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Why Betting Could Mean Big Business for eSports

13th January, 18:04

In 2019 it's safe to say that the world of eSports (professional competitive video gaming) is now a full-fledged industry in its own right. The debate about whether it's really a sport or not may still be ongoing, but the numbers speak for themselves. Currently, the estimated value of the global eSports industry stands at $900 million, a figure that is likely to only increase as eSports gains more traction by the day.

Business is booming in the eSports industry and, while there's no shortage of opportunities for growth, many of them are tied up with game publishers, influencer agencies, and eSports organizations. That's why the emergence of betting on eSports could be the next thing to take this rapidly developing industry to the next level.

Fast-growing vertical

As it stands, eSports is one of the fastest-growing verticals in the gambling market. In total, eSports betting is expected to reach a volume of $8 billion this year, which would equal over $550 million in revenue for the industry. As impressive as those numbers are, over the next few years things could increase significantly, with annual wagers reaching as much as $16 billion.

This forms a stark contrast to the $1 billion of revenue estimated to be earned throughout the remainder of the eSports industry in 2019, which, when factoring in publisher fees, media rights, sponsorship, and advertising etc. could drop to around half that figure.

In its early stages

It could be argued that eSports gambling is still in its infancy since the first big wave of real money wagering washed in the 2013/14 seasons. Games like Counter Strike: Global Offensive and DotA 2 have real money economies within them, commonly known as 'skins' due to their use of in-game aesthetics. Pretty soon, gamers figured out that they could use the unregulated casino chips in skins to place bets on eSports.

Given that these skins-based gambling sites were unregulated, they offered no protection to customers in the form of Anti-Money-Laundering controls, had no gambling license, and did little, if any, customer compliance. They were, however, a total hit with gamers and esports fans - the unregulated skins market grew to as much as $5 billion in total liquid volume - but in 2016, the games' publisher, Valve, effectively shut the market down.

While the unregulated skins market did help establish eSports betting as a lucrative vertical, the fact does remain that these sites offer no security or protection for the punters themselves. To keep customers better informed, gambling directory sites like CasinoSmash have collated together those regulated sites and published their versions of the best eSports betting guide on an annual basis.

Mutually beneficial

The biggest opportunity that an industry like sports betting can offer eSports is the opportunity for lucrative growth. At present, the primary revenue-generating ecosystem within eSports occurs outside of publisher assets. However a significant portion of revenue generated is spent on meeting the IP demands of publishers. As an example, any organization that wanted to set up a League of Legends tournament would need to pay a certain amount to Riot Games, the publishers, to do so legally.

Betting, on the other hand, is entirely independent of Intellectual Property. It's an activity that doesn't need a franchise and is free of those licensing fees typically paid to publishers. Additionally, the cyclical nature of games makes it impossible to predict how successful a new release will be and for how long, but betting activities can be seamlessly integrated into focusing on whatever game, tournament, or team is in vogue at any moment in time.

In turn, new windows of opportunity are opening up for existing and new sportsbooks. The traditional sports betting markets are heavily saturated with competitors, but eSports is still an emerging betting market, meaning that new investors and operators with new ideas could easily and quickly carve out a place for themselves.

And of course, eSports betting provides plenty of opportunities for fan engagement and interaction in creative ways. The interests of Millenial eSports fans are different from that of a 35-year-old horse racing enthusiast, or a football fan in their fifties and, consequently, they need something different from sportsbooks. Operators could soon enable things like contextual betting alongside engaging content, community offerings, and relevant team/match data, as well as offering the typical odds and statistics.