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eSports betting roundtable
Much has been said of the potential returns for the bookmaker that brings esports betting into the mainstream. However despite numerous attempts, no company appears to be close to doing so. Those looking to crack the market discuss the challenges they face.
iGaming Business: The number of commercial tie-ups between gambling operators and esports teams as not been as high as anticipated. What is preventing them from happening?
Eirik Kristiansen, CEO and founder, Pixelbet (EK): One of the main reasons is that the prices have been inflated substantially by the booming interest surrounding esports. Many operators will baulk at making such deals, especially when the sponsorship costs and expected ROI don’t add up. Another reason is simply that the esports markets are largely focused on pre-match offerings and in-play segments are lacking compared to more traditional sports.
Esports such as League of Legends and DOTA2 contain too many variables for any human to accurately evaluate odds in real-time, so esports betting will have to rely on machine learning and AI to perform these tasks. The technology is almost there when it comes to pricing up in-play markets; once that happens it will dominate the sector and we will see many more collaborations between teams and operators.
Luca Pagano, CEO, Qlash.gg (LP): The esports industry has still not reached maturity and the potential is not yet strong enough for operators to release huge funds into esports organizations. The fact that the different game titles are controlled by different publishers, each having their own approach, structure and vision also doesn't help in that respect. Integrity issues can crop up if there is no unified body to regulate the market.
However, probably the largest barrier for widespread entry of gambling operators in the esports market is reputational. A large part of the audience and also a lot of the players in the industry are underage and targeted advertising of gambling services might be seen as detrimental to society, not to mention it can potentially lead to legal issues. Having said that, with the industry growing as fast as it is, inevitably the gambling operators will find a way to get involved, which will surely speed up the growth even more.
James Harding, former esports pro and founder of 2GD Studio (JH): I would say all of the above play a part. There isn’t a main culprit, but it should be pointed out that behind the scenes there are plenty of game developers turning down millions because they want to safeguard their reputations, and that of the industry. Or of players on low salaries who have rigged matches and publishers who have wanted to ban all teams from having betting sponsorships. The list goes on. The resolve should be simply to work with the company that owns the game.
IGB: An issue now coming up for US professional athletes post-PASPA is the potential use of their personal data for sports wagering purposes via the various deals between the leagues. Is the esports industry aware of these issues coming down the track, and if so, how is it addressing them?
JH: Esports betting is still in its infancy. I very much doubt the industry has even looked into this seriously.
EK: As esports are evolving faster than any other sports segment, data is likely to become an even bigger issue than in traditional sports. A tremendous amount of data must be gathered for an operator to accurately set odds for in-play betting, and personal data is now also being added into the equation.
One of the issues that emerges when gathering vast amounts of data is how this data will be collected and disseminated. There are no signs of data collection slowing down and as it continues on its trajectory. Tackling the issues will need a clear approach to ensure that it does not lead to privacy issues, disputes over whether players, teams, game creators or operators own the different datasets. Personally I don’t think the esports industry has thought much about the potential ramifications of these issues. In addition, data gathering is moving so fast that it is unclear how fast it will get these issues under control.
LP: Esports regulation is just not in place yet, associations are new and not established and especially the idea of an “esports athlete” is non-existent - most of the nations don’t have it in law as a profession. Therefore it certainly does become an issue that data of esports players may be at risk, but also there is the opportunity to establish it in a safer way as we are in the period of regulating and figuring things out.
IGB: Will the future of esports wagering be driven by traditional betting operators, esports-only operators (Unikrn, Pixelbet) or skin betting operators becoming legitimised?
EK: Skin betting and in-game item marketplaces are already huge, both for game creators and those making a living buying and selling items online. This is only likely to continue growing massively as esports evolve. As long as an item has a value and is stable enough to be bought, sold, traded or gambled with, it will happen, without a doubt.
However, as an operator we strongly believe that the fully licensed esports-only operators will dominate the esports betting scene going forward. Traditional betting operators will most likely have a share of the esports betting market as they offer a wide variety of sports, but pure esports-focused operators will gain the biggest share of market going forward. When skin betting (or equivalent) is regulated, it will be a natural addition for esports-only operators’ existing platforms. I am doubtful the traditional betting operators would follow on this.
JH: The market leader from the betting operators will most likely be whoever can forge a good relationship with the games’ intellectual property owner.
LP: If the projections on the size of the esports industry become reality, it could soon overtake some established sports. When that happens there will be enough space under the sun for all kinds of operators. The big players in the market will get involved and will naturally gain significant market share by leveraging their large userbase and operational structure.
More targeted operators that offer a more customised user experience will also be successful. The pie will be big enough and we expect to see a similar service level and market distribution of betting operators to what we currently see in the traditional sports scene.
IGB: What should we be looking out for with regard to esports in the next six to twelve months?
JH: New esports games. Tournament organizers that have decision-making powers over sponsorship deals. Up and coming game developers/publishers that own the esports titles, their intellectual property and data round them will gain in importance in the next 12 months.
EK: For me the key ingredient to turning esports into a full betting offering is credible, real-time in-play odds and fast payments. At Pixelbet for example you can make a deposit, play, win and withdraw and the money is in your account within five minutes. These features, combined with live bets that can be placed and settled in a matter of seconds, will be a paradigm shift in the way esports betting is done. This will surely be in place within the next 12 months, and the operators that can settle bets, make the fastest payments and combine that with the most varied odds will be leaders in esports betting.
LP: Clearly expectations are for continued growth. All the statistics point towards young generations being highly interested in esports. Technological availability also plays a huge role in allowing the industry to quickly grow, even in less developed regions, bringing huge visibility to esports on mobile especially. Investments, sponsorship deals, number of organisations in the scene, online and live spectators - these are all on the rise and we expect to see this trend accelerating.
Infrastructure is also being developed with dedicated esports arenas and studios under construction. Franchises like the Overwatch league are testing whether traditional models can be profitable in esports. TV rights will also become an extremely important aspect for both publishers and teams. New monetisation methods through online streaming and mobile apps are being developed. Merchandise sales will inevitably be a big part of revenues for competitive organisations. Overall, the common feature is that the industry is extremely dynamic and there is growth on all fronts.
The participants in the roundtable will be speaking on the Learn from Esports pioneers – Assume your position! panel at iGB Live! in Amsterdam on July 17.