It’s impossible to deny that esports has carved out an impressively large space in the global entertainment and hospitality sectors. From Korea to the US, Latin America to Eastern Europe, esports venues regularly sell out to huge crowds.
As the scene has developed, esports operators have become increasingly engaged with various other entertainment sectors. Media is a given, as is hospitality via the venues used to host these sell out events – but betting is another sector which is hard to ignore.
This is not just a case of esports companies looking to cash-in on opportunities betting provides via sponsorship, revenue sharing, and data sales etc. The betting sector is also increasingly looking to what it can learn from video games, and the competition that has built up around these products.
“Video games are a much bigger deal than gambling,” said Anthony Gaud, CEO of Gaud Gaming Group, speaking at the Canadian Gaming Summit (CGS).
“What’s been happening over the past couple of years, is that the video game industry is starting to learn how to come into the regulated industries.”
Esports growth has not gone unnoticed by the gambling sector. Companies have moved to engage with the sector extensively, particularly by tapping into the extensive revenue potential by offering betting markets.
“Video games are a much bigger deal than gambling.”
Anthony Gaud, Gaud Gaming Group
Some firms, such as Canadian sportsbook Rivalry – which focuses chiefly on esports although also offering traditional sports betting – have sought to combine media and betting for a Gen Z and millennial-focused product.
“As a licensed operator we’re engaging with a lot of our users and that does mean we have to face a lot of different challenges,” Britt Doll, the bookmaker’s Global Marketing Director, shared at CGS.
“Esports and gaming consumption is very much on the rise, steadily growing. By 2025, next year, there’s going to be 320 million esports viewers and a larger population of three billion gamblers worldwide. There is a very large, significant population of people involved in esports and gaming to some degree.”
The rise of esports is one of sports businesses stand out success stories, although it may not get as much recognition as the revenue and prominence seen by the likes of football (soccer), the NFL or NBA, to name a few of the world’s biggest traditional sports.
Regardless, the popularity of global esports cannot be denied. As the panel, and Insider Sport, have noted, esports tournaments are now selling out stadiums in the likes of Korea, and in places closer to home for the CGS panel, like New Jersey.
Melanie Penner, Founder of the Manitoba Esports Association (MESA), said: “It’s much more than just kids playing video games in their basement, which I guess is what my parents thought that it was – but like I said, it’s much more than that.
Coming from a community standpoint, where did esports really begin? A bunch of kids playing games in their basements were slowly building up until they were selling out stadiums in South Korea. It’s crazy they can do that.”
This is not to say that there are no challenges in how the sector operates, however. A notable conundrum exists in that esports associations are operating tournaments which they own, but they do not own the game that they are competing with.
“Esports and gaming consumption is very much on the rise.”
Britt Doll, Rivalry
Various leagues exist for Counter-Strike: Global Offensive (CS:GO) and Dota 2, to name two of the most popular esports titles. These leagues attract huge viewing figures in the tens of millions, and revenue figures go even further.
However, the tournament organisers do not own the games. To reference the above mentioned examples again, CS:GO is developed by Valve and Hidden Path Entertainment, with the former also developing Dota 2.
This challenge around licensing can make things difficult for tournament organisers, but also for operators seeking to engage with the space, as Penner explained to the audience at CGS in Toronto last month.
“With esports, you’re kind of stuck in between publishers, and publishers, what they’re trying to do with their licensing, is really difficult as any operator – whether you’re a tournament operator or a casino operator or a venue – to get around that, because there’s a lot of regulations to even host a small tournament.”
Getting around the licensing aspect about esports operations is a constant challenge for those involved. For betting operators in particular, certain game publishers may have rules around who esports participants can engage in partnerships with.
However, there is one particular element of the global esports scene that operators, media organisations, and tournament organisers alike can rely on.
Like many other sports, esports has built up communities around its various teams, leagues and games. This isn’t too dissimilar to traditional sports – take the communities that form around football clubs in Europe and Latin America, for example.
These communities are closely connected to the various teams and the games featured in the tournament. They have also played a key role in the global growth of esports, and engaging with these communities can be a key to success for those wishing to commercially leverage esports.
“I really like focusing on the games that are the most popular right now,” she said. “So in the last couple of years, what we do as a nonprofit is we always put out a survey to the community – what games are you looking for? What kind of events would you want to come out for?”
She added: “We’ve always been focused on what’s most popular and what we can do as a tournament organiser, because, like I mentioned before, the licensing and then that type of aspect is really difficult.
“Also finding smart venue partners, getting audio visual partners,, is really difficult in this space as well, because a lot of people don’t really know.”
This raises another significant challenge that esports has had to overcome over the years – recognition. In comparison to say, football/soccer, the NFL or the NBA, esports is still a relative newcomer to the global sports scene.
As a result, many of the stakeholders the sector needs to cultivate partnerships with in order to grow are not entirely familiar with what it is, how a tournament works, or the staging requirements of putting on such an event.
“There’s a lot of education that needs to be done.”
Britt Doll, Rivalry
This, in turn, is something bookmakers have come across. When it comes to betting, many consumers “don’t even know that esports betting is even a thing”, Rivalry’s Britt Doll remarks. The resolution to this is education of and engagement with the esports’ fanbase.
“I think, unlike traditional sports, where you know that you can bet on football, you can bet on basketball, you can bet on soccer, people have been doing it for years and years – not so much to be said for esports betting itself.
“There’s a lot of education that needs to be done and awareness that needs to be done, and that’s what I’ve been doing over the last couple years, working at Rivalry and really building that awareness and being able to market to consumers.”
Central to Rivalry’s approach to building up its status in esports has been its marketing. The company’s marketing activity centres heavily on user engagement, partly by utilising influencers and streamers.
This has become particularly useful in Ontario, where the Alcohol and Gaming Commission of Ontario (AGCO) has introduced new rules around betting marketing – something discussed on another panel at CGS.
This has only influenced Rivalry to be more creative, Doll explained, finding new ways to engage with its audiences whilst complying with AGCO rules. Organising watchparties and hosting its own CS:GO tournament are elements of this, for example.
Doll continued: “Being a licensed operator in Ontario, we are held to very high standards, working with the ADCO and working with iGO, and there are limitations on what we can and cannot do, with marketing to consumers in a way that makes sense.
“So, for example, we’re not necessarily able to use celebrity endorsements. We’re not able to use professional athletes in our advertisements.We can’t use inducements to get people to actually bet on Rivalry. And so we have to get creative at Rivalry.
“The way we do that, we have creators, we have influencers that we work with that are within esports, within the gaming space, that we leverage to really create activations that are really engaging.”
Despite some of the challenges listed at CGS last month, the overwhelming sentiment around esports growth is that it is not slowing down. Engagement with esports from other industries, like gaming, will not slow down either.
Although with the first video games having emerged in the late 80s and early 90s this is not entirely the case. The esports audience is by and large disproportionately younger than that of traditional sports, and its audience is also a lot more plugged into the internet than others.
This may give esports yet another advantage over other sectors, being that it does not need to rely on the physical events traditional sports need to.
As Gaud explained, video games “have become a social platform” over the past 10 years, and whilst this does not mean that esports organisers do not want physical events, they do not need to count on them as much as others.
Esports’ future trajectory is looking bright. The sector’s audience is only increasing year-by-year, and with that so are the revenue opportunities – but companies looking to engage with the space must consider how they can connect with its communities, and navigate its tricky pathways, which present a unique set of challenges that other sports lack.
