Peeps Place, or anyone else interested, do you think that we could use a prediction market to provide a measure of trust for bitcoin sportsbooks? This would provide a means for skeptical bettors to hedge against the risk of fraud.
One problem with this plan is whether anyone would be willing to bet that the book was not going to disappear (or whatever the contract specified). At a minimum, the sportsbook itself should be willing to provide some bids to help build confidence. After all, if they are legit, they would be betting on an outcome that they control. The only excuse they would have to not do this is a desire not to tie up the capital. However, they could roll this over as contracts expired. Any sportsbook lacking the capital required to do this should be extremely worrisome for that reason alone.
An additional issue with this plan is, of course, the reliability of the prediction market itself. There seem to be a few of these that have now emerged as fairly stable. Some, such as Predictious, have also demonstrated a level of transparency that is, so far, unheard of among the sportsbooks themselves. (At least they have an address, a verifiable company name and a legal jurisdiction!) Ironically, some of the legal limitations that are a principal reason for both sportsbook owners and players to prefer anonymity might not apply to a bet on whether the sportsbook would "go Madoff".
The final challenge I see would be structuring the contract in an objective way, allowing verification without requiring the prediction market to launch a huge investigation. This is an issue, but I think that it could be addressed.
A couple of near-term examples would be:
"Nitrogensports / Anonibet to pay out 20 BTC World Cup contest bonus."
Since these books have taken pains to provide transparency to these contests, it should be possible to verify these outcomes. In effect, the bonus amount could be held in escrow by the market. Players participating in these contests could do so with confidence, and could hedge against the fraud risk, if desired.
Has this been suggested, or even tried, before?
You could put this up on
BetMoose without any real involvement of us (the exchange). The host (you) will be responsible for the resolution. You get paid commissions for the 'bet' so you could take this up as a community effort. Also, you have flexibility for selecting any conditions and specific (to the minute) outcome times.
Feel free to to PM me and we can help set you up with a private/password protected contract if you're interested.
I for one would be interested in seeing how many of the 'legit' sportsbooks would be open to entering into such a collateral, and how many would outright oppose it.
P.S: We are also 'real' and if this has enough volume behind it we could have a private information-share agreement, so that's not a big concern.
the one problem that I see, if I'm understanding this completely, is that there is just another possibility of not being paid by enacting a program spelled out above.