According to the American Gaming Association, nearly 40 million Americans plan to bet on games during the 2019 NFL Season. The amount of money wagered on sports in Nevada has increased every year since 2010, reaching $5 Billion in 2018 ($1.8 Billion on football). And with the repeal of PASPA slowly but surely creating additional sportsbooks across the country, it’s clear sports gambling has yet to reach its peak. The numbers correspond with football being America’s most popular sport. However, its value to sportsbooks is nowhere near the potential of esports betting.
Engaging Esports Bettors
The ability to bet online makes esports one of the fastest-growing categories of online gambling. Esports betting is on pace to reach up to $8 billion in 2019, with projections estimating over $12 billion in annual wagers by 2020. Growth estimates could reach more than $16 billion based on the following key factors: (i) more traditional sportsbooks including offerings for esports; and (ii) better data leading to an increase in the number of events and types of wagers. The demand for esports wagering is strong, and the following sportsbooks are capitalizing: (i) Unikrn; (ii) Pinnacle; and (iii) Sky Sports.
Sportsbooks looking to engage a new wave of bettors should know that an old school approach will not work. The market for sports bettors and esports bettors reflects two different generations. In an age where most engagement occurs online, the use of digital marketing and social media influencers could prove vital. Streaming well-known esports players live from the casino floor could help bring crowds together.
However, other factors remain. While the Wire Act remains in place, traditional sportsbooks need guidance on how to set esports betting lines. Former gamers should be called upon to assist once their playing days are over. How events are regulated will also need to be addressed.
Regulations and Integrity Issues
Currently, sports betting is legal in 18 states. Yet, only: (1) Iowa; (2) Mississippi; (3) Nevada; (4) New Jersey; (5) Pennsylvania; (6) Rhode Island; and (7) West Virginia allow for mobile betting. Even then, some states (such as Mississippi) only allow mobile betting within the confines of licensed establishments. Other states – e.g., Indiana – have gone so far as to ban esports wagering in its gambling laws. These prohibitions significantly limit the revenue that could be received from esports betting.
These limitations stem from states’ concerns regarding the integrity of the games being wagered on. Regulators want to ensure that wagering is fair and honest; specifically, they want to know: (i) what the game is; (ii) how do players interact with the game and/or other users; and (iii) any other factors that could impact gameplay in ways unbeknownst to first time bettors. Gameplay integrity issues don’t exist for well-known publishers of games such as Madden or NBA 2K, where regulators are more concerned with cheating, match manipulation, and doping amongst players. The NBA 2K League recently banned one of its players for “violating the league’s gambling rules” by providing inside information to a known bettor.
The Future of Esports Betting
Currently, Nevada is the only state that provides esports wagering opportunities, and other states are looking to follow its lead. Nevada regulates esports through its “other event” category, thereby requiring event-by-event approval through meeting certain criteria to ensure the integrity of the game. There is hope that the approval process could be streamlined or done away with altogether by classifying esports as a sporting event; however, this would require the creation of a sanctioned body to oversee the integrity and development of minimum standards for each event. Until then, the Esports Integrity Coalition (ESIC) is used to monitor and protect the integrity of approved competitions.