The extreme spectator excitement that is the FIDE World Chess Championship kicks off on Friday, November 9.
US sports betting fans may not have made it past the first paragraph of this article. If so, they’re missing out on one of the fastest growing areas of sports betting.
This year’s world championship is between Magnus Carlsen from Norway and Fabiano Caruana, born in Miami and holding US and Italian citizenship.
US has the first chance at the chess world championship since 1972
Carlsen is the favorite as the reigning champion. He is 27 years old and first won the championship in 2013. Since then he has retained the title every year.
Caruana is a year younger, and at 26 has a FIDE rating only three points lower than Carlsen. For stats lover,s Carlsen is rated at 2835 with Caruana on 2832.
If Caruana can create an upset victory, he’ll be the first American world chess champion since Bobby Fischer. In fact, “no player born in the United States has won or even competed for a World Championship since Bobby Fischer in 1972.”
During the Cold War, the world chess championship was a proxy battle between the US and the Soviet Union. A cultural war to demonstrate the philosophical superiority of either the capitalist or communist system.
Carlsen and Caruana have their future earnings on the line
Today, the bragging rights remain phenomenal, but there are big bucks at stake. The year before Carlsen first won the title, he made $1.2 million, mainly from sponsorships.
The New York Times stated:
“Carlsen sits at the center of a campaign carefully constructed by him and his handlers to use his intelligence, looks and nimble news-media-charming skills to increase his profile outside the sport, as if he were a tennis or golf star. Not since the days of Fischer, Kasparov and Karpov has a player managed to move so deftly beyond the world of chess into the world at large.”
Since winning the title, his marketability has improved. The effect was immediate. In November of 2013 Cosmopolitan selected him as one of the “Sexiest Men of 2013.”
By 2017, Carlsen reached an even higher celebrity peak. He appeared as a character in the Simpsons episode where Homer discovers he’s a chess genius.
For the two players, the London championship represents a lot more than just a trophy. And that means that there won’t be any slow play; no quarter will be offered or asked for. This is a contest where everything is on the line.
That makes it ideal for sports bettors. No chance of any game rigging here. Both players will be giving it their all, and that’s one reason why Unibet expects to take so much in wagers.
Ilya Merenzon, the CEO of World Chess, explained:
“The odds from the World Chess betting partner Unibet shows just how exciting this championship will be. It’s great to see the betting community from across the globe, as well as six hundred million chess fans, come together, proving that the sport is continually becoming even more popular.”
Tournament format makes for plenty of in-game betting
The competition will take place over 12 games. Unibet has set the chance of a win for Carlsen at 29/50, with 7/25 chance for Caruana and 9/50 chance of a draw.
In early betting, the chance of Carlsen winning the first game is 16/25 and 7/10 that the winner won’t be decided in less than 11 games.
OK, maybe the pace of a chess match isn’t as thrilling as motor racing, but things can change quickly on a chess board. That makes for in-game betting opportunities as the board position appears to lean one way or the other.
Chess may be a game of complete information; all the pieces are always visible, but it can also generate surprises. Apparently strong positions can suddenly collapse as an unexpected sequence of moves shows up a fundamental weakness.
Richard Öström, country manager for Unibet Norway commented:
“The odds in this highly competitive match will continue to fluctuate and this year’s World Championship showdown between Magnus Carlsen and Fabiano Caruana in London will continue to establish chess as a permanent fixture in betting.”
There’s even a sexy logo
Chess is not noted for being a sexy sport, but this year FIDE has sexed up their logo. At least, FIDE has offered up two logos, one more traditional and one with a different image of the game.
- Or Sexy
Sports bettors in New Jersey who want to support the US contender will probably be able to find a wager.
There are now more than enough online and live sports betting operations in New Jersey, and surely one of them will step up and offer the chance to place a chess bet.
The championship takes place at the Victoria and Albert Museum in London from November 9 to November 28.
UK company, Sky Bet has come up with a neat innovation that allows friends to make sports bets together.
The new Group Betting function allows players to create a group in which they build an accumulator bet with each member of the group making one selection each.
The FAQ makes it clear that each wager continues to be made from each individual bettor’s account.
“The selections forming the Group Bet will be made jointly by the customer and the other customer(s), however the Group Bet will be placed individually by each customer, it will not constitute any form of syndicate or pools betting.”
Key Features of Group Betting
- Minimum group size is two people
- Maximum group size is 50 people
- Each bettor can join a maximum of 5 groups
- The Group Bet will be available for additional selections to be added until the kick off of the earliest selection
- Bets will be closed if no selections are made within 7 days of the bet being created
- If a selection within a multiple bet (e.g. doubles, trebles, accumulators) is voided then the bet will become the next accumulative bet down, e.g. a treble will become a double etc.
- If a selection is classed as an Ante-post bet the bet will be classed as a losing bet
Sky is formalizing an informal practice
Andy Evans, Sky Bet’s principal product manager told iGamingBusiness that:
“The idea of Group Bets came through the internal CoLab project that we ran earlier this year. Essentially we’ve taken a behaviour that already exists and created an experience that satisfies users’ needs and simplifies that activity for them.”
Evans explained that the new feature was still open for further development:
“We’re still in a Beta phase, but the aim is see how customers respond to what we’ve done so far and see what it is that interests them most.”
Sky Bet is not available in the US, yet
Sky Bet is part of Sky Betting & Gaming which has just been bought by The Stars Group for $4.7 billion. Sky Bet is not available to US customers, but there is the possibility that that might soon change.
It is strongly rumored that PokerStars has partnered with the Mount Airy Casino in PA, and the Mount Airy Casino has already put up $10 million for a state online gambling license. A sports betting license will cost it another $10 million, but that would enable the casino to launch branded sports betting either with The Stars Group and/or its other partner 888.
The Stars Group hasn’t yet released its Q2 results this year, but when it does, CEO Rafi Ashknazi will be sure to mention the sports betting opportunity in the US. Something for which its acquisition of Sky will be ideal preparation.
A tortuous possibility, but the legalization of state-regulated sports betting will shake up the market. New industry players and new brands will emerge as gambling operators, both on and offline, scramble for a share of the revenues on offer.
Regulation stifles innovation
One major risk of tough gambling regulation is that it can reduce the incentive for licensees to innovate. Their licenses give them privileged and protected access to a market so they are not exposed to the full force of international competition.
The US state-regulated markets are typified by the regulatory demand that online operators must partner with land-based casinos. This means that the casinos benefit from the innovations the online operators bring as the result of their need to remain competitive globally.
The upshot is that US sports bettors should be getting the best of both worlds; local, accountable gambling regulation with world-class gambling products.
Research published by Barclays bank points out that for the first time, people born in Generation Z now outnumber Millennials. The oldest members of Generation Z are 23, and all businesses, including sports betting operators, need to change up to cater to the new generation.
Research author Hiral Patel classifies Generation Z as those born from 1995 to 2009. Millennials are those born between 1980 and 1994. Her paper, “Introducing Generation Z” sets out some key differences between the two generations’ attitudes in five areas:
- Financial Habits
- Attitude to work and Education
It’s the parents’ fault
The report argues that these differences arise from:
- Parenting & Household Dynamics: Millennials were raised by the Baby Boom generation, sometimes known as the “Selfish Generation.” As parents they were indulgent and overprotective as well as economically wealthy. Generation Z was brought up by Generation X, considered to be a more discerning, less financially secure generation.
- World economy & international affairs: 9/11 was the key event for many Millennials, whereas Generation Z are more affected by the Great Recession of 2008. The explosion of news on social media has made the younger generation more aware of international affairs at a younger age.
- Technology: Millennials were digital pioneers, adopting the smartphone, broadband internet and social media. Generation Z are “digital natives” who have never experienced a time when these technologies were not an integral part of their life.
The critical point Patel makes in her report is that:
“We fear they are either still trying to adapt their business models to the Millennials or hoping simply to re-use whatever strategies they’ve developed for Millennials on Generation Z. We argue that adopting such a homogenous approach will deliver unsuccessful results as it fails to identify the two generational cohorts as different.”
Less sex, drugs and alcohol
This applies equally to sports betting operators. Ominously one difference is that Generation Z likes “less sex, drugs and alcohol,” than their forebears. Any psychometric test demanding completion of that sequence would probably add “gambling.” If so, marketing sports betting is going to get a whole lot more difficult in the next decade.
One point that is made in the report which offers more optimism is that the new generation is very interested in gaming.
The top two media companies in which Generation Z has an interest are Activision Blizzard and Electronic Arts, both are at the forefront of the esports revolution that is ongoing. For internet companies, Tencent also gets a mention, and Tencent seems to own either outright or in part a large part of the video game development industry.
Put both graphics together and what emerges may look confusing to any traditional sports betting marketer, but there are signals as to the way forward.
- Esports will obviously be a bigger issue for Generation Z, and most sports betting operators have already put together esports betting products alongside their normal sports betting to reflect the Millennial’s interest in the games.
- The shift from text based information to visually oriented apps points towards some serious web redesign, but also a need to make sports betting more visual and less about numbers. Busier screens that would make a Baby Boomer wince will be child’s play to the new generation
- Combine this emphasis on the visual with Generation Z’s tiny attention span and the attraction of virtual sports betting becomes more apparent. Virtual sports offer exciting visuals and shorter matches with more frequent betting opportunities. It looks like Generation Z doesn’t want to wait for the outcome of a game before knowing whether they have won or not.
As for traditional sports betting, the idea that Generation Z likes to be more active than the basement-dwelling Millennials suggest that their interest in sports will be more geared to participation that to passively watching on TV.
Either way, their interest in sports looks like it will remain despite competition from esports and passive video game entertainment.
Generation Z is different and it’s growing up quickly. Sports betting needs to begin reacting now before other attractions displace it from Generation Z’s agenda.
From outside the United States, the current scramble to produce state legislation for sports betting looks a bit like the US has just discovered VHS video recorders. The rest of the world has long since moved on.
A quick scan of legislation proposed in various states looks like it was designed for the steam age. Where are the current big regulatory issues in gambling regulation; esports, virtual sports, in-game and crypto-currencies? Conspicuous by their absence.
Esports betting is the next next thing
The most popular esports are League of Legends (LOL), CounterStrike Global Offensive (CSGO), StarCraft 2 and Overwatch although there are many others which garner a large audience.
If any US politicians have noticed the existence of Twitch, they should have picked up that on June 24, Riot Games became the first channel to pass one billion views, almost entirely for broadcasts of their esport game League of Legends.
We'd like to extend a thank you to the viewers for helping the @RiotGames @Twitch Channel be the first one to surpass 1 billion views. We could not have done it without your loyal support ❤️ pic.twitter.com/2W69ix0CEJ
— lolesports (@lolesports) June 24, 2018
At a Nevada Gaming Policy Committee meeting chaired by Governor Brian Sandoval, Arthur Manteris, vice president of Station Casinos‘ sportsbooks made the simple statement:
“Gamblers make viewers, and viewers make gamblers,” adding that the viewing figures are: “Numbers the world has never seen before.”
Manteris has forty years experience of sports betting in Las Vegas.
Online esports betting still isn’t legal in Nevada, but it is available in casinos. New Jersey’s latest sports betting legislation includes what appears to be a ban on esports betting:
“A prohibited sports event includes all high school sports events, electronic sports, and competitive video games but does not include international sports events in which persons under age 18 make up a minority of the participants.”
Sports attorney Daniel Wallach told Compete that there was still some wiggle room and that the regulator could rule on a case-by-case basis to allow some esports betting. Nevertheless, it doesn’t look good.
Esports is experiencing triple-digit growth
Over the last four or five years, esports betting has been the fastest growing area of sports betting. Sports betting operator Pinnacle has seen triple-digit growth for the last five years.
— Pinnacle (@PinnacleSports) December 20, 2016
Narus Advisors and research firm Eilers & Krejcik Gaming have forecast that global wagers on esports will be $6.7 billion in 2018 growing to $13 billion by 2020. That’s a small but significant fraction of the global online sports betting market and it’s growing at internet speed.
Virtual sports are a closer complement to traditional sports. Using big data about players and team performance they enable virtual versions of traditional sporting fixtures to be played out.
Bettors can watch the matches with high-quality video game graphics, and even engage in in-game betting. Sports data firm BetRadar is one of the biggest names in the virtual sports betting business.
Here’s their 2018 promotional video showing the sports they offer as virtual products and the quality of the video graphics.
If you skipped the video, you missed the list of sports that they offer globally; soccer, basketball, tennis, horse racing and dog racing.
No hockey, no American Football, no baseball. This is the legacy of the federal ban on sports betting, the most advanced betting technology in the rest of the world has ignored the most popular US sports.
Nevada and New Jersey are two states where at least some virtual sports betting is allowed, the question is whether other states will follow when they pass their own sports betting legislation.
Skins, crypto & loot boxes
One characteristic of modern video games and esports is that the game developers monetize play by offering virtual goods for sale. These goods, such as weapons, armor, boxes with surprise contents (loot boxes) and other in-game advantages/enhancements can also be won by playing.
Collectively known as skins, they have become a de facto in-game currency, and can sometimes be used for betting.
The regulators of today need to define what counts as money for the purposes of gambling. The UK Gambling Commission has made a good stab at the problem. US regulators need to follow suit, especially with the proliferation of modern cryptocurrencies.
With everyone so excited about the legalization of sports betting, it’s easy for politicians to miss the fact that the industry is moving on into a virtual age. The legislation they produce risks excluding players and US businesses from an important development or at least leaving gamblers to the risks of placing their bets on the black market.
West Virginia now has a sports betting law that will come into effect as soon as the US Supreme Court issues a ruling allowing states to regulate the industry. But the fight to get the law passed was bitter, pitting the sports leagues led by the MLB and NBA against the sports betting operators.
Now it’s time to bury the hatchet and join forces to ensure that legal regulated sports betting is as widely available as possible.
Unnecessary conflict will reduce spread of legal sports betting
One of the biggest problems is the issue of so-called “integrity fees” – payments to the sports leagues from sports betting revenues. The leagues want them, and the betting operators don’t want to pay them.
The West Virginia bill, S415, became law on March 10 without Governor Jim Justice’s signature. It includes no integrity fee provisions despite frenzied lobbying on the issue.
Connecticut, Mississippi, New Jersey, New York and Pennsylvania are all either ready to go with legal sports betting, or well on the way. That still leaves most of America out of the game, and even if other states introduce legislation, they will face the opposition of the sports leagues.
The inevitable outcome will be that fewer states will pass sports betting laws, meaning the US market will be smaller than its true potential.
Anyone with an ounce of understanding of game theory should be able to see that this is a sub-optimal outcome, but a win/win strategy is possible if both sides change their tactics.
There is so much nonsense spouted by political opponents of legal sports betting that we risk ignoring the few arguments that are valid. If operators accept the integrity fee argument they can increase support for gaming legislation and therefore increase access to safe, regulated sports betting.
Integrity fees have a logical basis
The sports leagues invest in making their sports popular and betting operators get the benefit from that investment in increased wagers. An integrity fee compensates the leagues by giving them a share of revenues that they are partly responsible for creating.
The leagues simply want to be compensated for the intellectual property rights they have in the game data that they have created.
The problem is a mindset where the sports fixtures on which people bet are being considered as a “common good” like the air we breathe, or the water in the oceans.
- In previous times, this made sense because poor technology made the concept of an integrity fee impractical; it simply couldn’t be calculated or if it could, it couldn’t be collected.
- Now that this is no longer true, all that remains is the outdated belief that the games themselves are a common good.
The sports leagues and teams have paid good money to create the asset on which sports betting operators base their businesses, and they believe they have a legitimate claim to share in any revenues other businesses make by exploiting that asset.
It’s time for betting operators to recognize the validity of this argument, and in doing so join forces with the sports leagues to spread legislation across as many states as possible. That would be a real win/win strategy, for leagues, operators, and the American people.
West Virginia Governor Jim Justice made the point when he announced the new law:
“After the U.S. Supreme Court issues its decision on sports wagering, to address any provisions of the legislation that might be in conflict, I will ask the Legislature to look at the advantages of partnering with the major sports leagues. This approach will allow us to develop a relationship with all the major sports leagues so that it is beneficial to everyone.”
Google (Alphabet Inc), Amazon and Facebook are three of the top ten largest public companies in the world, and they are now in frenetic competition to win the esports audience.
Twitter may be small in comparison, but it is big in the social media space, and it too wants a piece of the esports pie.
Twitch was the initial force that grew live streaming on the back of esports leading Amazon to buy the company in 2014.
Google’s YouTube introduced live streaming in 2011, but only for select sporting events. It caught on to live streaming esports much more recently.
Twitter is no minnow in the social media space, but its market cap of less than $20 billion makes it tiny in comparison to the three top tech companies.
In March this year, it also struck a deal with ESL, setting its sights on the esports millennial demographic. Twitter will be live streaming over 15 events from major esports tournament series such as the Intel Extreme Masters and ESL One.
Facebook’s deal with ESL
At the end of last week, Facebook agreed with ESL to stream over 5,500 hours of esports events, including 1,500 hours of original programming.
The deal goes into action in June when content from the CS:GO Rank S competitions will launch, accompanied by an exclusive weekly CS:GO show. Streams will go out on the ESEA Facebook page and its group page.
Vice President of Social Media and Editorial at ESL, Johannes Schiefer said that the deal would mark “a huge step toward expanding the reach of esports among mainstream audiences.”
ESL already has a major Facebook presence; Schiefer added:
“Last year, ESL content generated over 2 billion impressions and reached over 200 million users on Facebook globally. Now, with the addition of live streaming for all major ESL events, as well as exclusive content around CS:GO and ESEA, we are excited to expand our reach to more audiences and build strong local communities of highly engaged esports fans.”
Twitch still dominates esports broadcasting, but….
Twitch remains the number one esports broadcast channel, but its dominance may not last.
Seen as a competitive strategy, this suggests that YouTube is not seeking to beat Twitch on organic growth. Instead it is buying audience share with exclusive deals.
YouTube now has exclusive rights over two of the top three CS:GO leagues. Maybe next will be Starladder’s StarSeries, the third largest league.
If a deal goes through, then YouTube will have a de facto monopoly on the vast majority of CS:GO streaming hours.
Facebook may compete for League of Legends streams
Only a week before the deal with ESL was announced, Facebook sealed a deal with Major League Baseball (MLB) to stream 20 live, regular season games.
MLB is taking more than one route to benefit from esports. At the end of 2016, its subsidiary BAMTech signed a deal with League of Legends owner Riot Games. The deal guarantees Riot a minimum of $50 million a year and extends to 2023.
The Walt Disney Company owns a third of BamTech, for which it paid $1 billion in August 2016. Its aim is to produce live streams for ESPN, but it will also be looking to exploit social media live-stream opportunities.
The deal to stream MLB on Facebook may provide Facebook with an advantage in negotiating with BamTech for LOL streaming rights.[show-table name=betway]
Facebook is working the full length of the value chain
Facebook has also begun a process further down the value chain by striking relationships directly with esports teams.
At the time, Guy Cross, Facebook North America head of games partnerships, gave a clear indication of Facebook’s commitment to esports.
“As gaming video continues to grow across Facebook, whether it’s a live stream from a professional esports team or a player looking to share Overwatch with their friends, we are committed to being a go-to destination for gamers to play, watch and share the games they love with people around the world. As part of the Sixers, Team Dignitas is one of the most progressive esports teams in the world, and we can’t wait to see all the creative ways they’ll interact with and find new fans on Facebook.”
Five esports teams now have a direct contract with Facebook.
Can Twitch fight off the competition?
If exclusive broadcast rights to major esports competitions in CS:GO and LOL go to competitors, and esports teams strike individual deals with YouTube and Facebook, Twitch will have to seriously raise its game if it is not to lose its primary position.
The stakes are high. A Newzoo report issued in February expects the esports audience to reach 589 million by 2020. That is more than double the 2015 figure of 235 million.
Each social media channel has its own characteristics, and these may be the defining factors which will determine the winner in future esports live streaming.
One active Twitch streamer from the world of poker has just decided to switch from Twitch to YouTube.
Using Twitch analytics tools, Doug Polk explained his rationale in a video for his subscribers, and the content makes compulsive viewing for anyone interested in the relative merits of the different channels.
The bottom line for Polk, is that Twitch effectively operates a winner-takes-all system, whereas the larger YouTube user base and more developed search engine gives smaller players a better chance of building their audience.
Esports live streaming looks like it will benefit from a highly competitive landscape over the next few years. While there may be some audience fragmentation, high rates of growth appear to be inevitable.
From an esports betting perspective, this growth is a very good thing. The total volume of any form of sports betting is closely related to the total audience size.
Those operators who have put the investment into an attractive esports betting platform are likely to be major beneficiaries of the competition between the social media giants.
From May 12 to May 14, the Tropicana Atlantic City is hosting a weekend-long Melee/Smash4 tournament with a $10,000 combined pot bonus.
The event is significant in that it confirms the trend for casinos’ involvement in esports. For casinos, esports has a special attraction—the player demographic.
Millennials with money to spend are a tough market to crack. They demand value for money, authenticity, and a fully rounded entertainment experience. At the same time, they resist traditional sales tactics.
But once acquired as customers, they can be very loyal and have higher levels of engagement with their entertainment than traditional casino customers.
The esports betting industry is growing at an accelerating pace, but revenues are still comparatively low. Nevertheless, casino executives can see where the future lies. And esports will be a big revenue producer in coming years.
Outsourcing esports events mitigates risks
To put on the event, the Tropicana has partnered with Spawn Point, a company that specializes in:
“creating advanced competitive environments. The Spawn Point Esports tournament platform is built on the AliQuantum gaming platform – a recognized leader in gaming software with the regulated integrity of a licensed gaming platform.”
The Tropicana is reducing its business risks by using a third party. But it is also able to use Spawn Point’s expertise to increase its own knowledge of esports.
Co-founder of Spawn Point, Kevin Mercuri, explained:
“Esports has the ability to attract and entertain an entirely new demographic of casino players and should play an integral role in every casino’s marketing plan.”
MGM is bringing esports to the Las Vegas Strip
Many businesses can see the potential of esports. But they’re wary of taking on a new business vertical without sufficiently understanding the factors that will lead to success.
MGM Resorts International is one of the first casino companies to have the confidence to invest directly in esports.
In April it announced that the Luxor Hotel and Casino on the Las Vegas Strip will be transforming a 30,000-square foot nightclub into a new esports arena.
Even so, it too has gone for risk mitigation in the new business vertical. It is partnering with Chinese company Allied Esports, who have built a US business based on hosting esports events.
Senior Vice President of Allied Esports Jud Hannigan explained that the Luxor venue would be a fully featured esports tournament venue.
“The arena will provide a ready-to-go championship destination for tournaments, leagues and high stakes match-ups in a setting designed to deliver an unparalleled fan experience,” Hannigan said.
The Tropicana is offering entry level prices for the event
One of the interesting elements in the Tropicana event is the low tournament entry fee which it is charging.
Each of the four tournaments, two for Melee, and two for Smash4, costs only $10 to enter. According to a post on Reddit, as of May 10, there were over 500 players registered.
Spectators can buy full event or one day passes for $40 and $15 respectively. But even so, the total revenues generated by this weekend’s events will not be huge.
The price point indicates that the casino is carefully targeting the event. It reinforces the idea that the Tropicana is treating this as a learning experience.
Steve Callender, general manager at the Tropicana, said, “We expect a high turnout for players as well as spectators who will enjoy not only esports, but all that the Tropicana has to offer.”
And that may be the most important part of the learning experience—what additional spend will the esports audience deliver, and what elements of the Tropicana offer will most appeal to them.
Match-fixing allegations out of South Korea are putting the spotlight on Overwatch and esports match integrity.
The Gyeonggi Bukbu Provincial Police Agency Cyber Bureau has charged two people with an offense related to match fixing an Overwatch tournament.
Korean police allege that both the player manager and coach of Overwatch team Luminous Solar tried to bribe team UnLimited to deliberately lose a qualifying match in the APEX Overwatch League.
The player-manager Jin Seok-hoon and coach Baek Min-jeh have already been banned by Korean TV channel and tournament organizer OGN.
Blizzard can’t afford to ignore match fixing
This is the first high-profile case of Overwatch cheating. It poses a reputational risk to Overwatch developer Blizzard Activision.
Blizzard is planning its own major Overwatch tournament series, the Overwatch League. That is expected to debut in September this year.
The league depends on investors buying team franchises linked to major cities around the world. The franchises will likely cost up to $15 million each. Any reputational risks arising from a cheating scandal are likely to have an adverse effect on investor sentiment.
A month ago, Nate Nanzer, Blizzard’s global director of Overwatch esports, said:
“In terms of the actual nuts and bolts of the league in 2017, and content production, all that, there’s no delays there at all. You probably understand the amount of legal work that goes into doing this, and that time between BlizzCon and today has been spent finalizing legal documents.”
To what extent this preparatory work focuses on match integrity is not known.
But this match-fixing case will undoubtedly focus the organizers’ minds on minimizing risks for the Overwatch League.
Esports betting promises rich rewards for cheaters
Esports tournament prize money is on the increase. That creates big incentives for crooks thinking about match fixing are the gains available from esports betting.
The Overwatch League is likely to attract significant handle as total esports betting wagers are rising at an increasing rate.
A graphic produced by Pinnacle shows how rapidly the business vertical is growing.
— Pinnacle (@PinnacleSports) April 23, 2017
Extrapolating from this, Pinnacle expects to take its 10 millionth esports bet in January 2018.
The rewards for successful match fixing are growing in line with the total betting handle.
Traditional sports have taken the risks of match fixing seriously. To maintain the same level of credibility, esports must do the same.
Solutions are available from BetGenius and Betradar
The two leading companies offering technological counters to cheating and match fixing are BetGenius and BetRadar.
“Furthermore, as FACEIT’s chosen technology partner, we have a responsibility to safeguard the integrity of their events by providing systems that monitor and safeguard against the threats of match-fixing and betting-related corruption.
As FACEIT and the wider esports community understands, protecting the integrity of games is fundamental to the continued success and explosive growth of esports around the world.”
BetGenius introduced its Sport Integrity Monitor (SportIM) in 2015. Since then it has pushed for common integrity standards across the esports world.
Betradar also engages in the prevention of esports match fixing. In its white paper on esports, Betradar explains:
“Bet monitoring is a key weapon in the armoury of eSports. As an example, Sportradar’s Fraud Detection System already monitors all ESL competitions by monitoring the odds movements and patterns across 450 betting operators worldwide. It spots anomalies in both the pre-match and live markets.
Those anomalies are then analysed by members of a 35-strong team of Expert Analysts, who lead the process into understanding whether the anomalies can be legitimately explained or whether they are indeed suspicious and worthy of further investigation – either by the sport rights holder or the relevant law enforcement agency. Bet monitoring gives a clear indicator of participants or teams that are involved in match manipulations and consequently give peace of mind and reassurance to all stakeholders.”
Match fixing solutions are more than technical fixes
Betradar was one of the founding members of the Esports Integrity Coalition (ESIC), which launched in July 2016.
ESIC aimed to bring industry stakeholders together to create exactly the common integrity standards that BetGenius supports. In ESIC’s initial launch announcement, the organization said:
“ESIC has created a Programme for acceptance and implementation by professional esports stakeholders – primarily tournament organisers and platforms, games publishers and licenced and regulated bookmakers offering esports betting markets – that consists of a Participant Code of Conduct, an Anti-Corruption Code, an Anti-Doping Policy and an independent Disciplinary Procedure based on principles of natural justice.”
Most recently ESIC produced a position paper on the disciplinary standards it proposes for industry adoption. A consultation on these is ongoing.
Many of the measures are procedural rather than technical. However, they are an essential underpinning if esports are to operate with the highest levels of integrity.
Game developers can’t ignore esports betting
Whether esports game developers support esports betting, or oppose it, they can’t choose to ignore it.
It is the potential gains from esports betting that provide the motivation for cheaters and match fixers, As such, esports match integrity — and the reputation of games like Overwatch — is dependent on the integrity of esports betting.
Blizzard’s new Overwatch league will certainly implement the necessary integrity measures. But for those tournament organizers that think they can skimp on the expense, it is only a question of time before they encounter another scandal.
Esports is coming to Luxor in Las Vegas.
The Luxor Hotel and Casino, owned by MGM Resorts International, brought the Sphynx and Great Pyramid of Giza to the Las Vegas strip. Now the iconic property will shift into the future with its first esports arena.
The Luxor esports deal, at a glance
MGM has struck a deal with Chinese company Allied Esports to transform a 30,000-square foot nightclub at the Luxor “into a multi-level arena complete with a competition stage, LED video wall, telescopic seating, daily gaming stations, a robust food and beverage offering, and state-of-the-art streaming and television-quality production studios.”
Niklas Rytterstrom, general manager of the Luxor, said:
“Our company is the leader in the entertainment industry and recognizes the exciting growth in esports. With this partnership, we will introduce a new experience to the market, once again elevating the city’s vast entertainment offerings.”
It is plain that the partners have big ambitions for the new esports venue. Senior Vice President of Allied Esports Jud Hannigan added:
“The arena will provide a ready-to-go championship destination for tournaments, leagues and high stakes match-ups in a setting designed to deliver an unparalleled fan experience.”
Esports is already in Vegas
The Luxor is not the first Las Vegas casino to recognize the potential of esports. The Downtown Grand began studying the esports industry in 2015.
Since then it has created the first casino esports venue in Las Vegas.
“We had viewing parties, and now we have contests where aspirational sports players go to the casino floor and pay a cash entry fee to play in a tournament, play for a cash prize, and that happens every Friday and Saturday night,” CEO Seth Schorr told ESBR. “Once we saw that happening and working really well, we realised we were on to something.”
When Esports Betting Report interviewed Schorr in May 2016, MGM had already put on two major esports events. Almost anticipating the Luxor announcement, Schorr said:
“There’s no question that every major casino in Las Vegas is talking about esports. It’s certainly a topic in the boardroom. MGM has done a fantastic job producing two large events.”
Esports betting is definitely on the Luxor horizon
He has worked closely with the Nevada Gaming Control Board to educate them in the risks and potential of esports betting.
In this deal with Alliance, Murren has brought esports into a high-profile casinos on the Las Vegas strip. Esports betting will be an integral part of the arena’s growth strategy.
Other casinos are likely to launch their own esports offering
The Downtown Grand pioneered the way, now the industry heavyweights in the form of MGM are taking Las Vegas esports mainstream.
It cannot be long before other casinos on the strip follow in their footsteps. They may aim for the same destination, but are likely to take a variety of routes.
A dedicated esports venue is only one way to ride the esports growth trend, and Vegas may be limited in how many venues the market can support.
Casinos are not the only businesses interested in esports. Millennial Esports opened its esports event and production complex in the Neonopolis building on Fremont Street in downtown Las Vegas last year.
Millennial has already established a toehold in the global esports scene by partnering with Microsoft and Electronic Arts (EA) to hold the Madden Championship Series, Madden NFL 17 Tournament on Xbox One and PlayStation 4.
Millennial is open to the potential of esports betting. But it recognizes that it will have to wait for the regulatory opportunity.
The MGM venue will seek to compete for such signature events, but there a limited number of top competitions. Too many venues will spread revenues thinly.
Casinos may opt to treat esports betting like traditional sports betting
Esports fans love live competitions. But the majority of play is online, so casinos have the option to treat esports more like traditional sports betting.
Casinos with sportsbooks don’t play host to the NFL or NHL events on which they take bets. There’s no reason why the same strategy can’t work with esports betting.
These factors are likely to contain the growth of Nevada esports venues to whatever the market will support. That number is likely to be a higher than it is now, but there is a limit.
Hannigan is in no doubt as to the level of dominance that he expects to achieve:
“Just as Yankee Stadium, Madison Square Garden and Wembley Stadium are considered their sports’ most aspirational venues by players and fans alike, Esports Arena Las Vegas will be the iconic destination in esports and complement the city’s incredible appeal, attracting video gaming competitors and fans from around the world.”
The Esports Integrity Coalition has issued a position paper on esports cheating. The paper rejects a “one-size-fits-all” approach, arguing that each case must be judged on its merits.
ESIC’s paper is available here.
ESL’s policy has been to impose a two-year competition ban on all players caught cheating.
ESL, which is a member of ESIC, announced that it was standardizing the two-year ban for cheating. But it made no mention of its approach to match fixing:
“This policy of a two year ban was also recently adopted by ESEA, which had previously used only 1 year ban. All of these changes are meant to create consistency for all future bans across all platforms throughout CSGO. So that VAC bans can also be included in this consistent overall framework, we therefore recently updated our competitive rulebook to bring our treatment of them in line with these policies.”
Not surprisingly, a Twitter storm ensued. Players strongly opposed people who had been caught cheating as recently as two years ago being allowed to play in ESL competitions.
From the FaZe Clan, player Karrigan made his displeasure clear:
Apparently its okay to cheat for years at LAN tournaments(only 2 years ban) but 1 matchfixing match is life time ban. Welcome back cheaters
— FaZe karrigan (@karriganCSGO) March 23, 2017
His team mate kioShiMa put his tongue firmly in his cheek in replying:
sup dude, your turn to get into it, get few hundred of thousands $$ and get caught and comeback 2 years later 🤔
— FaZe kioShiMa (@kiocsgoo) March 23, 2017
ESIC more soberly said that ESL’s position “gives rise to a number of serious issues.”
The industry needs a common position on integrity
ESIC says that focusing on any one policy is missing the more important point that “the esports industry is inconsistent and uncoordinated across the board on the issue of cheating.”
In setting out its position as the starting point for a wider dialogue, ESIC wants to begin the process of standardizing the industry’s response to breaches of integrity.
ESIC identifies six broad areas where a common approach is required:
- Reasonable sanctions
In its approach to cheating, ESIC wants a just response that reflects the seriousness of each case:
“We would hope that it is accepted that a 15 year old cheating with a free download aimbot is not guilty of as serious an offence as a seasoned pro winning prize money matches using cheat software and they do not deserve the same punishment.”
ESIC argues that each case must therefore be judged on its own merits. The response should be proportional.
ESIC agrees with the approach used in traditional sports. There, match-fixing is considered to be a more heinous offense than cheating.
Although unstated in the paper, match-fixing is often allied to some form of money-making opportunity, typically involving esports betting.
Match-fixing has the potential to affect many more people than a simple case of cheating. And it would involve much larger sums of money.
On this issue, ESIC defends ESL’s approach:
“Match-fixing, on the other hand, usually results in longer bans – 5 years and upwards even for first offences and, in a number of cases, jail time and criminal records. Consequently, the criticism levelled at ESL in particular in this regard was not fair when viewed against what happens in traditional sports.”
On the issue of consistency, ESIC displays unexpected vehemence. It says that the VAC ban may be consistent but it is not fair. ESIC describes the resulting situation in extremely negative terms:
“It is confusing, inefficient, inherently unfair and will lead to bad outcomes and controversy (as has already happened).”
Even though Valve is an individual company, ESIC argues that a coordinated response is necessary regardless of the differences of opinion within the industry:
“Valve is the obvious vehicle for facilitating this, but the industry stakeholders need to get past their personal biases, entrenched positions and preconceptions.”
There is a strong element of “it’s time to bang heads together to get a solution” in ESIC’s tone and approach. Whether it will work or not is debatable. But it is surely time for the industry to follow ESIC’s advice.
Failure to agree leaves esports companies open to reputational risk, which at this stage of the industry’s development is not just a financial risk, it is an existential risk.
ESIC says that current procedures have serious problems and can appear “arbitrary and inconsistent.”
Although recognizing that the power to resolve problems lies with game developers, ESIC puts itself forward as an independent potential provider of process:
“Realistically, only Valve can force this agenda in CS:GO (and DOTA2), but ESIC is best placed to provide it through the ESIC Programme where we already have clear rules, a clear and fair procedure and an independent disciplinary panel to make fair, unbiased decisions and provide an appeal mechanism.”
The ESIC recognizes the anger expressed by the Twitterati as being an important consideration that wiser heads must not ignore.
ESIC explains that life bans in traditional sports are reserved for the most serious or repeat offenses being seen as “the absolute limit of acceptable and then only for the very worst offences.”
However, ESIC adds:
“Having said that, if the CS:GO community believes that a person who cheats should never play CS:GO again, then that needs to be taken into account.”
Such an approach may sound good to the player community. But in practice, there will inevitably be cases where a life-time ban is clearly an egregious punishment.
The same community which currently demands the harshest punishments will soon be arguing that the rules are despotic.
ESIC advocates for players to have the right to present their defense. They should also be able to appeal a disciplinary decision at least once.
“Anything less undermines the integrity and appeal of esports and makes us, as an industry and community, look unprofessional and immature and undermines any effort to be considered anything other than a fringe activity despite the amazing support, passion, revenue and loyalty we engender.
Moving in the right direction slowly
ESIC is now preparing a questionnaire, with input from Valve. It will provide that to a wide group of stakeholders.
The consultative process is arduous, slow and subject to the caprice of Valve, at least in regards to CS:GO.
Nonetheless this is an essential process if the world of esports is to achieve the same levels of integrity and discipline that have brought traditional sports such respect.
ESIC is a relatively new organization. It is sticking its nose into business which many tournament organizers and game developers consider to be their own proprietary domain.
In other words, it is doing exactly what its founders intended it to do.