The fourth part of our 2020 series takes a look at esports.
Participation and viewing interest in esports grew massively in 2019 and that’s expected to continue into 2020. According to Newzoo, total esports audience grew to 453.8 million globally in 2019.
The growth of esports is fast becoming the envy of other sporting organisations, especially as it involves a key demographic for sports clubs, that elusive 14-25 market. Major sports are sitting up and taking notice on how esports platforms operate with the likes of Formula 1, the NBA and the Premier League all dipping their toes at various levels in esports.
Streaming has become an important part of how people consume sport these days. Whether it’s NBA highlights on YouTube, NFL clips on Twitter or Premier League games being streamed live on Amazon Prime. Esports is a market leader in this regard with Twitch, owned by Amazon, enjoying huge growth in recent years by both streaming major tournaments and also providing a platform for esports players to stream and earn revenue.
Another appealing aspect of esports, is the fact that it is community lead. Ultimately it is the communities who decide if a game will be an esports or not, and when that community gets behind their esport, amazing things happen. An example of this is the International, a DOTA 2 tournament that crowdfunds its prize pool and in the last two years has exceeded $30 Million Streaming and esports are not reliant on each other though. A lot of top esports players do not stream and vice versa.
Most streamers get their big breakthrough on sites like Twitch and YouTube, however Ninja, perhaps the biggest known esports star in the world, streams exclusively on Microsoft’s Mixer platform.
Esports competitions are attracting huge audiences and the sport’s biggest stars have become celebrities.
Betting on Esports
Betting markets around esports tournaments is very much an emerging market but one that has seen incredible growth in recent times. There are several reasons for this, one is the wide variety of tournaments as well as the global reach of games and the creation of esports-specific betting sites.
Recent reports from Eilers & Krejcik Gaming state that over $8 billion was wagered on esports in 2019. This figure has grown from $315 million in 2015.
Betting has become an important part of the esports viewing experience. There are several hypotheses we could make on why this might be the case.
- Analytics. Gaming fans are analytical by nature. They study stats and scores and are well informed to make betting decisions.
- Viewing Habits. Many esports fans use a second screen or phone while watching events.
- Engagement. Esports fans are very engaged in games. They are often competitive gamers themselves with a deep knowledge of complex game rules.
Esports is now offered by all mainstream bookmakers, yet most seem unable to properly monetise it.
What is key to note for esports is that the market that follows are Generation X, millennials and Generation Z, who are turning into adults now. These groups are less likely to bet on traditional sites such as William Hill but more on dedicated sites for esports.
That’s why companies like Pinnacle and Unikrn are prospering. Pinnacle launched their Esports Hub and focused their marketing efforts on Esports education to maintain their position as leaders in the Esports betting industry.
In 2020 and beyond, we will also see a lot more peer to peer platforms where people can create markets on themselves.
“There is a lot of investment going into the esports world at present but this has mainly been focused on tournament organisers, esports organisations and content/engagement platforms, esports betting platforms have largely gone under the radar; however the industry does offer a potentially big opportunity especially as a peer to peer offering.
One of the most interesting aspects of esports is the ownership and control of the publishers and in a way, betting on esports can be viewed as being agnostic as you do not need licenses or a franchise. However, the key for any betting company entering/growing in this space is understanding the titles and data around tournaments, and being agile around them, especially as we saw with the Fortnite World in 2019, players can come from out of nowhere to win. ”
Trev Keane, Head of Sports and Esports at Fansly Ventures.
Data integrity has become a hot topic in the gambling industry.
For bookmakers, data is at the core of the business, from KYC processes to setting the odds on their sportsbook. For esports to flourish as a betting market, the regulatory authorities must ensure data integrity.
We have seen in recent times doubts around betting markets for Welsh and Irish football and that has the potential to occur in smaller esports tournaments.
We mentioned in one of our previous articles that this has already caused issues in the NBA2K League. Basil ‘24K Dropoff’ Rose was disqualified from the league for passing insider information to betting groups.
The gambling industry is still in its infancy in the United States. As of January, only 13 states have legalised sports betting with six more states soon to be finalised.
The US is a very immature market and it’s likely that American Football (NFL & NCAA), NBA and MLB will continue to grow with more in-play markets coming for these sports and potentially higher margins.
However, esports does not fall under the sports category as far as the United States regulatory authorities are concerned. New Jersey became only the second state to accept esports bets in early November. The New Jersey Division of Gaming Enforcement gave a one-off exception for sportsbooks to accept bets on the League of Legends World Championship Final.
It remains to be seen whether esports betting will take-off in the US but sites like Unikrn are well-placed to benefit if it does.
- Esports revenue to hit the $1.3 billion mark
- An Esports betting regulatory authority to be established to ensure data integrity and promote the sport as a viable betting market.
- Traditional bookmakers will get involved with esports sponsorship. Betway already has a considerable esports portfolio.