The COVID-19 pandemic has ushered in a growth phase for the esports betting industry, and companies in the space are working to address the unique challenges that come with this relatively new type of gambling.
The US sports betting market has grown significantly since the Supreme Court decided the practice was legal in 2018. The current size of the market is $ 9.5 billion and is projected to reach $ 37 billion by 2025, according to a wealth management company ARCHE Invest.
While the sports betting market is much smaller, a recent report from Market insight reports estimated it would reach a global value of over $ 13 billion by 2025, a significant increase from its estimated value of $ 800 million in 2019. “COVID was actually a great time for sport because it was in sports betting nothing was played, âsaid Vlastimil Venclik, CEO of the data analysis company Oddin.gg.
Most esports betting is relatively straightforward, with contestants wagering on who will win before the competitions. For some of the bigger esports, companies like Oddin offer more detailed odds that allow users to bet on specific in-game interactions: who will win or lose lives in the game, exact game results, first team to win a certain number of rounds, and so on Further. As one of the few odds makers specifically focused on eSports, Oddin covers a wide variety of games but only offers its live betting services for the most popular titles – Counter-Strike: Global Offensive, League of Legends and Dota 2 – on top of that the massively popular Chinese mobile game Honor of Kings. “95% of the betting volume goes for these titles,” said Venclik.
The production of eSports odds is also part of Fandom’s business model, which provides betting services to companies in both the sports and eSports industries. Like Oddin, fandom covers all major esports, but Fandom CEO David Vinokurov believes one of the biggest challenges for companies in this space is the ever-present risk of an esport losing popularity or being replaced by a newer title. “Now that we can look back on League of Legends and CS: GO and the other leagues in hindsight, the integrity procedures are well established,” said Vinokurov. “So you will see new games hit the market faster and the whole ecosystem will become more sophisticated.”
There’s also the fact that eSports fans tend to be younger than traditional sports viewers, which means eSportsbooks have to fend off more potential underage weather than their stick-and-ball counterparts. This is more of an issue for console titles like Overwatch and Fortnite, according to Scott Burton, CEO of sports and esports betting company FansUnite. “Counter-Strike, Dota, and League of Legends are obviously PC-based games,” said Burton. “And if you look at the fan base, they are older – over 18 is a large percentage of them.”
To avoid this danger, eSportsbooks have gone to great lengths to review users and educate them about the risks of betting. Esports betting company Rivalry has partnered with esports organizations like FNATIC to educate younger viewers about laws and best practices surrounding betting, and to limit the maximum wagering amounts on some of its services to prevent overzealous ones and inexperienced bettors write off their savings. “The way the entire product is designed, we don’t want to turn young people into degenerate sports bettors,” says Rivalry CEO Steven Salz. Although the betting amounts for individual eSports betting transactions are small compared to traditional sports betting, the total amount of bets on eSports in 2019 was according to a. nearly $ 8 billion report by Eilers & Krejcik Gaming.
In addition to these philosophical barriers, there are a number of legal obstacles in the way of esports betting development. Despite the 2018 Supreme Court ruling, companies still need to be licensed on a state basis to operate in the United States. To avoid these restrictions, most sports betting companies use licenses from other countries to operate globally while locating in the United States. “We have a license in a place called the Isle of Man, one of those blue-chip offshore jurisdictions,” said Salz. “Normally every sports betting provider, including those in the US except DraftKings, has a license from the Bridgehead Foundation.”
The typical game plan for betting companies, Salz said, is to get an offshore license to deliver a proof-of-concept, UK and Australia. So far, Rivalry has obtained a license in Australia, but it’s a long way.
Licensing is a battle that betting companies share in both sports and esports. A more esports-specific legal barrier is the dangerous territory of intellectual property. For example, Riot Games prevents betting companies from sponsoring events in League of Legends and Valorant, making it harder for companies to reach consumers in these communities. âFrom the outside, we’re definitely pretty CS [Counter-Strike]-difficult, “said salt. âSome of these have to do with Riot Games and the other IP owners besides [Counter-Strike developer] Valve can make it very difficult to be a betting company doing things in these games. “
To avoid these problems, some companies are taking the development of betting titles into their own hands. Both FansUnite and Rivalry have started developing bespoke betting games that can be used by casinos, real sports betting and online betting services – the former by the subgroup Askott games, and the latter via the massively multiplayer online racing game Rushlane.
“A game that is created, owned and managed by an individual or a group of betting companies and that has access to all game data seems like a natural, if extremely difficult to achieve, evolution,” said John Armstrong, sports betting advisor.
As the eSports betting market is growing, some eSports books like Rivalry have started expanding into traditional sports for additional revenue streams. But Venclik and his colleagues remain confident that the esports betting business will continue despite legal and cultural challenges.
âThe audience is very young, aging and having more disposable income,â said Venclik. “So it’s definitely very interesting for bookmakers – and that’s why I think it’s the next big thing in esports.”