Suppose they use a fully centralized oracles, isn't there still a huge benefit in having much lower fees and tighter spreads, even if it's not decentralized? For the end user, having settlement, custody, and market making decentralized while having centralized oracles is still a huge advantage.

Then consider that people are tackling the issue of decentralized oracles. The most common platform for that is Chainlink [1]. In this space specifically, Augur [2] is among those who has attempted to make decentralized sports reporting Oracles. I'm not sure if their solution is fully fleshed out, but regardless it doesn't seem to be an insurmountable technical issue for something that is as easy to verify as outcome of a game.

If your willing to accept that the Oracle problem will be solved, I'm not sure how you would say this doesn't create value for consumers.

1.https://chain.link/education/blockchain-oracles 2. https://augur.net/

I think partial decentralization would introduce the worst of both worlds: you might place your trust in a small number of potentially malicious actors (external centralization), yet they’d only be subject to on-chain rules and regulations (internal decentralization).

Of course I’m aware that there are attemps to incentivize oracle providers to play fairly (and even “decentralize” oracles), but I don’t quite see how it can be definitively resolved. Not saying it’s impossible, but I just don’t see it (or understand it) yet.