In such a huge and rapidly growing market as eSports, with prizes getting more valuable in each passing tournament it is only natural that bettors would get involved sooner or later in this new economy.

In fact, betting on eSports began seriously through a system known as “skin betting” in the game Counter-Strike: Global Offensive. An update to the game in August 2013 allowed players to change the appearance of their weapons cosmetically by using “skins”.

Photo via Steam Workshop/Chris “Coridium” Brown

Skin Gambling

Skins can be earned through gameplay in CS:GO, but can also be traded between players. Market forces meant that rarer skins fetched higher prices. This, in turn, led to several websites where players could gamble their skins for the chance to win more valuable ones which could then be bought and sold for real money.

That skins could be used as a currency for unlicensed gambling drew criticism and in Summer 2016 publisher Valve cracked down on the activity amongst a flurry of cease and desists and lawsuits. A flourishing underground industry was crippled and projections that once predicted the skin gambling vertical to be worth $20bn by 2020, now stand at less than $0.5bn.

However, skin gambling continues and is particularly popular for CS:GO and Dota 2.

The Rise of eSports and Cash Gambling

In 2012, Pinnacle was the only major sportsbook to offer eSports betting. Today nearly all major betting sites now offer eSports betting in the same way they would any other sport. Continued growth and maturation of the industry (aided by big market players, such as Amazon, Alibaba and ESPN) is expected to further fuel the growth of eSports gambling.

There are several factors that suggest eSports gambling will grow rapidly as we approach 2020.

· Compatibility. Data suggests a strong interest among eSports fans in native gambling brands, and a strong propensity to gamble.

· Attractive audience. The core eSports enthusiast is younger and with disposable income.

· Existing infrastructure. Sportsbooks already have the systems and platforms they need to handle eSports. Effectively, once they have the issues of data and pricing solved, they are able to treat eSports as “just another sport”

· In-play potential. In-play betting on regular sports is increasing in popularity, in part driven by pressure from popular trading platforms such as Betfair. The ability for sportsbooks to instantaneously import game data into pricing systems enables a vast opportunity to expand betting markets in eSports.

· Cross-sell opportunities. There appear to good cross sell opportunities for traditional sports betting sites for pushing traditional sports and casino play to eSports audience and eSports betting to their existing audience.

There are still various challenges to betting companies entering the eSports market, but as these issues are overcome, I see no reason that they should not enter the space more aggressively.

In 2016, Eilers & Krejick Gaming projected a total value of wagers around major eSports titles of £12.9bn, with 6.5 million unique customers placing bets. (note the impact of Valve’s pressure on skin gambling in 2017)

Given how eSports is already exceeding expectations, these projections could prove to be rather modest. As eSports and eSports gambling continue to grow, it seems only logical that betting brands will become a key source of advertising revenue for the eSports industry.

___________________________________________________________________

Esports Interactive Platform is develping a platform which will allow the direct interaction between brands, community and consumers in the eSports ecosphere.

For more information, please visit our official website

Whitepaper: EIP whitepaper