to casual users to bet against.
To build on this idea, there are new sports betting exchanges launching on Solana, for its low transaction cost and high speed. Aver Exchange launched a few months ago and is trying to find its footing in the market. They are currently only offering a few upcoming events to try to concentrate the liquidity and betting in action in a few places rather than being spread across many events. This is good if you want to bet on those events but limits the choice of what to bet on.
BetDEX is another exchange on Solana. They are still in closed beta but will be entering open beta soon. They appeared on the scene with an announcement that they raised $21m before the public had even heard their name. With this funding and the team’s industry pedigree (previously worked at FanDuel), it is to be expected that BetDEX will have active market makers, probably with off-chain agreements. However, their time spent in beta, and going forward, staying in testnet open beta, means that it could be a while before you can place a bet worth real money with them.
More interestingly, blockchain and smart contract technology has allowed a new type of bookmaker to appear. This could be broadly categorised as a virtual automated market maker (VAMM). Within this category, there are small differences (and hopefully more will be developed with further innovation). The first in this category I will mention is Azuro. They are a relatively new protocol on the Gnosis blockchain. They are purely an on-chain protocol but there is a frontend which accesses their contracts at Bookmaker.XYZ. Azuro markets are set using Chainlink oracles of industry average odds for the events and are only adjusted by user bets. This is similar to how old-school bookmaking was done — where the goal was to balance the “book” by having equal risk on all outcomes so that the bookmaker won no matter the outcome of the event. Similar to Azuro is Overtime Markets, built upon the Thales binary options markets on Optimism. It is not designed specifically for sports betting like Azuro, so things work differently on the backend, but to the average user, the experience is similar. With both of these protocols, there is always liquidity available to bet into since you are betting against the VAMM and not a person setting bets on an exchange. Azuro currently has a focus on soccer with a wide range of leagues, as well as some major CSGO and DOTA2 events with lots more coming soon. Overtime is more focused on American sports with MLS, NFL, NCAA football, MMA, baseball and motorsports. Between the two, it’s unlikely most bettors would ever have to sign up to a traditional bookmaker ever again.
If you reached this far, I hope you learned something or found it interesting, but you might be wondering why this was published by Purebet. Purebet is the next step in on-chain sports betting. Based on custom programs on the Solana blockchain, Purebet’s base layer is a sports betting exchange similar to BetDEX or Aver (but placing an order requires 10% of the rent exemption compared to them and taker orders require none. (Sorry for bragging.)). However, for our mainnet launch, building on top of the exchange, we will be aggregating the odds and liquidity from a number of on-chain betting protocols. This means there is no need to check 3 or 4 venues for the event you want or to see who has the best odds. Purebet will always offer the best odds and deepest liquidity since it is every protocol combined. So if you bet big or just want to know you are getting the best returns, Purebet is the place to be.
This article is the opinion of one person based on their personal experience. If I have made a mistake, you think I have missed anything, or you have any questions, you can reach me in the Purebet discord server: https://discord.gg/stPns8uA43.