Inside a sold-out Allen Event Center earlier this summer, thousands of fans erupted in cheers as members of the Dallas Fuel Overwatch team pushed back from their computer screens on stage and pumped their arms in the air.

Fireworks burst around them and the words "DALLAS WINS" flashed on massive screens, dwarfing the celebrating professional players of the popular video game Overwatch.

The deafening crowd at the first-ever live esports home game was a milestone for a burgeoning industry that's found its footing not only in the entertainment capital of the world, Los Angeles, but also in North Texas.

While esports has risen in popularity on a global scale, it's been slower to emerge in the U.S., with select regions only recently beginning to see investment in teams. Three major teams have taken root in Dallas-Fort Worth.

An influx of tens of millions invested in these teams is fueling a new era as the industry attempts to bring fans out from behind consoles and computers and into public spaces where they can build a sense of community not unlike traditional sports.

Internationally, professional competitive video gaming has been king for nearly two decades. Countries like South Korea have hosted massive tournaments that turn out thousands of fans since the turn of the century. In the U.S., tournaments and leagues didn't begin forming until about a decade ago.

Dallas Mavericks owner Mark Cuban, who also owns an NBA 2k esports team called Mavs Gaming, has called North Texas the biggest hotbed for esports outside of California. The region is also home to the largest stadium dedicated to esports in North America, the former Arlington Convention Center.

So how did North Texas manage to attract and foster not one, but multiple large esports organizations?

Founder and CEO Mike Rufail, whose Envy Gaming owns the Dallas Fuel, credits the region's wealthy investors with supporting nascent esports organizations as they hunted for ways to become profitable in the long term. Dallas oil magnate Kenneth Hersh has reportedly invested millions in Envy Gaming.

Others like Frisco-based Complexity Gaming founder Jason Lake and Infinite Esports founder Chris Chaney think the three teams' arrivals in North Texas are purely "coincidence."

"Because three large brands ended up here in a short amount of time, it looked like there was a strategic initiative or conversation to make that happen, but it really wasn't," Lake said.

Coincidence or not, the three organizations found a favorable business environment and a supportive fan base that's positioned them to capitalize on what's predicted to become a $1.7 billion industry worldwide by 2021.

'The investor era'

Growing up, Jason Lake saw himself as an anomaly in the 1980s.

"It was much simpler ... you were a jock or you were a nerd," Lake said. "I was a strange aberration right in the middle."

Lake said he largely put aside gaming when he went to college and eventually pursued a law degree. It wasn't until a friend introduced him to Counter Strike's online multiplayer scene in the late 1990s that he began thinking about what would become Complexity Gaming.

In 2005, Lake established a gaming house — a Plano home with high-speed internet where his team lived and practiced. Lake's team competed professionally at events around the country. He began to play less to manage the business of the team.

Complexity Gaming founder Jason Lake has been embedded in esports for nearly two decades. He's pictured here in 2006, celebrating his team's Counter Strike 1.6 championship at the World Series of Video Games. (The Dallas Morning News / File photo)

In 2011, Rufail — then a competing player for Envy Gaming — was already seeing a bright future for esports in the U.S. He told Forbes that though esports was in its infancy, viewership was "exponentially rising."

"Soon we're going to see these large corporations that have products that have nothing to do with gaming, but they want to market by demographic, coming on board," he said.

The number of people worldwide who consider themselves esports enthusiasts nearly quadrupled between 2012 and 2019 to 200 million, and that number is expected to expand even further to nearly 300 million by 2022, according to Statista.

By 2014, Lake had seen the rise and fall of multiple esports leagues as the industry attempted to break free from communal gaming houses that confined players and emerge as a serious competitive sports genre.

"It was becoming so ubiquitous around the world and getting insane viewership numbers and investors started noticing," Lake said. "We started to enter the investor era."

That same year, video platform Twitch was gaining massive popularity for video game streaming and was acquired by Amazon for close to $1 billion. The success of the platform was a key factor in elevating esports into the mainstream and attracting the attention of investors, Lake said.

Player lounge inside Complexity Gaming's GameStop Performance Center at The Star in Frisco, on Monday, May 20, 2019. (Vernon Bryant / Staff Photographer)

Lake began touring executive boardrooms around the country in a search for the perfect backer for Complexity Gaming. That eventually led him to Dallas Cowboys owner Jerry Jones and the family of successful real estate investor John Goff.

Goff's son, Travis, had a passion for video gaming, particularly Counter Strike, and wanted to bring it into the family business. A deal was closed by the end of 2017, though the size of the investment was not made public.

At roughly the same time, Rufail and Infinite Esports founder Chris Chaney were also hunting for forward-thinking supporters. Their teams had each ranked in numerous accolades, taking top spots in tournaments around the world playing Counter Strike and Call of Duty.

Rufail, the son of Egyptian immigrants who was raised in East Texas, inevitably found himself back home — where he immediately hit it off with Kenneth Hersh.

"I come from a very conservative Texas Republican family," said Rufail, who respected Hersh's success as a businessman and his involvement with the Bush family. Hersh is CEO of the George W. Bush Presidential Center in Dallas.

"They gave me a fair deal whereas a lot of other investors were really trying to take advantage of me as a founder," Rufail said. He wanted to keep control of the team's direction, and Hersh was offering that along with a reported $35 million investment.

The investment allowed Envy to buy into Activision Blizzard's Overwatch League, a first-of-its-kind experiment in esports to anchor teams to cities they represent much like the NFL and MLB. Even the Overwatch League logo resembles the two-tone MLB logo. But rather than a baseball player with a bat, it features Overwatch's flagship character Tracer holding two pistols.

Rufail and Envy Gaming aren't the only North Texas organization with an Overwatch franchise team, which is said to carry a hefty $20 million buy-in. The Dallas Fuel was formed and carried a roster of highly sought-after players from around the world.

The region's other esports organization, Infinite, also secured a league position and formed a team to represent Houston: the Houston Outlaws.

Strong companies

Mike Rufail, chief executive officer and owner of Envy Gaming and the Dallas Fuel, poses with with several esports championship trophies at their offices in Dallas in August.. The trophy in the middle is from the 2016 World Electronic Sports Games in China for the CS:GO team. (Ben Torres / Special Contributor)

High operating costs, rising player salaries and difficulty turning profit has made some in the industry skeptical that esports organizations can succeed long term. Rufail brought in sports marketing veteran Geoff Moore, who has leveraged his experience building fan events around franchises like the Dallas Stars, to help him create additional revenue streams for Envy Gaming.

By 2019, Rufail's prediction to Forbes had become a reality. Sponsorships are now the lion's share of esports revenue, and Envy Gaming carries sponsorships from companies like Jack in The Box, Monster Energy and Grapevine-based GameStop. GameStop also sponsored Infinite and put the company name on Complexity's new esports training facility conveniently located at Jerry Jones' high-profile Star development in Frisco.

Brand sponsorships are expected to bring in $456.7 million for esports organizations this year as industry revenues cross the $1 billion threshold for the first time, according to esports analytics firm Newzoo.

The success of the Overwatch League's first home game at the Allen Event Center, where the Dallas Fuel was front and center, was proof to some that fans were ready to support geographically anchored esports teams. Most of the fans at the event were over the age of 21, Envy Gaming said at the time, and hold the kind of purchasing power that could fuel a legitimate sports franchise.

Today's esports industry isn't just appealing to teenagers, though it is an especially popular form of entertainment with 14- to 21-year-olds. One out of every two adults under the age of 30 has played or watched online video games, and a quarter of adults overall expressed similar habits, according to a Washington Postand University of Massachusetts poll conducted in 2018.

If the success continues, hometown identities could open up even more opportunities for esports teams to monetize and stay afloat.

"The goal is just to make sure the fans are having a great time with us and cheering for our team," Rufail said. "If you do that, then the revenue comes in."

While Envy and Complexity have found at least short-term stability in North Texas, the same can't be said about Infinite.

Infinite's Optic Gaming, which had competed in Counter Strike, Call of Duty and League of Legends, found backing from Texas Rangers co-owners Neil Leibman and Ray Davis in 2017. The team was moved to Frisco.

But in June, Infinite struck a deal to be acquired by Los Angeles-based Immortals Gaming Club for $100 million. It was the largest transaction in the industry's history, but one that may end with the organization relocating to L.A.

Chaney - who was ousted as president of Infinite last year but retains a stake in the company - was disappointed to see Infinite acquired. But he said other teams will have to make similar strategic decisions to remain viable.

"The space needs strong companies that can also weather some storms because, as in any industry that's growing fast, you'll have some dips naturally," Chaney said.

Rufail and Lake both said they'd like to make D-FW their teams' long-term home. Yet Rufail also doesn't rule out a potential move someday from his team's Victory Park offices.

"I felt like I picked the place that embodied our brand and the lifestyle of our players," Rufail said. "We have a lot of young people working in the organization, young players, and they kind of desire a more upbeat lifestyle for now."

On Twitter: @DomDiFurio

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