What is a smart contract and how is it used in gambling?
A smart contract is a self-executing code that is stored on a blockchain. Instead of relying on a casino operator to handle your bet or payout, the rules are written directly into the contract and enforced automatically.
In gambling, smart contracts come with several features:
- Hold your wager in escrow and release payouts instantly when the game result is confirmed
- Hold a deposit amount for a session. When you end the sessions, the smart contract ends releasing any profits or remaining balance to the player and any casino profits are released to the operator
- Power decentralized games like dice, lotteries, or poker that run entirely on-chain
- Ensure transparency, since the rules and transactions are visible and auditable on the blockchain
- Eliminate human manipulation as the contract executes exactly as coded
It’s worth noting that not every crypto casino uses smart contracts. Centralized casinos that simply accept crypto deposits usually operate off-chain. They run games on their own servers.
Smart contracts are more common in decentralized casinos and gambling dApps, where blockchain logic controls the complete betting process.
This makes smart contracts a cornerstone of the provably fair movement, which gives players the confidence that outcomes are automatically determined by code and not by the house.
