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COVID-19 is Wiping Out Sports Betting -- but Odds Look Good for Esports

7th April, 14:59

Esports was one of the first entertainment sectors to see mass event cancellations, but now it is ironically one of the last standing competitive endeavors on Earth. Mass social distancing has minimized betting opportunities for sport, but in their place, some video game competitions are seeing higher viewership, and data demand, than ever before.

"All the fence-sitters have been pushed off the fence into esports," Mark Balch told The Esports Observer. He is head of product and partnership for Berlin-based data company Bayes Esports Solutions, which recently estimated that sports betting was down over 60%, and as much as 90% for some bookmakers. "It really is a scramble to find any content anywhere in the world for pretty much everyone involved in the business."

On betting sites, the last sports standing includes Belarusian soccer and Russian table tennis, which are sitting on borrowed time. In place of the Premier League or LaLiga, FIFA 20 is seeing odd demands unprecedented for the soccer simulator series. Many are just random competitions thrown together by sports stars with little else to do; essentially creating an endless cycle of content.

Sports sims have typically played second fiddle to core esports -- shooters and strategy titles -- which are, admittedly, confusing to most people. What might help certain games is legacy; Counter-Strike: Global Offensive (CS:GO), is part of a twenty-year-old tactical shooter franchise. Still considered a tier-one esport today, it may bring in lapsed players to view and bet more so than games with high learning curves, like Dota 2 and League of Legends.

"There are a lot of sports that have been discovered through the betting lane," said Flavien Guillocheau, CEO of esports data and odds provider Pandascore. "I expect large tier esports or very easy-to-watch esports like CS:GO, for example, to get people from sports as new fans, potentially."

At the same time, he added, there is a bigger structural problem with CS:GO, because of the stream latency imposed by ESL and other tournament organizers. "For people who bet, it's not a very good experience because the bookmaker is moving the odds one minute before the action you see on stream." Last week the Nevada Gaming Control Board approved wagering on various CS:GO leagues, but only pre-match odds.

Changes to tournament format can also have a knock-on effect for betting. Several multi-day tournaments have had to recalibrate to league structures to accommodate teams now scattered across the globe, and programming gaps created by canceled arena events. These format changes may actually increase the number of matches available for bookmakers to buy. Usually online tournaments carry a lower value, but more volume is offsetting this.

What might hurt a bit is when tournament organizers make last-minute changes, such as which server the games are played on. A bigger problem is viewer experience. While some CS:GO athletes have spent years playing from their bedrooms, organizers like Riot Games invested millions in studio tech, and are now producing piece-meal broadcasts from dozens of locations.

"This does impact the bottom line. At the end of the day, betting is a reflection of how much people are invested," said Balch. "When it comes to these issues, people can turn it off and watch something else."

A good portion of the lapsed sports viewership is currently focused on racing simulations. The NASCAR Pro Invitational Series, which features current and hall of fame drivers on an iRacing track, earned a 0.81 Nielsen rating and 1.33 million viewers for its races on March 22. Formula One also gathered racing drivers, professional simulation drivers, and content creators for the "Not the AUS GP," organized by Veloce Esports.

This phenomenon is not wholly unheard of in sports. When a 1967 outbreak of foot-and-mouth disease brought UK horse racing to a sudden halt, the BBC proudly staged the first computer-simulated horse race. Details on the riders, course, and random variables were given to machines to work out the odds, with commentary provided on British radio.

During another outbreak in 2001, the industry once again turned to digital grandstands, with virtual horse racing now a staple niche for mainstream bookmakers. Needless to say, the 2020 Grand National will be virtual too, and will also be broadcast on primetime UK television for the first time.

Betting companies are likewise keen to add simulated motorsports, but the math for multi-participant games may be too complex for most data companies. This extends to the battle royale genre, where up to a hundred players compete to be the last man standing. Fortnite in particular is highly prone to cheating, and its developer Epic Games simply refuses to engage in any data provision.

In the short term, data companies are looking to onboard bookmakers during the sports drought. Bayes, a joint venture with Sportradar, has waived its revenue share and reduced the minimum fees for new clients by 40%, in order to fast-track companies in other esports sphere. "It will not replace the volume of traditional sports betting, but it stops them losing their customers," said CEO Martin Dachselt.

Customer acquisition costs for these companies can reach as high as $500 USD, said Dachselt. With nothing to bet on, these customers may turn to bookmakers with esports odds, and never come back. The crunch on content is also affecting other applications of esports data, such as media companies, who are rapidly restricting budgets and putting investments on hold.

"We had two projects that were supposed to start, but now delayed till they clarify the budgets," said Dachselt. "Cash is king. They keep the money together, and decide where to go."

Right now the economic impact is a bit behind the reality. The real challenge will be the summertime, and whether or not physical events and minimal-contact sports (like golf or tennis) return. "We will see some consolidation," said Dachselt, who is confident his business will grow short term, but is uncertain of the mid-to-long-term impact.

"Some [betting] market participants will disappear. Large ones with high automation and know-how will benefit long term, so we might suffer a bit too in that we lose some of our customers. On the other side, we may see a bigger volume of esports betting that will make up for it."

As an event-based industry, it's now a matter of survival for sports betting. Esports becomes a more enticing offering by the day, especially as China and other regions in Asia begin to reopen physically. While second waves are inevitable, the successful companies will attune their schedules to each region. Overall, it's a prolonged opportunity for esports to bring in more fans, and begin fulfilling the hype that's been building over the last five years.

"Everyone was already over-estimating revenue, and to be fair it's getting there for sure, but it's not at the level of expectations that some people have," said Guillocheau. "It might be a defining moment for esports in the long run."