The emergence of esports as a serious competitive sporting event has been unprecedented in its rapidity. Even now, esports is both massively popular and relatively niche, with the concept of video gaming tournaments remaining unknown to large sectors of the population. What is undeniable is the enormous fan base for esports, which eclipses that for some more traditional events. In 2019, the peak viewership for the League of Legends World Championship was 44 million, compared to just 9 million for the men’s final at Wimbledon that same year. The nature of esports makes it more difficult to regulate than other types of sport, especially when it comes to betting and gambling.
New casinos pursue the esports crowd
For casino and sports betting sites, capturing a slice of the $15 billion esports betting market could be highly lucrative. Unsurprisingly, many new online casinos include esports betting in their services, with some sites dedicated to nothing else. For the betting industry, capitalizing on esports betting is imperative, but it doesn’t come without complications.
There are many reasons that esports are an attractive prospect for casino and sportsbooks. For a start, they bring a younger audience to their services. Data shows that the majority of online gamblers are over the age of 35, while esports fans are on average around a decade younger. For casinos, part of their long-term strategy must be to adapt to what the next generation wants.
Another boon for esports betting is its resilience. 2020 was a disastrous year for traditional sports markets, but the pandemic increased the audience for esports considerably. New viewers flocked to lockdown tournaments, especially for sports games such as FIFA, as a way to compensate for the live events that they were missing. As expected, betting on these tournaments also increased – in the UK the gross gambling yield from esports leaped by 124% between April and May of 2020. Even as traditional sports betting collapsed, esports betting has proved to be a valuable revenue stream for online gambling sites during an uncertain period.
Challenges to integrating esports into betting markets
During the sports drought of the pandemic, events such as the Virtual Grand Prix gained new popularity. However, the majority of monetized esports are still more traditional video games such as CS:GO and League of Legends. One major challenge facing bookmakers is how to tabulate the odds for matches and tournaments in what is a relatively new arena. Sites that specialize purely in esports betting are still seen as more reliable by these bettors. Virtual versions of real-world sports do not follow the same patterns as the leagues and teams that spectators are familiar with.
Another potential issue that esports betting could be facing is how it is characterized in law. Policy makers have so far struggled to formulate legislation to manage how esports are conducted and regulated. One argument, given particular emphasis in the UK, is that esports are fundamentally different from physical sports events and must be treated as such.
Esports, the reasoning goes, are not purely skill-based games because some events are determined by a random number generator (RNG). Therefore, there are grounds to classify the tournaments themselves as a kind of gambling, even without the added layer of betting on the outcome. Should this line of reasoning go forward, the future of esports in the UK is thrown into doubt. Having the sector regulated as a form of gambling would make things much more complicated, and would cut off the possibility of having a betting market attached. With a review of the UK gambling laws imminent, this could have serious consequences not just for betting, but for esports as a whole.
Potential impact of esports on young players
At this time there are several pressing questions surrounding esports and the way that younger audiences are targeted and affected. Video games, and therefore any gambling related to them, by their nature appeal to a largely younger demographic. Related advertising targets these younger people, whether by accident or design. Questions have been raised over whether betting on esports risks encouraging a new generation of compulsive or problem gamblers.
The links between esports and young gamblers are not yet well-defined. Certainly there has been a significant rise in the number of young people involved in gambling activities, but these are not necessarily linked to esports. Studies suggest that the great majority of social media interaction with esports betting accounts is carried out by those under 24 years old.
Another concern is about the content of the video games themselves. A spotlight is currently on the use of so-called loot boxes in games, and whether they constitute gambling themselves – or encourage players to engage in other forms of gambling. Loot boxes may satisfy the same neural reward centres as more overt forms of gambling, such as slot machines or infinity ring.
It seems that the video game industry is moving towards greater transparency for loot boxes, for example by clearly displaying the odds of receiving a certain item. With national regulators seemingly unable to agree on legislation, most regulation is coming from inside the industry at present. This has been largely driven by pushback from the gaming community, rather than external pressure from the authorities.
This is a paid guest post.