DAO-Run Casinos: Can the Community Replace the House?

Casinos as a concept have existed for hundreds of years and only evolved with human tastes and attitudes. For example, casinos used to be restricted only to land-based establishments, but now, you can gamble using your mobile devices and computer. The ways by which casino users can fund their wages have also evolved, with credit card casinos becoming a prominent fixture in the industry. As Wilna van Wyk writes, many of these casinos offer innovative options both in terms of accessible payment options, as well as the sheer variety of games available (Source: https://casinobeats.com/online-casinos/credit-card-casinos/).

But perhaps one of the most unique evolutions casinos have seen has been the emergence of Decentralized Autonomous Organization-run casinos(DAOs). But what exactly is a DAO-run casino, and can they be the future of gambling?

What Is A DAO-Run Casino?

A decentralized autonomous organization is a blockchain-based entity in which a group of people come together to invest time, energy, and resources into a collective project. Within this project, the community collectively makes decisions about how it is run, and these are enforced using smart contracts. A DAO-run casino would be one where a community comes together to collectively run an online casino. Every decision will be put to a vote and automatically implemented based on this vote. For example, such a casino might consider adding a new game niche to its offering. In that case, all community members can vote, and if the motion to include this new niche wins the vote, it is automatically added. 

This principle is then applied to virtually every aspect of the casino, from the rules of the house to help profit is shared and so on. Decentralized autonomous organizations grew in popularity in the 2010s thanks to the rise of blockchain technology and cryptocurrency. Now, the business model is being applied and also of industries, and the gambling sector seems to be next. But is it truly the future of the industry?

Can DAO-Run Casinos Replace The House?

Decentralized autonomous organizations running casinos certainly have a lot of potential. First, the use of blockchain technology and, specifically, smart contracts, allows for more transparency. Many of those who are part of the community are also customers of the casinos themselves. Thus, they know the inner workings and know that operations are being run fairly. On top of this, DAOs have a high potential for innovation as any community member can propose any motion to innovate and change the site. Such casinos also have a high tendency to embrace cryptocurrency and other such digital assets, which can grant it access to an enthusiastic market.

At the same time, the limitations of DAO-run casinos need to be acknowledged. Specifically, such casinos will be limited mostly to online operations. Because DAOs are only run in cyberspace and typically focus on digital-based projects, such casinos will likely not expand into a land-based enterprise. While this means that they can target users from all over the world, the growth is capped to a degree. Also, while DAOs solve some of the existing issues with casino management, they bring up some of their own. A decentralized model means that there is more democracy, but it also means that leadership of the casino will be less defined. When it comes to legal issues such as obtaining licenses, dealing with regulators, and so on, a specified leadership board needs to exist, but its power becomes eroded when it is subject to the whims of the community.

Overall, DAO-run casinos have benefits for both players and those who engage with it on the back end, but all these come with challenges of their own, and it is up to both casino users and investors to decide whether it is a risk worth taking.