Sonia Randhawa

Sports gaming is a growing industry, with new technologies driving even more interest. Total revenue for the sports gaming industry is estimated at $10.24 billion this year, and is expected to reach $13.8 billion by 2027. In-game advertising is expected to make up the majority of this figure, followed by in-app purchases.

There are challenges facing the industry, and use cases for emerging technologies such as blockchain that aim to fill these gaps. For example, the decentralization and transparency of blockchain transactions could address long-standing challenges in traditional sports gaming, especially in areas such as asset ownership and reward distribution, which could hold the industry back from reaching its full potential.

Challenges in the traditional sports gaming industry

Traditional sports games lack transparency in transactions and ownership, especially since most of these are under the control of game operators. With no ability to freely trade or transfer in-game content, players have no true ownership of these items. Reward systems can also be unclear, which reduces trust from the community. Players are unsure whether they will receive fair rewards for their efforts and achievements in the gaming ecosystem.

Traditional sports gaming platforms also pose security concerns as player data is stored centrally, exposing information and in-game assets to hacking and breaches. This can include both player and developer data, such as distributed denial of service (DDoS) attacks against Blizzard Entertainment games. Hackers have a variety of reasons for attacking gaming platforms and individual gamer accounts, ranging from stealing hard-earned in-game assets to getting revenge on opponents or even taking down an entire game.

Ultimately, players have limited control over their gameplay, resulting in a loss of trust in the community and ecosystem.

How blockchain improves asset ownership and community engagement

The main advantages of blockchain technology are decentralization, transparency and immutability of transactions, meaning that once a transaction is approved by a consensus mechanism, the ownership of the assets is also established across the network.

The establishment of non-fungible tokens (NFTs) has been a game-changer in how these non-physical items represent both digital and real-world assets, such as player cards, virtual goods, or exclusive rewards. NFTs are becoming extremely popular as an asset, with global revenues projected to reach $2.378 billion in 2024 and grow to $3.369 billion by 2028, at a CAGR of 9.10%.

NFTs provide verifiable ownership and control over such assets and can be traded not only within the same gaming ecosystem but also across other marketplaces, meaning NFTs can be used across different games and can also be used as investments, creating new economic opportunities inside and outside of gaming ecosystems.

“NFTs are unique in that they meet all of the requirements for digital property rights and foster an efficiently run marketplace. They also serve important social functions: enabling self-expression, creativity and ownership,” Flora Li, director of the Huobi Research Institute, said, referring to the institute's report. Overview and trends of the global cryptocurrency industry report.

Blockchain Use Cases in Strengthening the Gaming Ecosystem

Several sports gaming platforms have successfully leveraged blockchain technology to significantly improve asset ownership and player engagement.

GameOn is a pioneer in using NFTs to represent player avatars in fantasy sports. Users can actually own these avatars and participate in games, which is not limited to a specific league and can span different platforms. Avatars can also be traded on the NFT marketplace, increasing the value of engagement. Players have tangible rights to their virtual assets. To strengthen the seamless integration of Web3 and blockchain technology, GameOn announced a strategic partnership with Arbitrum, a layer-2 blockchain network with $3.13 billion in total value locked (TVL). As part of this collaboration, GameOn also secured a grant from Arbitrum.

GameOn is expanding on that approach, leveraging blockchain technology to offer flexible rewards with these NFTs: for example, if a user’s LALIGA player is in the off-season and not earning rewards, they can pay a small fee to temporarily convert the player into a participant in another league, or even into a reward-earning UFC fighter.

ZED RUN is a digital horse racing platform where horses are bred, raced and traded using NFTs. Each horse has its own unique characteristics and attributes that affect its performance on the virtual track. Horse owners can earn rewards based on their horses' racing results, creating dynamics in the competitive environment.

Meanwhile, F1 Delta Time was a Formula 1-focused platform owned by Animoca Brands. Players could collect and trade unique cars, drivers, and car parts as NFTs, and it was officially licensed by the FIA. At the time, assets could be used in virtual races, and performance was also influenced by the rarity and attributes of the NFTs. The game also had a staking mechanism, allowing users to earn rewards by staking tokens into the system. F1 Delta Time boasted the highest NFT sales at the time, but the system was shut down when the official license from the FIA expired.

Finding a balance between technological advances and user benefits

Blockchain technology is revolutionizing reward distribution: Firstly, rewards can be defined through smart contracts or self-executing contracts with predefined terms, automating reward payouts for maximum transparency, eliminating the possibility of human error or manipulation and giving players more confidence that they will receive rewards fairly.

According to GameOn CEO Matt Bailey, it's important for an NFT-powered sports gaming platform to deliver benefits while ensuring technological advancements happen in the background: “It's really important that blockchain is in the background technically and only the benefits are marketed on the front end.”

He emphasizes that to better understand the benefits, consumers need to think of it as a sports and gaming-focused platform, rather than an NFT platform: “We are a fantasy sports and gaming company made better by Web3. Fans don't care about three-letter acronyms and tech jargon. All they want is the benefits.”

GameOn offers this approach to sports games, rewarding players with tokens for playing games, participating in challenges, or simply holding certain NFTs, which can be used for in-game purchases, staking for rewards, or redeeming for real-world goods and services.

The platform has partnered with major sports leagues such as LALIGA and Professional Fighters League (PFL) and provides users with a fun and rewarding experience with a focus on match-based gaming and live in-game action.

The Future of Blockchain in Sports Gaming

As blockchain technology matures and becomes easier to use, its adoption in sports gaming is expected to accelerate. More platforms and industries will embrace the use of NFTs, smart contracts and decentralized systems to improve user experiences and create new revenue models.

The integration of blockchain technology into the gaming and sports industries will play a major role in shaping how users benefit from participating in the gaming ecosystem.

TN Global Insider We publish contributions related to entrepreneurship and innovation. Subject to editorial discretion, you may submit your own original or previously published contributions.

Image credit: Unsplash