Online gaming is booming. In 2018, more than two billion players worldwide are expected to spend up to $138 billion on all types of video games. According to Newzoo, a market intelligence firm, the number of players will further grow to almost three billion by 2021, with global revenues surpassing $180 billion. Thanks to increased exposure, the number of people aware of eSports, a growing sector within the industry, is expected to reach 1.6 billion in 2018, while the enthusiast community will comprise 165 million of the total and grow to 250 million by 2021.
Together, these trends are shaping the future of the eSports betting market. In fact, it is possible that it is now larger than the entire eSports industry. According to software analytics company Narus, and industry research firm Eilers & Krejcik Gaming, the market has almost $6 billion wagered on video game titles in 2018, and this will expand to $13 billion by 2020. Here, we explore the key drivers of the eSports betting market and provide a brief overview of its landscape.
The Introduction of New Leagues and Participants
Historically, eSports struggled to gain traction until approximately 2010. As the number and size of professional competitions grew, so did viewership and sponsorships. Today, with multi-million-dollar prize pools, eSports tournaments continue to rise at a meteoric pace. For example, the International 2017, an annual Dota 2 tournament, featured a prize pool of $24.7M. In turn, other video game titles such as League of Legends, StarCraft II, and Counter-Strike: Global Offensive have their own leagues and tournaments, boasting massive eSports betting volumes.
Less visible to the outside world, eSports betting has become a robust market. With over $5.5 billion already wagered on major game titles this year, existing tournaments, followed by the introduction of new competitions, will continue to be the crucial factor behind its expansion.
Moreover, new video game entrants such as PlayerUnknown’s Battlegrounds, Amazon’s Breakaway, and the Overwatch League, together with real-world sports companies, starting to partner with tech giants like EA Sports, will further drive growth and increase interest in the eSports betting market, making it more technologically advanced and bigger than ever before.
From better betting performance to enhanced user interfaces, there are constant attempts to devise more innovative technological solutions to improve the online betting experience. Today, tech startups such as Unikoin and Bettium are trying to tap into the lucrative eSports betting market by replacing traditional betting sites with next-generation services and platforms.
The former is a full-fledged wagering service that provides a single place to track stats and bet on eSports with Unikoin, a platform-specific virtual currency, while the latter is designed to help users improve their betting experience and make educated decisions by deploying Merlin, a built-in assistant with Big Data capabilities.
In fact, Bettium’s Merlin will be a pioneering AI system that predicts outcomes and executes betting strategies based on real-time eSports-related content analysis, and the company hopes, it will replace the online sports book model with a more responsible alternative levelling the playing field between professionals and amateurs.
These startups – as well as other betting companies – will continue to introduce improved technology, as well as new standards for functionality and reliability, that will transform the way online betting is perceived, opening the market up for more and more players, advertisers and investors.
The Effect of Regulation
In the US, eSports betting companies continue to face regulatory challenges, as betting on competitive video game tournaments is still subject to the same vague loopholes as real-world sports betting. Now, though, with the Professional and Amateur Sports Protection Act being reviewed by the Supreme Court, there’s potential for a ruling that would make sports betting – and hence the eSports betting services – completely legal in all states that decide to allow them and create the necessary regulatory framework.
Such a move would mean a windfall for Unikoin, Bettium and other eSports betting startups, especially those working with major sports leagues such as NBA, NFL, and MLB, while catalyzing the growth of the entire betting market.
In other countries, where sports betting is permitted, policymakers have generally accepted the idea of treating eSports the same way they treat any other sport, but licensing remains an incredibly complex topic. Indeed, given the legal uncertainty, banks often view eSports betting startups with caution and can be reluctant to provide proactive service and support.
On the other hand, there is an emerging wave of Blockchain-based startups entering proof of concept stage across the market. By design, the Blockchain technology – which allows for decentralized banking, tamper-proof record keeping and identity verification – will give them the flexibility that they need to meet customers’ expectations, even in a highly regulated environment, like the UK and the EU.