Web3, Crypto, and the Sports Industry - How Blockchain Reshapes Sports

At first, one may wonder how blockchain and sports connect. The combination seems off, and it doesn’t seem like both worlds connect on paper. But evidently, the sports industry has moved from humble beginnings to an era where tech is at the forefront of every innovation. 

However, sports are now more than physical competitions among teams and players. The sports industry is a billion-dollar one, but it still requires stepping up in the global business environment. Blockchain seems set to help the industry unlock more potential. How so? This article will explain in detail. 

Understanding Blockchain Technology and Web3

One can hardly talk about modern technology today without touching blockchain and Web3. Experts even argue that blockchain technology is the future of the internet. But to ensure we’re all on the same page, let me briefly explain both concepts before we explore their potential in the sports industry. 

Blockchain is a distributed ledger that allows transactions to run on it. Unlike traditional transactions, it uses cryptography to make transactions secure, transparent, and immutable. The network is also decentralized, so no single entity controls it. 

Web3 refers to a new type of internet built on the blockchain. Unlike the previous web versions, it creates a decentralized and democratic approach to internet usage. Web3 users have complete control over their data and digital footprints because of the decentralized applications (dApps) they use. 

As the name suggests, dApps operate on decentralized blockchain networks that need no intermediary to function. They also foster user engagement and leverage blockchain technology to ensure their operations are permanent, transparent, and secure. 

Current Challenges in the Sports Industry

As stated earlier, the sports industry has significantly evolved in recent times. We’ve seen businesses adopt tech initiatives to improve their performances. 

For instance, in soccer, we now have goal-line technology and Video Assistant Referee (VAR) systems to reduce human errors during matches. However, there’s still a vast majority of bottlenecks that traditional tech has been unable to solve. These include: 

Monopoly and Centralization 

The global sports industry is largely centralized. Every major sport has a primary body responsible for maintaining operations and managing resources. For instance, FIFA and FIBA are the agencies responsible for managing all soccer and basketball events worldwide. 

However, I’ve realized over time that giving a single entity so much power and control poses various challenges, including corruption, bribery, vote rigging, and illegal financial dealings. 

Recently, some FIFA executives were detained for massive corruption and unscrupulous dealings. These issues result from the industry’s reliance on traditional centralized systems of operations that ultimately lead to monopoly. 

Lack of Transparency

Time and time again, we’ve seen how sports companies make crucial information and decisions without the knowledge and input of the fans. From data manipulation to the unavailability of essential internal updates, it’s evident there’s limited trust and transparency. 

For instance, Gareth Southgate recently stepped down as England’s manager after leading the team to the Euro 2024 final. Except for Southgate, the England FA, and maybe some insiders, the general public had no idea he was going to resign or why he decided to. 

Similarly, there have been resignations and sacking of top managers like Jose Mourinho in different clubs. Fans never get the chance to be a part of these decisions. Who knows if it’s really in their best interest? 

I believe that organizations that lack transparency tend to have a poor corporate culture that they hide due to the industry’s current realities.  

Human Errors 

Despite the various tech initiatives to develop error-proof systems that make results fair and transparent, many of these structures still depend on human decisions for finality. For instance, if the VAR video shows that a player was pulled down in the box during a soccer match, the referee must still decide whether it’s a penalty or not. 

I’ve seen cases where referees made wrong calls despite the video evidence. Afterward, they apologize for their errors that have altered the match result. The possibility of such human errors has caused several arguments against VAR and the fairness of sports games. 

Failed Doping Systems 

Another major concern in the sports industry is doping. Despite various initiatives from the World Anti-Doping Agency, including the use of the Anti-Doping Administration and Management System, the system has fallen short in some cases. 

Recently, Nigerian athlete Tobi Amusan was declared to have missed three anti-doping tests. However, the Disciplinary Tribunal declared she did not violate any anti-doping rule. 

Even the world’s greatest athlete, Usain Bolt, and his 2008 Olympics relay team were stripped of their gold medals many years after the tournament. The reason was that a team runner was found guilty of a doping violation. 

Why did it take years to discover that? Failed systems. And so long as these flawed structures exist, athletes cannot be guaranteed protection from the governing bodies. 

How Blockchain and Crypto Could Turn Sports Around 

Some of the highlighted issues prominent in the sports industry are already being addressed by blockchain technology. There are also potential opportunities for the sector to benefit from Web3 in the future. Here are some possibilities:

 

• Decentralized Ticketing 

 

Blockchain technology can create a decentralized ticketing system that will eliminate touts and help fans find affordable access to games. Everyone can also know how many tickets get sold and how much sports organizations generate from these sales. 

 

• Sports Betting 

 

There’s still the fear of games getting rigged or fixed matches in sports betting. Though the best crypto casino sites have stepped up to combat this, broader blockchain adoption will provide better transparency through smart contracts. 

 

• Fan Ownership/Engagement

 

Fan tokens and other initiatives have created better ways for clubs to engage their fans better. Through these tokens, fans can feel like they own a stake in their loved clubs, and companies can create new revenue streams. These digital collectibles also hold value and can be traded on exchanges.  

 

• Fair Player Contracts  

 

Blockchain technology can eliminate the numerous intermediaries involved in player contracts and transfer dealings. These individuals cost both players and clubs a lot of money and can also influence decisions to suit their pockets.  

• Seamless Payments 

Cryptocurrency payments are now a part of the modern sports industry. Whether you’re purchasing tickets or betting on sports games, you can use Bitcoin and other digital assets for fast, anonymous, and cheap payments. 

(Devdiscourse's journalists were not involved in the production of this article. The facts and opinions appearing in the article do not reflect the views of Devdiscourse and Devdiscourse does not claim any responsibility for the same.)