The Rise of Esports Betting

Sheppard Mullin Richter & Hampton LLP
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Sheppard Mullin Richter & Hampton LLP

During the first few months of the COVID-19 lockdown, with virtually all major sporting events cancelled, sports betting and gambling companies turned their eyes toward the esports universe in search of a solution. While initially large scale esports events were also cancelled, professional gaming competitions soon began taking place online. As one of the only professional “sports” competitions being broadcasted with any consistency, esports competitions filled the gap for many sportsbook operators.

Online bookmakers that specialize in esports, such as Luckbox and Unikrn, caught the first wave of esports betting explosion, reporting incredible growth in total bets placed on their platforms since the pandemic-related lockdown. DraftKings, Bet365 and other online sports betting platforms began offering products related to esports specifically to appeal to existing sports bettors in a familiar format and with multiple betting opportunities. Las Vegas and the casino industry soon followed, and the Nevada Gaming Control Board approved sportsbooks to take wagers on the ESL One: Dota 2, DreamHack Masters Spring, League of Legends European Championship, Overwatch League, FIFA League, NBA2K League, etc.

Some industry analysts and bookmakers forecast that even as traditional sports make their return (in their current crowd-less form or after the end of the pandemic), as supported by several data sources, the growth in esports betting should continue to explode.  According to one report that reviewed betting data across 10 bookmakers between the months of March and April of this year, there were 40 times growth in esports betting, mainly fueled by two major esports titles, FIFA and NBA2K. Although such considerable increase in esports betting is not surprising given the initial market size and the void caused by the worldwide cancellation of traditional sporting events, the study also revealed that half of the core betting audience of esports is represented by high income, full-time professionals between ages 26 and 35. Considering that the principal demographic of esports gamblers grew up playing computer and/or console games, some industry insiders predict long-term growth opportunities, as gamblers become more educated on esports and its offerings. Furthermore, analysts highlight increased betting opportunities in esports due to the fact that (i) a single FIFA match takes 8 to 15 minutes while a soccer match last close to 2 hours, and (ii) esports competitions occur year round with no off-peak periods.

Since the Supreme Court’s 2018 ruling that declared unconstitutional a federal ban on sports betting, the United States sports betting market steadily grew with 17 states joining Nevada to permit legal sports betting in variety of forms. Investments in esports and gaming continues to rise signaling continued growth in this space.

While esports gambling is having a moment with no apparent slow-down on the horizon, only our return to normalcy will determine its place in the broader fabric of sports betting.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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