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RE: Poof Like Magic it Disappears
"I'm not sure how smart contracts would have saved anything here."
As I said, perhaps you should look into makerdao and how it operates.
But to get you started on your journey; Smart contracts are programs operating on immutable blockchains... So yes, when properly coded, exit scam like this couldn't happen. Oh, since we're talking of gambling, check Augur as well.