The COVID-19 pandemic has sparked a period of growth for the sports betting industry, and companies in the sector are struggling to address the unique challenges associated with this relatively new way of playing.
The US sports betting market has grown significantly since the Supreme Court ruled the practice legal in 2018. The current market size is $ 9.5 billion and is expected to grow to $ 37 billion by 2025. , according to asset management company ARK Invest.
While the sports betting market is much smaller, a recent report by Market Insight Reports estimated that 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 big It’s time for esports because nothing has been played in the sports betting arena,” said Vlastimil Venclik, CEO of the analytics firm of Oddin.gg data.
Most esports betting is relatively straightforward, with participants placing bets on who will win before competitions. For some of the bigger esports, companies like Oddin provide more granular odds, allowing users to bet on specific in-game interactions: who will gain or lose in-game life points, exact match scores, first. team to win a certain number of rounds etc. As one of the few bettors to focus specifically on esports, Oddin covers a variety of games, but offers his live betting services only for the most high-profile titles – Counter-Strike: Global Offensive, League of Legends and Dota 2 – in addition to the popular Chinese mobile game Honor of Kings. “95% of the betting volume is for these titles,” Venclik said.
The production of esports odds is also part of the business model of Fandom, which provides betting services to companies in the sports and esports industries. Like Oddin, Fandom covers all major esports, but Fandom CEO David Vinokurov believes that one of the biggest challenges for businesses in the space is the ever-present risk that an esport may lose popularity or either replaced by a more recent title. “Now that we have the hindsight to revisit League of Legends and CS: GO and the other leagues, the integrity procedures are well established,” Vinokurov said. “So you’ll see new games appearing faster, and that’s just when the overall ecosystem gets 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 gamblers than their counterparts in the stick-and-ball space. . That’s more of a problem for console titles like Overwatch and Fortnite, according to Scott Burton, CEO of sportsbook and esports company FansUnite. “Counter-Strike, Dota, and League of Legends are obviously PC games,” Burton said. “And if you look at the fan base of those, they’re older – 18 and over is a big percentage of them.”
To get around this danger, esportsbooks have gone to great lengths to screen users and educate them about the risks of betting. Sports betting company Rivalry has partnered with esports organizations such as FNATIC to educate young viewers about betting laws and best practices, limiting maximum bet amounts in some of its areas. services to prevent overzealous and inexperienced bettors from withdrawing their savings. “The way the whole product is designed, we don’t want to turn young people into degenerate sports bettors,” said Rivalry CEO Steven Salz. Although the amounts wagered in individual esports betting transactions are small compared to traditional sports betting, the total amount wagered on esports in 2019 was almost $ 8 billion, according to a report from Eilers & Krejcik Gaming.
In addition to these philosophical barriers, there are some legal hurdles that prevent esports betting from becoming a fully realized industry. Despite the 2018 Supreme Court ruling, companies still need to obtain a state-by-state license to operate in the United States. To avoid these restrictions, most sports betting companies use licenses from other countries to operate globally while establishing themselves in the United States. “We are licensed in a place called the Isle of Man, which is one of those top notch offshore jurisdictions,” Salz said. “Typically all sports betting, including those in the United States other than DraftKings, essentially has a foundational beachhead license.”
The typical game plan for betting companies, Salz said, is to get an offshore license to provide proof of concept, “and then you start trying to go to all the regulated markets in each country,” like the United States, United Kingdom and Australia. So far, Rivalry has acquired a license in Australia, but there is a long way to go.
Getting a license is a struggle shared by sports betting and esports companies. A legal barrier more specific to esports 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 those communities. “From an external point of view, we are definitely quite CS [Counter-Strike]-heavy, ”Salz said. “Part of this has to do with the fact that Riot Games and other IP owners, other than [Counter-Strike developer] Valve, can make it very difficult to be a betting company in these games.
To avoid these problems, some companies take charge of the development of betting titles. Both FansUnite and Rivalry have started to develop bespoke betting games that can be used by both casinos, live sports betting and online betting services – the former through the Askott Games subgroup, and the runner-up via the massively multiplayer online racing game Rushlane.
“A game created, owned and operated by one or a group of betting companies, with access to all game data, appears to be a natural progression, although extremely difficult to achieve,” said the esports betting consultant. John Armstrong.
As the esports betting market grows, some esports books, such as Rivalry, have started to expand into mainstream sports to generate additional revenue streams. But Venclik and his peers remain convinced that the sports betting industry is here to stay, despite legal and cultural challenges.
“The audience is very young, they are getting older and older, and they have a higher disposable income,” said Venclik. “So it’s really, really interesting for the bookies – and that’s why I think it’s the next big thing in esports.”