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👋 — Lately I’ve been thinking of how to give a more accurate picture of the esports industry. Specifically around Data & Esports Betting. Most popular studies or reference posts on esports will mainly talk about Sponsorship, Advertising, Merch & Tickets, Game Publishers Fees & Media Rights. The problem is when seasoned investors, entrepreneurs, and talents look at the ecosystem through this they see:

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💵 Esports as “just” a $1B to $2B industry.

🔬 Limited view on ecosystem structure through companies involved but also lack of opportunities.

📺 Viewership numbers on a pedestal as the only thing that matters.

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We often hear industry people saying they have a hard time finding the money in Esports right now. When you think about it, everyone is going after the same things. How many start-ups can you have on coaching and tournament platforms? Esports is so much more than this, but there is a too high concentration in certain business models.

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Now let’s talk about Betting. Why is it not mentioned enough?

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☔️ It’s an opaque industry where numbers are not shared publicly

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🤪 In many countries it’s unregulated or less embedded into the culture.

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It’s clear that Esports fans want to bet, in 2016 Valve had to shut down skins gambling which was over $7 billion in wagers in a short period of time.

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https://www.bloomberg.com/features/2016-virtual-guns-counterstrike-gambling/

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Going further than this, esports are just as likely — and I would argue even more likely — to make bets as sports fans (I’ll share my reasons below):

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💻 They often use their second PC screen or phone while the event is happening, using second screen natively while watching esports matches.

📊 They are very analytical and data driven, as a gamer you’re always watching stats and scores.

🥳 They are very engaged. They are used to high interactivity and complex games rules, and often play the games competitively themselves.

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Bookmakers help sustain the growth of esports

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On the other side of the spectrum, Bookmakers are pouring money into the ecosystem through sponsorships and advertising, the two biggest revenue streams in esports right now. Some interesting examples: Betway sponsoring ESL tournaments or Rivalry sponsoring the Fnatic CS:GO team.

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https://www.fnatic.com/articles/fnatic-partners-with-rivalry-gg

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There’s a reason bookmakers are investing heavily in the space. As long as there are fans, betting will happen and bet volume is growing rapidly.

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Is esports betting big already?

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The exact numbers aren’t known due to industry opacity. But after discussing with many bookmakers we estimate conservatively from $500M to $2B/y in revenue out of at least $7B+ in wagers.

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Furthermore, from our many discussions with industry people and bookmakers we hear often esports being their #top7 money maker. Sometimes #top5 and even #top3. This is quite big already, since esports betting roughly started in 2011 with Pinnacle.

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Based on this I would not be surprised if esports betting was one of the top spends of esports fans.

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Some insights on the esport betting market

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Despite what’s often said about CSGO dominating, we’re seeing, from small to major bookmakers more volume on LoL in some cases.

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I think the punters are less educated in LoL regarding betting (no skin betting hype) but that doesn’t mean it’s all about CS:GO… not anymore. The popularity is heavily linked to geography of course. In Asia, League of Legends or Dota 2 are very popular alongside PUBG but CS:GO is less covered. But in Eastern Europe LoL will be less popular than CS:GO or Dota 2.

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Some of the biggest bookmakers in volume right now: Bet365, Pinnacle or Betway.

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The most hyped esports outside of the big 3 (CS:GO, LoL, Dota2) are:

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🔫 Call of Duty

🛩 Fortnite

🕶 Overwatch

🏎 Rocket League

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Integrity is key, betting will help

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The key to protect gamblers and improve integrity is to have bookmakers working hand to hand with tournament organisers and publishers.

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A good example of progress is ESIC, the Esports Integrity Commission. They are helping create a dialogue between all parties involved. ESIC helps by identifying suspiscious betting activity all around the world. For instance one big bet placed on an underdog scenario or on small tournaments with very little cash prize might raise an integrity alert. Bookmakers know what is happening and communicates through the ESIC network.

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Integrity is key and will serve to protect games and organisations image while esports grow. Regarding how to enforce it, having esports under a betting license is necessary. Getting publishers on board is also mandatory as it helps solution emerge and have the ecosystem acknowledge the potential issue.

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In the US right now esports betting will mostly not be part of the first wave of regulation. Esports fans who really wants to bet will still be able to do it on offshore/illegal websites which gives them more exposure to underaged betting and addiction.

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“Betting will happen wether publishers like it or not.” We’ve all heard this many times. It’s 100% true and publishers needs to get involved to make it clean.

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Conclusion

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We need to include esports betting in industry discussions. It will give us a more accurate picture of how the ecosystem is evolving. It will help attract more investors, talents, and finally encourage a better regulation.

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Looking forward any feedback, thoughts or debate.

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(repost of my Linkedin article)

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