Smart Contracts to kill() U.S. Gov. Lotteries

It’s no secret that state-run lotteries are gigantic monopolies with high administrative costs. Their net social value is dubious at best; governments probably shouldn’t profit from gambling addictions – and very soon they will no longer be able to.

Blockchains and smart contacts are going to put government lotteries out of business. That isn’t phrased as a mere possibility – because it isn’t one… it’s inevitable.

Government Guns are no Good Here

First thing’s first: gambling online is illegal in the USA because the government says so and they have bigger guns than their citizens do. For many people in the USA, this would be enough of a reason to stay away from anything but state-approved lotteries. Until, of course, they realize that they probably won’t ever get caught.

Private transactions are coming to smart contract platforms. Buying tickets for and getting paid by lottery DApps is going to be completely private. Couple that with the intelligent use of a random blockchain address – and the risk of getting caught trends towards zero.

The cost of starting a lottery DApp is constantly decreasing. Anyone can literally copy and paste existing implementations. Even if the government will actively try to shut down such things, they simply will not be able to keep track of them all. Oh, and don’t forget: the ones that the government would want to go after would have no means of being shut down. That is, after all, the power of decentralized applications.

Ok, so the government can’t stop these smart contract lotteries. That’s only half the equation, right? The players would have to switch to these new lotteries en masse for the old government lotteries to go bust…

They absolutely will make the switch, here’s why:

Blockchain-based lotteries are completely transparent and can never mismanage funds. Winning players won’t ever have to worry about getting just a government IOU – as has happened recently in the USA. They also won’t have to worry about insiders rigging the games – as has also happened recently in the USA.

Blockchain-based lotteries have little to no overhead; the prize pool needn’t be reduced to fund bureaucracy, auditors, or political pet-projects. This means that the odds can be better for players. Competition will force the “house edge” of DApp lotteries down to near-zero – government lotteries simply will not be able to compete.

A Good Bet for You Might Be a Problem for Jr.

These low-cost lotteries are going to be ubiquitous – and that is going to potentially save adults who enjoy gambling some money. Good news… but… the flip side is slightly more problematic: it’s also going to be easy for younger people to gamble. The lines between gaming and gambling will inevitably start to blur. Luckily, our technology will surely help us deal with the problems introduced by our technology.

Hint: software wallets with parental controls are going to be a thing.

The government exploitation of problem gamblers won’t be.



If you want to check out what lottery DApps look like:

Remember, zkSNARKs isn’t on the mainnet yet 😉