A new paradigm: Is blockchain the future of player protection?

In 2014, a brief from PwC’s Canadian Gaming Practice team argued that “every gaming business has a role to play in fostering a secure gaming industry”. Over the last two decades of poker being played for real money, not every gaming business has played their role.

While there have been several areas where poker operators have breached customer trust, two areas are ripe for security improvements by using blockchain technology: card shuffling and protecting player funds.

Even today, gambling businesses proclaim their trustworthiness to customers based upon opaque security systems. Some of these opaque systems and calls to authority might well be safe for purpose but customers have little information on which to make a judgement.

New blockchain technologies represent an opportunity for customers to not just be assured of a random shuffle, but to also be able to verify that the random numbers have not been tampered with. This is possible because the blockchain technologies are designed from the ground up to be decentralised, with proof-of-work a core part of many blockchain deployments.

CoinPoker and other blockchain-led operators have an opportunity to include new technologies to enable customers to verify that the cards were random and untampered. One such system is being implemented by including random numbers generated by each player’s device and making those random numbers visible to the end-user.

For the first time, meaningful parts of the shuffling process will be open source, allowing end-users to verify the design and implementation of the protocol.

While few players may spend the time to verify the randomness of a shuffle, the fact that such a system exists will be a strong incentive for the operator to protect the random shuffle. This is akin to a home burglar alarm – having an active alarm is a strong deterrent to misbehaviour, even if the alarm is never triggered by an intruder.

Protecting player funds

Over the last 20 years, hundreds of millions of dollars belonging to many thousands of online poker players have been lost by online poker sites inappropriately spending player funds. By operating a transparent wallet on a public blockchain, operators can change that paradigm in a fundamental way; the location of player funds will be transparently visible to anyone who wants to look at the blockchain data.

In the past, online poker sites were able to get away with spending player funds because their accounts were hidden from public view and the weak regulatory regimes were unable to satisfactorily protect player interests.

Players were placed in an awful situation. Solving this problem truly isn’t easy in a traditional financial system because existing operators do not continually publicise their bank account transactions.

Consequently, in the pre-blockchain world, players will continue to be forced to trust the good word of online poker operators without much ability to verify the claims. Because every deposit and withdrawal to the operator’s wallet is publicly visible on the blockchain, it isn’t possible to secretly take player funds and spend them elsewhere.

Because all deposits and withdrawals are public, players can monitor what is happening at their poker operator. These two areas – card shuffling and player funds – represent a new paradigm where players will no longer be forced to trust the sometimes-opaque security of online poker sites.

This will be good for players, and improve the safety, security and trustworthiness of the online poker world.

[Bio]

Michael Josem is a veteran when it comes to online gaming security and fraud prevention. He is best known for uncovering two major cheating scandals in the poker world and has been working in the field for more than a decade. His experience at PokerStars and Full Tilt Poker allows him to provide insightful analysis on issues affecting players, in-game transparency and security.