Smart Contracts: What's Their Role in iGaming?
Smart contracts have completely reshaped the world of online casinos. They significantly increased players' trust in crypto casinos, and the effects are noticeable. Players nowadays prefer smart contracts because they are automatically executed without third-party involvement.
This Crypto Gamba guide to online casino smart contracts closely examines their modus operandi, types and unique features. Stay with us to learn how smart contracts work, how they can help you play at crypto casinos in 2025, and where smart contracts might take the industry in the future.
What are Smart Contracts
Famous cryptographer Nick Szabo invented smart contracts in 1994. He intended to incorporate the efficiency and transparency of computer programs into contracts.
By definition, smart contracts are digital agreements on the blockchain network. Their differentiating feature from traditional contracts is that they are automatically executed after the terms and conditions are fulfilled. The T&Cs are written in unique blockchain programming languages, most often Solidity.
How do Smart Contracts Work?
Like other legal contracts, smart contracts are binding agreements between two or more parties. The difference is that smart contracts take advantage of blockchain. They rely on “if-then” statements written in code on the blockchain, making them efficient and completely transparent. For a contract to be operational, it needs to have the following checklist completed:
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Agreement Details
Both parties need to know what the contract entails.
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Contract Creation
The contract can be built using a provider or built by the participants.
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Deployment
The contract must be uploaded to the blockchain.
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Monitoring
The contract must be tracked for the predetermined prompts.
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Execution
When the “if” happens, the contract’s “then” is triggered to activate, and actions are enforced automatically.
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Recording
The effects of the contract execution are published on the blockchain, and the system confirms that the action is logged.
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Conclusion
All concluded agreements are publicly available on the blockchain at all times.
Smart contracts today are used in all blockchain transactions. Although the concept is the same, there are different practices enforced for some smart contracts.
Types of Smart Contracts
There are three types of smart contracts widely available today. We outline them in detail here:
- Smart Legal Contracts: These are legally supported and have the same structure as a legally binding agreement. They are known to offer high levels of transparency and are often used for KYC and AML in gambling.
- Decentralized Autonomous Organizations: Also known as DAOs, these are democratic groups governed by a contract that gives them voting rights. A popular example is VitaDAO, a contract for a scientific community that sets up the organisation's operations. In gambling, DAOs are used for gambling governance and profit allocation.
- Application Logic Contracts: ALCs are not signed between humans or companies but between machines and other contracts. They include application-based code that is synced within different blockchain contracts. In crypto casinos, ALCs ensure provably fair betting and gameplay. They are also used in escrow and payout contracts, to apply logic to events, and to obtain real-world data for betting events.
How Smart Contracts Affect Online Gambling
Because of their adaptability, smart contracts are today tailored to deliver all services in crypto casinos. Based on a smart contract, players can make sports bets, participate in lotteries and play casino games.
Players deposit money into the smart contract, and the contract, not the casino, verifies whether the event happens and the payout is due.
Smart contracts are set to verify results from multiple sources automatically. Once the verification is done, contracts pay out winnings based on the previously established odds and rules.
Transparency
Smart contracts give players a high level of transparency and confidence in crypto casinos. Moreover, to strengthen their position further, all transaction history and contract info are stored on the blockchain.
Immutability
Smart contracts are unchangeable due to their cryptographic hashing nature. Once the relevant contract data is added to the blockchain, it cannot be changed retroactively. If both sides want to make changes to the contract, the changes are transparently added in the next blocks on the blockchain.
Provable Fairness
One of the greatest player concerns regarding new crypto casinos is security. Players want to know whether the games they play are fair and be sure that the outcomes do not work to the operators’ advantage. Smart contracts are often used in top-rated crypto casinos to verify the game algorithms are fair.
Automated Payouts
Smart contracts automate many online casino processes, including withdrawals, which are among the most important for players. With smart contracts in crypto casinos, players can make seamless transactions without relying on a casino employee's decision to cash out their winnings.
Dispute Resolution
Because smart contracts are completely unbiased and there is no third governing party involved, they are very useful for dispute resolution. This is especially valued considering the global scope of online casinos' operations. Instead of considering governing laws and regulations, dispute resolution with smart contracts bypasses them and only resolves issues according to the exact coding of the contract. Compared to traditional dispute resolution, this saves all stakeholders time and money.
The Future of Smart Contracts
The benefits of using smart contracts for gambling activities are numerous. Even now, they significantly increase transaction speeds while reducing costs that often burden players.
Further investment in the development of blockchain solutions, such as smart contracts, makes us optimistic about their future, especially in the context of online gambling. We may see the complete removal of chargebacks and low administrative fees while maintaining or increasing security and safety.
Bonnie Gjurovska
Crypto Expert
Bonnie Gjurovska has been a gambling enthusiast since 2017. Her crypto journey began in 2019 when she first read a Twitter post. She then purchased Verge and Bitcoin as her first cryptos and developed a deep interest in blockchain, DeFi, NFTs, altcoins and protocols, scouring forums and communities for sharing knowledge. She is a strong believer in decentralization and digital economy, which stems naturally from her legal educational background.
