An ongoing debate within the esports betting industry is fixed on whether the audience is happy with being catered for like any other sports betting punter or if they prefer to be treated as a class apart.
Variants of approach can be seen across the range of offerings from the traditional betting operators that have added esports to the long list of traditional sports on offer through to the likes of Pinnacle, which has opted for dedicated esports portals and on to the esports-only offerings.
The newest entrant into the space has opted for the latter approach. Pixel.bet is a Curacao-licensed esports-only operator which launched into live beta mode at the start of this year.
What we know about Pixel.bet
Claiming to be a mobile-first operator, the company offers the usual selection of leading esports and tournaments.
The company also suggests that the traditional bookmakers are failing to attract the potential esports betting punters due to a lack of understanding of what they want from a betting platform.
“Traditional operators are led by sports and casino — the whole branding, site experience and UX/UI in the products are dictated by this,” says Richard Smith, the chief executive at Pixel.bet.
“Right now, I think it’s fair to say that most have not put the resource or hired the right people to drive this forward. It’s created a wonderful opportunity, though, for esports-only brands and product innovation, with the up and coming esports focused brands.
“Trust is very important in gambling and right now esports-only operators are building that trust in the community which will give them a very strong position as the market matures.”
Pixel.bet isn’t the first esports-only betting proposition. The leading market contender is Unikrn, which has been in the limelight of late after it raised a multi-million dollar amount late last year via the sale of its Unikoin Gold tokens.
Love esports… love esports betting
Like Unikrn, Smith says the company hopes to compete at the level of customer experience rather than on price.
“We have focused our resource on building a strong product experience, so the user can find their game easily, watch it, bet quickly and have the highest standards of customer support should any issues arise,” he says.
Again like Unikrn, Pixel.bet claims to be a site built by gamers and with the development guided by feedback gained from putting the product in front of esports enthusiasts.
“It was important that we worked to understand and tried to solve the current pain points for people who want to bet on esports,” he says.
“Currently people have a lot of choice, although nothing that really brings together the full package in our opinion. We want to offer a mobile-first experience, where people can easily be watching a live stream of a game and have the opportunities to bet on this in a simple and clean design.”
Smith clearly believes that esports offerings need to “speak the same language” as the people who play the games themselves and he goes on to suggest that those that can “connect” with the audience will be the ones to succeed.
He adds that depth of offering will be the differentiators, with increased use of the data available being the driver.
“This is just the start,” he says. “The range and depth of betting is growing by the day to a point where esports should have more varied and exciting opportunities to bet on than soccer games in the years to come. The data is all there and is getting better by the day. It’s exciting times ahead.”
Smith says trust is vital to get the business off the ground and give it the platform from which to thrive.
“Trust is very important in gambling and right now esports-only operators are building that trust in the community which will give them a very strong position as the market matures,” he adds.
[geoip2 region=’ROW’][show-table name=betway][/geoip2]
The future of Pixel.bet
Though Curacao-licensed right now, the company says it hopes to offer real-money licensed gambling in regulated territories, which would suggest that more licenses are being applied for. (Notably, the dateline for a recent press release last week suggests the company works out of Malta.)
Adding a late voice to the skin betting debate, Smith says that in his company’s opinion the landscape is being affected by “several major issues and should fall under regulation.”
Along the same lines, Smith also signaled that the company might join the Esports Integrity Coalition (ESIC).
“We are committed to uphold the integrity of the sport and the work that organizations like ESIC do,” he said.
Predictions for the year ahead are always treacherous; even the best attempts at prognostications are liable to be upended before January is out. This goes double for a sector as fast-moving as esports and its attendant betting sector.
Still, what we can forecast with a reasonable degree of confidence are the themes we will be writing about in the months to come, so here are our tips for what to watch out for as 2018 unfolds.
More esports-related ICOs
Yes, I’m afraid we have to talk cryptocurrency.
The esports betting sector found itself in the middle of what we can call the ICO fever that took hold in 2017. Headed by Unikrn, which garnered both enthusiasm and at least $15 million for its Unikrn Gold initial coin offering in the late summer, esports was at the vanguard of the token gold rush.
In truth, what happens next with the burgeoning token economy is beyond the scope of this article, although we are hearing from other esports-related ventures that planned ICOs have been pulled on the basis that the crypto market is a touch too frothy.
That is an understatement. Still, should Bitcoin continue its miraculous ascent, surely others are likely to take advantage with more esports and esports betting-related offers. Whether anything much will come of these is more debatable.
Questions over the viability of esports betting
A not unrelated theme from last year that is likely to feature again in 2018 is the question of just how much revenue is being generated by the various esports betting offerings. Again, we wrote last year that there are suspicions that the amounts being bet at the traditional bookmakers are likely very small.
William Hill told Esports Betting Report last October that it saw revenues of circa $1.3 million a year, or about as much that is wagered on a non-Wimbledon tennis major.
It is likely a different story at esports betting market leaders such as Betway and Pinnacle. But despite the latter’s much-publicized claims about the volume of esports bets, there is very little yet being said about profits.
Meanwhile, there is at least half a suspicion that the enthusiasm shown by Unikrn shareholder Mark Cuban in the company’s coin-offering pivot might be because actual betting volumes on the site are stubbornly refusing to match the token hype.
Skin betting continues to thrive
In comparison with the legitimate betting sector, the evidence we have seen from the ongoing loot boxes controversies would indicate that skin betting remains a thriving sector. For various reasons, this will continue to be a thorn in the side of the legitimate betting sector and — when they do turn their attention to the issue — the games publishers.
One strand of thought that has been expressed is that the esports betting operators need to get to grips what skin betting represents in terms of innovation being forged from below by the esports players themselves. Certainly, if the official betting offerings are failing to enthuse the audience as much as skins trading evidently does, then it will fail to entice the needed level of customer numbers that would make further investment in the offerings worthwhile.
Further regulatory issues around loot boxes
The questions around whether loot boxes constitute gambling came to the fore with Star Wars Battlefront II and the ensuing furor has seen questions raised in the UK parliament, a clarifying statement issued by the UK Gambling Commission and statements on the issue coming from both the Belgium and Netherlands gambling authorities.
These might be isolated and certainly the UK Gambling Commission is tiptoeing around the subject for the very good reason that – as yet – there is no obvious case to answer with regard to actual gambling. But still, the issues raised by loot boxes are a good example of how the regulatory embrace welcomed by the regulated esports-betting sector could have implications in the wider space.
Match-fixing scandals will gain further attention
Alongside the increased regulatory attention being paid to esports, instances of match-fixing will also be a focus in the months ahead. The Esports Integrity Coalition (ESIC) has already made its presence felt in esports betting circles and it is to be hoped that it will continue to rally more names to its flag, including the publishers and tournament organizers.
Corruption is obviously corrosive and needs to be dealt with in a coherent fashion or the sports will suffer. In a sense, the uncovering of scandals and murky practices has a cleansing effect and should be welcomed. But as much as the response to individual instances needn’t be overwrought, action needs to be seen to be done.
[geoip2 region=’ROW’][show-table name=betway][/geoip2]
Esports and the US
One huge area of interest for the sector pertains to the ongoing US Supreme Court case regarding the federal sports betting ban (PASPA) and the potential for further sports betting openings in the US.
The interest shown by various Las Vegas interests in staging esports tournaments – including a deal announced in December between MGM Resorts International and Unikrn for a series of events starting this month at the MGM Grand – suggests there is growing enthusiasm for esports among casino groups eyeing the potential for attracting a new audience.
It isn’t much of a stretch to imagine that the same US gaming groups might seize upon the opportunity offered by any kind of PASPA repeal to offer esports betting. Certainly, William Hill US has already laid down a marker, having been offering esports betting in Nevada since late 2016.
Increased betting is likely to play an important role in the further march of esports towards becoming a mainstream entertainment product, according to a yearly review of the sector from analysts at Macquarie.
Investments by both online bookmakers and land-based casinos in esports-based products are increasingly evident as both attempt to grab a greater share of wallet from a younger demographics.
The Macquarie team cites the development of esports offerings by major European-based operators such as William Hill and Paddy Power as one of eight emerging themes in esports. The report notes that William Hill in Nevada recently introduced esports betting as part of its offering.
However, the report makes Las Vegas giants MGM Resorts International and Caesars Entertainment the top picks, suggesting casino operators are moving into esports to “better engage with the younger crowd, expand their entertainment venue and hedge against the decline in the baby boomers.”
Stepping up a level at MGM
Just before the Christmas break, esports-only betting operator Unikrn announced it had agreed a partnership with MGM to co-host competitive esports tournaments at the LEVEL UP lounge at the MGM Grand on the Las Vegas Strip. Bi-weekly competitions will begin early in the new year.
The Macquarie analysts suggest parallels should be drawn with the way betting has helped traditional sports connect with their audiences.
“Esports betting is an overlooked but nonetheless an important area in the broader esports industry because we believe that esports betting is a critical tool for esports engagement just as much as sports-betting is to sports,” they write.
The report goes on the cite the success of Pinnacle in the past 12 months in both promoting and profiting from increased interest in esports betting.
“Pinnacle Sports is one of the earlier movers in this space, having generated 8 million betting counts since 2010 with more than 3 million generated in 2017 alone.”
A SCOTUS opportunity
Macquarie also considers that the current US Supreme Court case with regards to New Jersey sports betting might have some benefit.
“With the US potentially overturning the ban on sports-betting, we could see esports betting accelerate and drive more mainstream engagement in esports that will ultimately benefit the bookmakers and the land-based operators that offer some of the widely wagered titles such as Dota2, Counter Strike, League of Legends and Overwatch.”
It should be noted that the Macquarie analysts claimed much the same forward momentum in a note in January 2017 when they again cited Pinnacle’s esports claims and suggested that Tabcorp would be among those that might expand their offerings in this area.
One year on, Tabcorp’s position with regard to esports is more complicated following the shuttering of the Luxbet arm. It was through Luxbet that Tabcorp extended its relationship with Unikrn, in which the company is a shareholder.
The closure of the Luxbet business has brought to an end Unikrn’s licensed Australian business, although Unikrn said in a blog published before Christmas it will continue to operate under its joint Isle of Man license.
[geoip2 region=’ROW’][show-table name=betway][/geoip2]
Split imperatives in sports
Others involved in esports betting might also question from where the acceleration in esports is going to come.
Back in October, Esports Betting Report reported that the amounts being bet on esports mainstream bookmaking sites remained very small in comparison with betting on traditional sports. William Hill it saw turnover of about £1.3 million a year on esports, the equivalent to the amount taken on a non-Wimbledon tennis major.
There might be other complications for the esports betting sector from some of the other predictions put forward by Macquarie. The potential for esports to become more important to the publishers would likely see more focus placed on the issues raised by unofficial skin betting.
The Macquarie team points to Tencent’s recent decision to fully acquire Riot Games, the publisher of popular esports title League of Legends.
“We think leveraging esports could become prevalent among all major game publishers as they look to drive engagement and awareness,” they wrote. “Notably, Tencent has been aggressively ramping up on its League of Legends eSports league via franchising in China and North America.”
Another potential point of conflict could arise should esports gain acceptance as an Olympic sport. The Macquarie team suggests this could happen within the next decade.
However, the Olympic movement has a problematic position with regard to betting activity on its events. A booming esports betting sector might cause issues when it comes to Olympic recognition, even more so should more instances of match-fixing come to light in the months and years ahead.
Similarly challenging would be deeper links with mainstream media. Says Macquarie:
“Esports media rights currently have little value relative to the billions of dollars in media rights held by conventional sports leagues and teams. We think this will eventually change as esports leagues undergo consolidation and as they increase their negotiating power with broadcasters.”
Again, any issues around match-fixing, integrity and gambling would harm the case for mainstream media involvement.
The founder of esports betting operator Luckbox said the UK Gambling Commission’s report finding issued that 11 percent of children surveyed had gambled with in-game items proved that action needed to be taken to prevent illegal activity in esports.
Lars Lien, the chief executive of the esports betting platform, said that there was “simply not enough understanding” among operators, marketing partners, service providers and game publishers that in offering skin betting they were actually breaking the law.
The commission has previously made it clear that it considers gambling with in-game items that have a real-world value is a licensable activity.
This was the first time the survey posed questions with regard to skin betting.
What we learned about kids and in-game item wagering
The survey also found that 45 percent of those surveyed were aware of the concept of skin betting. In terms of actual betting activity, the survey found an overwhelming skew towards boys betting in-game items, compared to just three percent of girls.
It also found that in-game betting activity was more common among the older cohorts, with 14 percent of 14-16-year-olds taking part in the activity. Incidence was also higher among those who had spent their own money on gambling in the past week (at 24 percent) and among those who had played online gambling games (30 percent).
Of the total 11 percent, more than a third had done so within the past seven days, 23 percent within one month and 41 percent more than a month ago.
Tim Miller, executive director at the UKGC, said it was clear that many children’s experiences of gambling-style activities are coming from the playground, game consoles or social media rather than the traditional sites of the bookmakers, the casino or the gambling website.
“That’s why it is essential that we work across industries and with parents so that together we can protect children and encourage those that choose to gamble in adulthood to do so safely.”
Regulators are catching up?
Luckbox’s Lien said the report suggested that gaming authorities are “finally catching up with what’s happening.” He added that it was “refreshing to see the regulators communicating their strong stance on these matters.”
“Many illegal sites have already been closed down and it is only a matter of time before the authorities are caught up with,” he said. “Being properly regulated and a responsible operator is the only way to become a successful and sustainable business in what is obviously a booming sector.”
Lien warned that skin betting had “opened the door” that unregulated operators could exploit.
“This has opened the door for lots of unregulated providers popping up to feed what is essentially a black market.”
He suggested that players of any age were not safe on such sites. “Skins betting is not the problem — illegal operators are.”
A licensed skin betting site
Lien said Luckbox – which is yet to launch – will accept skins for deposits and withdrawals. He said that the site will be fully licensed.
He confirmed in an email to Esports Betting Report the company will be licensed initially in the Isle of Man and that it will also apply elsewhere, including in the UK which Lien praised for taking a “strong stance” against the potential for illegal activity.
“We are working with multiple regulators in offering our thoughts on the future of the market, and we have had great mutual benefit from working with the Isle of Man Gaming Commission along the way,” Lien added.
“Skin betting was not possible when we initiated our project, but once the Isle of Man’s Gambling Supervision Commission understood what it was, they have been very receptive to our requests.
“In fact, some months after we discussed the implications and licensing regulations with them, it certainly appeared our feedback made a huge impact on how they now formally view this activity.”
[geoip2 region=’ROW’][show-table name=betway][/geoip2]
More action on in-game items?
The news of the propensity for young people to bet with in-game items is sure to increase pressure in the UK parliament for the government to take action. Within the past fortnight, the gambling minister Tracey Crouch has said that the issue of loot boxes in video games remains under review.
In the wake of the parliamentary questions, the UKGC issued a warning that it believed that when it came to loot boxes and other issues related to in-game items, there was a danger of lines becoming increasingly blurred.
Meanwhile, both Belgian and Netherlands gambling watchdogs have raised concerns in recent weeks regarding whether loot boxes are a gambling product that needs oversight. The issue is also under consideration in US jurisdictions.
The UK Gambling Commission has stated that it believes the issue of loot boxes has highlighted the degree to which the lines between gambling and games are increasingly blurred and added that the public concerns over the issue may trump questions about legal definitions.
In a statement released on Friday, the Commission responded to the heightened interest in the issue of loot boxes and whether they constituted gambling.
In recent weeks questions have been asked in the UK parliament regarding loot box activity and the participation of children. The issue has also been the subject of discussion elsewhere in Europe with both the Belgian Gambling Commission and its Dutch counterpart separately making public their concerns.
The UKGC has addressed esports and skin betting on several occasions. It also published a position paper earlier this year that stated that when it came to the issue of in-game items, if their exchange was contained within the game and the proceeds could not be cashed out at any point, then it could not be considered a licensable activity.
Where the UKGC stands
In the new statement, Tim Miller, executive director at the commission, said that the body’s starting point was that it was up to the government of the day to determine what did or did not constitute gambling.
“The law sets a line between what is and is not gambling,” he said. “As the regulator we patrol that line and where an activity crosses it and presents a risk to people, especially children, we have and will take robust action.”
Some aspects of gaming activity are in danger of breaching the boundaries, he suggested.
“We are concerned with the growth in examples where the line between video gaming and gambling is becoming increasingly blurred.”
The UKGC advice, March 2017
Here’s what the UKGC said earlier this year on the subject:
- Where in-game items or currencies which can be won, traded or sold can be converted into cash or exchanged for items of value, under gambling legislation they are considered money or money’s worth.
- Whether participation in a video game for a prize requires a gambling licence will be determined by reference to a number of factors including how the outcome is determined and how the facilities for participation are arranged.
- We will focus on those activities which blur the lines between video/social games and gambling and present a risk to the licensing objectives. In particular, we will prioritise those made available to children, those involving expenditure and those presented as gambling or associated with traditional gambling. (emphasis added)
Updating the policy
“Many parents are not interested in whether an activity meets a legal definition of ‘gambling’,” Miller added. “Their main concern is whether there is a product out there that could present a risk to their children.”
Suggesting the publishers should be ready to step in where there are public concerns, he added that even where a product failed to meet the gambling test but could still be seen to be causing harm to children, then parents would “undoubtedly expect proper protections to be put in place by those that create, sell and regulate those products.”
He also suggested the UKGC might take a more active role.
“We have a long track record in keeping children safe and we are keen to share our experiences and expertise with others that have a similar responsibility,” he said. “Whether gambling or not, we all have a responsibility to keep children and young people safe.”
[geoip2 region=’ROW’][show-table name=betway][/geoip2]
Perception = reality for loot boxes
Gaming law expert Jas Purewal, founder of law firm Purewal & Partners, said that perception factors were as valid as other legal and policy considerations.
“The perception factor is the one that has most enraged some elements of the gamer community – a concern that loot boxes in some way are an unfair way for publishers to make money at the consumer’s expense,” he said.
Noting the recent regulatory noises, Purewal pointed out there is a danger that regulators could “react too strongly to those topical issues,” in which case the games industry should respond. He noted, though, that to date the Belgian fears had come merely from a press comment and that no formal position had been either adopted or any strategy fully laid out.
A higher priority?
“In regulatory terms, the topic of loot boxes would become a higher priority issue if there were specific adverse decisions made in some of the major games jurisdictions in the EU or North America and/or if it escalated to the European Commission,” he added.
“There is no clear evidence that this is happening, will happen or is needed. However, were there to be an escalation somehow and if major gambling regulators took a hard-line stance against games mechanics which have passing similarities to gambling mechanics, then in theory it could raise serious legal and business issues for the games industry given the considerable popularity of – and consumer demand for – different ways of enjoying and paying for games content.”
He suggested that the publishers should be wary of deploying loot boxes in the future while also being mindful of not allowing the concept to be demonized or incorrect assumptions being made.
“Industry associations have a policy advocacy role to play with regulators,” he concluded. “The games and wider press also have a role to play in tackling these issues seriously and not just reporting each development without investigation.”
Loot boxes are at the center of the latest skin gambling controversy after first the Belgian Gambling Commission and then its Dutch counterpart went public last week with their concerns over their inclusion in Stars Wars Battlefront II from games giant Electronic Arts.
It is the latest sign of political and regulatory unease over the loot box issue to emerge in recent weeks.
Governments look at loot boxes
In mid-October, members of the UK parliament put pressure on the Conservative government to re-examine the issue of whether loot boxes should be considered gambling.
Late last week, the Belgians’ gambling watchdog issued a statement suggesting that EA and Blizzard might have a case to answer with regard to Star Wars Battlefront II and Overwatch.
“Games of chance cannot be compared to any other kind of economic services,” the Commission said in a statement.
“They may cause people to become addicted and cause them to lose a great deal of money. For this reason, a number of protective measures have been implemented to protect players against these sorts of potential risks.”
This was followed by a statement from the Kansspel Autoriteit in which the Dutch gambling regulator said it was investigating the potential links between loot boxes and gambling and whether they should be a licensed activity.
It added that it was incorporating an analysis of loot boxes in its ongoing assessment of social games.
France also jumped into the issue, as a senator in the country asked gaming regulator ARJEL to look into loot boxes.
Questions to answer on loot boxes
In October, UK Labour MP for Cambridge Daniel Zeichner submitted two questions to the Department for Digital, Culture, Media and Sport addressing the question of whether these in-game random draws should be brought under the remit of existing gambling regulation.
He asked “what steps (the minister) plans to take to help protect vulnerable adults and children from illegal gambling, in-game gambling and loot boxes within computer games.”
The minster with responsibility for the gambling sector, Tracey Crouch, issued a written response to the questions in parliament. She stated the official position that operators required a gambling license is the items that are obtained in a game can subsequently be traded or exchanged outside the game for a monetary value.
She added that protecting children from harm or being exploited remained a core objective of the Commission’s brief and a “priority for the government.” She added, though, that the government was continuing to review the issues being raised and would “monitor development in the market.”
[geoip2 region=’ROW’][show-table name=betway][/geoip2]
A Pandora’s box of loot
Research by ESBR shows the degree to which loot boxes – or crates – form a large part of the skin gambling activities of the sites that continue with the practice despite the efforts of game publisher Valve to bring the activity to a halt last year.
The analysis shows that a majority of the skin sites offer crate opening.
“Recently, the relationship between video games and gambling has been a contentious matter with a number of gambling regulators, including Valve/skin betting in the US, and FIFA gamers convicted of Gambling Act offenses in the UK,” said Paul Leyland, a partner with gambling consultancy Regulus Partners.
“It is also a relatively grey area, especially where clear definitions of gambling did not envisage video games in their intent.
“However, with issues relating to the interaction between gaming, gambling and children likely to continue to increase, the need for clear and sensible – ideally cross-jurisdictional – regulatory clarity is becoming both urgent and important.”
EA itself has strenuously denied loot boxes represent gambling. In a statement, the California-based company said that the “crate mechanics” that feature in Star Wars Battlefront II “are not gambling”:
“A player’s ability to succeed in the game is not dependent on purchasing crates. Players can also earn crates through playing the game and not spending any money at all. Once obtained, players are always guaranteed to receive content that can be used in game.”
Still, subsequent to issuing the statement on the issues raised, EA removed micro-transactions from the Battlefront II game, reportedly under pressure from the Stars Wars franchise owner Disney.
The lead commissioner at the Esports Integrity Coalition (ESIC) says the publicity garnered by the decision to ban two players for match-fixing at a recent Dota 2 tournament has had a “significant impact” as it once again draws attention to the dangers now apparent within esports.
Ian Smith, the integrity commissioner of ESIC, was speaking in the wake of the news of the two-year bans for Leonid Kuzmenko and Dmitri Morozov. They were alleged to have fixed a match at the Uprise Champions Cup tournament held in September.
The publicity over the case will have been beneficial, he suggested.
“Because of the highly confidential nature of a lot of what we do, it makes the task impossible to talk about, at least as much as it is publicly perceived,” he told Esports Betting Report.
“I don’t think players yet understand how increasingly likely it is that they’ll be caught if they try something like this now.”
Specifically in this instance, Kuzmenko and Morozov were found out after rumors surfaced about their behavior in a match at the UCC European qualifiers tournament against a team called Yellow Submarine.
An investigation was undertaken by the esports integrity services team at Sportradar using the esports betting data, which remains the strongest indicator of concerns that need to be followed up and will then usually be cross-referenced against match data.
ESIC is leveraging Sportradar’s multi-year expertise in this area. The company’s fraud detection system has been operating for many years across both traditional sports and esports and has a wide visibility across all the various betting markets.
This includes Asia, where Sportradar provides the only meaningful monitoring system available, but ESIC has as yet a minimal presence.
“Asia will be a major focus for ESIC in 2018,” he says. “In western markets, the chances of getting caught in betting fraud relating to esports markets is pretty high now.”
A work in progress for esports
The task of educating the esports market further remains a work in progress. The tournament organizers are a particular area of focus as ESIC and others continue to try and drive home the importance of integrity and of the concomitant sanctions and banning measures.
“Some do and some don’t understand the importance of this,” suggests Smith. “In my experience, most tournament organizers live at such a pace and in such a hand-to-mouth manner that they don’t have the time or the inclination to really consider these issues.
“Most have mercifully never experienced the reality of a match-fixing allegation or investigation. Most wouldn’t have the first idea of what to do if it happened to them.”
Face-to-face education on esports integrity
To help with the educational effort, ESIC announced earlier this week an anti-corruption online tutorial in collaboration with Sportradar which is being made available to esports players and other participants, including organizers, so that they can build up a “foundational level awareness” of the integrity issues around esports.
Smith says that education is the best deterrent to corrupt behavior.
“Face-to-face education has been very successful across the top end of CS:GO, Dota 2, SC2 and League of Legends, but that only goes so far.”
One area where Smith said he was very pleased with the progress so far was in persuading the esports bookmakers to sign up to the ESIC approach.
“These that have joined the ESIC network each contribute to a ring-fenced education fund that helps ESIC sustain and expand our efforts in that regard.
“We couldn’t do it without the betting operator support. Obviously, the more of them that get engaged with us, the more we can do and the better our alert network will become.”
[geoip2 region=’ROW’][show-table name=betway][/geoip2]
Betting and regulatory partners
ESIC’s betting partners include:
It also has agreements with the UK Gambling Commission (UKGC), the Nevada Gaming Control Board and the Malta Gaming Authority.
ESIC recently requested it be included as one of the bodies that shares information with the UKGC’s Sports Betting Intelligence Unit (SBIU). Although ESIC met some criteria, a recent UK government consultation document made it clear that it “appreciates the value ESIC can add” to the esports integrity area. It added that it would encourage the esports community to establish an “overarching esports governing body.”
Smith said ESIC already has an information-sharing agreement with UKGC, signed in May this year. He added that there was now a British Esports Federation, which ESIC supports.
“They have no integrity function, however, so wouldn’t be able to interact with the SBIU in any meaningful way,” he added. “I would hope (and I think this is the case) that the BEF would support ESIC in that role and defer to us on matters of betting fraud and match-fixing.”
The chief executive of esports betting operator Unikrn said the importance of the new license from the gaming authorities in Malta “really cannot be overstated” as it opens up the company’s offering to the vast majority of the continent.
Rahul Sood was speaking to Esports Betting Report after the company announced that the Malta Gaming Authority (MGA) had granted the company a license to operate from the jurisdiction.
Unikrn heading to Germany, beyond
It means Unikrn can begin offering its product in countries such as Germany, where Unikrn runs an esports studio and has an investment in the German-based CS:GO team BIG, as well as other markets in Eastern Europe and elsewhere.
Unikrn already has licenses to operate real money gaming in the UK and the Isle of Man, where it runs under the license under the name of LuxBet, the online brand of Unikrn shareholder Tabcorp.
The Unikrn EU offering will be run as a joint venture with France-based RBP, the company behind the Maltese-licensed, France-facing Zeturf offering, which claims 300,000 registered customers.
“This begins our regulated expansion well beyond Malta, including Germany and other nations within the Eurozone,” Sood told Esports Betting Report.
He added that the RBP joint venture was the “best possible partner.”
“Whenever we make an expansion like this, we have plenty of potential partners from which to choose, so our decision to go with RBP is itself a brilliant declaration of their track record and our interest in France and Europe as a whole.”
Unikrn ICO comes to a close
Unikrn came to the end of the offer period on its Unikrn Gold crowdsale on Friday. The company said last week it had raised more than $30 million worth of Ethereum through the sale both via investments from its venture capital investors — such as Dallas Mavericks owner Mark Cuban — and through the public token offering.
Unikrn raised £10 million from its investors in 2015. Also taking part in the token sale were:
- Blockchain Capital
- Pantera Capital
- Brock Pierce
- Draper Dragon
The Maltese authorities have been making strides with regard to the potential licensing of both cryptocurrencies and blockchain. Sood said that his company was “working closely” with the MGA to enable crypto-based betting.
“We’re confident we’ll make it happen,” he said, noting that the Unikoin Gold token would avoid falling into the trap of being what the US Securities and Exchange Commission (SEC) considered to be a security in the eyes of regulations.
Fail to prepare; prepare to fail
“We think there are too many ICOs with companies that have no business or understanding of how blockchain is meant to work,” he said. “We think the majority of ICOs are set up like securities or are set up to fail, and they are setting themselves and the community up for massive failure.”
In comparison, he said that regulation via the Maltese authorities “opens up incredible new opportunities for Unikrn.”
“We built, from the ground up, the most-regulated, most-secure token sale of our kind, and we hope to make it available to other really good operators.”
Alongside the Unikoin Gold ICO, Unikrn laid out its plans for a skins exchange for CS:GO players. Sood has been a vocal critic of the existing skin betting market, suggesting its unregulated status leaves it open to abuse and is bad for the esports ecosystem.
“The skins exchange is just another example of how UnikoinGold is not a casino chip, but part of a larger movement to build strong ties with the esports community,” said Sood.
[geoip2 region=’ROW’][show-table name=betway][/geoip2]
A revolution in esports
“We’ve given away hundreds of thousands of dollars in skins to users; by taking skins for our token, we are helping to end illegal skin gambling by giving a legal alternative,” Sood said. “People will not be able to bet with UnikoinGold on our platform unless they are legally allowed to do so.”
Sood suggested further joint ventures with regard to both betting and cryptocurrencies might be forthcoming.
“We are working to expand our entire platform across the globe, this includes real money and crypto betting, as well as our non-betting esports platform,” he says.
“We currently work with casinos in the US to bring in a younger demographic because slot machines just don’t interest today’s young adults. The gaming and esports crowd want to be more engaged on their own terms, and we have an endemic foothold in this environment unlike any other bookmaker.”
“We expect to continue to revolutionize this sector in every direction we see opportunity,” he concluded.
As esports betting operator Unikrn sets the seal on what is likely to be one of the largest initial coin offerings (ICOs) to date with its up to $100 million Unikoin Gold raise, a lengthy lineup of further esports-related token sales suggests CEO Rahul Sood’s headliner won’t be monopolizing the headlines.
The Mark Cuban-backed Unikrn has so far raised more than $30 million from a pre-sale open to a limited number of large-scale blockchain investors — including Cuban himself alongside blockchain investment houses Blockchain Capital and Pantera Capital — and a public crowdsale last weekend.
The Ethereum-based Unikoin Gold SAFT (Simple Agreement for Future Tokens) note will be the subject of further regional crowdsales in the coming weeks.
Unikrn is the most high-profile of the esports-related ICOs. But a host of further offerings have either already taken place or are slated to open in the coming weeks.
Going by some of the published roadmaps of many of the startups listed below, the esports sector might well be awash with differing crypto-coins next year. The number of the startups listed below that make it to that stage, however, is more debatable.
Some recent and upcoming esports-related ICOs
Here’s a list of some of the other ICOs out there.
- Gimli – A Malta-based company which makes the claim that it is the “first decentralized esports betting/streaming platform” built on the Ethereum blockchain. The ICO is slated to run until late October.
- Hashrush – A “large-scale hash-powered strategy game” which is powered by its own cryptocurrency called Rush Coin. The ICO is under way and runs until late October.
- Skrilla – Asports daily fantasy wagering platform and a “roadmap” that includes a betting exchange, pool betting and head-to-head skill-based competitions. The white paper says the site is a collaboration between Puntaa (a P2P social betting site) and esports media group Gamurs, which earlier this year merged with Dot Esports. The coin pre-sale starts in mid-October.
- GameCoin – A Russia-based esports-related cryptocurrency concern whose website claims it has raised nearly $9 million through a recent token event.
- HuntBet – Another Russia-based blockchain-based esports betting platform. A token sale occurred in August but the website Hunbet.io appear to be non-operational at present.
- Triforce Tokens – Another attempt to launch an esports-related token that in this instance hopes to become the “industry standard on multiple gaming platforms,” brining game developers and payers together in a new ecosystem. The coin sale runs until mid-October and the maximum amount that will be raised is $40 million.
- VRCoin – A Russia-based offer, this time promising a franchise of VR arenas with “profit distribution via smart contracts.” A pre-sale has been completed and the white paper says it will update on next steps in October.
- EnjinCoin – Another “smart cryptocurrency for gaming” which claims to have raised the equivalent of $12 million via a recent pre-sale. Another crowdsale was slated to end in early October.
- Refereum – A blockchain-based cryptocurrency which claims it will directly reward influencers on platforms such as Twitch and Unity. The company says it “uses the blockchain to directly connect developers and influencers, resulting in lower marketing costs and increased profits for everyone.”
- OPSkins – Skins marketplace that has already started accepting Bitcoin and hopes to launch an ICO in October for a blockchain-based decentralized platform for virtual exchanges called the Worldwide Asset eXchange (WAX). William Quigley, the chief executive of OPSkins, says that WAX creates a “global virtual-item platform accessible to anyone, providing a complete catalogue of all assets available for sale in real time.”
- Herosphere – A decentralized esports social betting app that planned to raise $14 million through an ICO in late September.
- TheEsports.com – The company says the ultimate aim is to build an online esports university where budding gamers will be able to learn new skills and techniques.
- Gilgam.es – An Ethereum-based competitive gaming platform whose recent crowdsale offers a hint of troubles to come. Having failed to sell the requisite planned amount of tokens, the company has had to reset its plans regarding the tokens left in the possession of the owners.
Esports and tokens are a good match
The long list of offerings suggests that esports and the ecosystem of tokens might be a match made in heaven. As Paul Polterauer, chief executive and co-founder of Herosphere, told Esports Betting Report: “We are convinced that that the esports and crypto community have a big overlap.”
Joseph Borg, partner at Malta-based law firm WH Partners, is involved with two of the ICOs listed above – Gimli and The Esports.com. He says there is a huge overlap between esports and the burgeoning ICO scene.
“Blockchain technology is very disruptive, particularly in the gambling industry as well as the esports,” he says. “It offers endless opportunities for operators and customers alike. As the technology develops even more, we will see big changes in many business models.”
Skins for gold
One such change is signaled by Unikrn, which says it hopes that esports gamers sitting on caches of skins from CS:GO will be able to exchange these skins for Unikoin Gold tokens.
An update from Unikrn said the company has designed an engine that will take CS:GO skins in and hand out UnikoinGold in their place. The Gold tokens can then be used in various ways on the Unikrn platform. Those include legal and regulated betting on esports. Players will also be able to swap their Unikoin Gold tokens for another token or cryptocurrency on any exchange.
Says the update: “By allowing our community to exchange their CSGO skins for Unikoin Gold, they’re helping us build inventory for more jackpots without burning cash, and we’re helping them trade out of a skin that they may not have use for anymore.”
For all the excitement about the potential for betting on esports, there are few signs as yet that it has truly taken off as a product and likely remains a small niche with most traditional bookmakers.
Such would be the conclusion when looking across the spectrum of European-facing bookmakers where esports offerings are somewhat few and far between, despite the hype attending the emergence of esports as a meaningful betting product in the last few years.
A quick scan of offerings across the industry shows that a handful of traditional bookmakers now offer esports, including William Hill. According to spokesperson Joe Crilly, WH sees turnover annually in the UK of about £1m ($1.3m) a year on its esports offering.
To put that in perspective, this was equivalent to the same amount William Hill takes on a non-Wimbledon tennis major such as the US Open or the French Open.
“Another way of looking at it is that we take more than twice as much from one middling English Premier League game – which for a game such as, say, Newcastle United versus Stoke City is about £2.5m– than we do in one year from esports,” he adds.
Still, others involved in the market are clearly taking a more concerted approach to esports. One such is Pinnacle, which has been offering esports as a product since 2010. Its marketing director, Harry Lang, says that the company’s esports offering is on its way to taking in its 10 millionth bet by the end of the year.
This compares with the five-million mark reached earlier this year. It is a trajectory which now makes esports the fifth most popular sport in Pinnacle’s offering.
“That should give you a pretty good indication of the growth curve,” he says. “We are over the steepest part of the learning curve for trading esports and now enjoying the benefits in terms of profitability.”
‘We’re in the ten percent’
As Esports Betting Report reported last month, at a recent conference it was claimed by the panelists at one session that up to 90 percent of esports offerings from traditional bookmakers are failing to make a profit.
Lang is adamant that Pinnacle is one of the ten percent for whom esports is more than just a loss leader.
“Many of our traders come from an esports background and they put a huge effort into learning how to make it profitable so I’m happy to say we’re in the 10 percent who are having a bit more success with esports.”
This likely isn’t the case elsewhere. Crilly at William Hill admits his firm’s offering is a “bit more basic” compared with others in the sector such as Pinnacle or Betway.
“Because of the way we have gone about our esports offering, with just head-to-head betting, it is likely that there are people out there in the market who know much more about the sports than we do.”
In effect, he admits that esports doesn’t as yet make enough money for William Hill to dedicate a specialist to the offering. It leaves the odds-making to those on the trading desk with a passing interest.
The youth vote on esports
What is attractive about esports for the traditional bookmakers that do offer the product is the demographic it attracts. In short, esports customers over-index on under-25s, those almost mythical millennials.
“The average esports punter is a lot younger than with traditional sports,” says Crilly. “They may not have been attracted initially by our sports and gaming offerings, but once they are through the door we have a chance to cross-sell.”
It is a similar strategy to that employed with novelty or exotic markets such as X-Factor and other reality TV betting.
“The people attracted to bet with us via X-Factor might not have been aware of the full complement of betting and gaming products. It is the same pattern with esports. We see a lot of account openings.”
The appeal of such a strategy is easy to understand, suggests Lang, but he adds that it is unlikely to pay dividends in the long term.
“While we do see a small percentage cross migrating to sports, our esports customers tend to bet on their favorite game and stay there.”
[geoip2 region=’ROW’][show-table name=betway][/geoip2]
Toe in the water for esports betting
Lang agrees there is also an element of ‘Will this do?’ about many traditional bookie offerings.
“Esports is still in its infancy, betting wise, so many operators have only dipped the tip of a toe in, and I expect seen very little action as a result, or been badly burned by customers who know more than their traders.”
He adds: “If you’re going to do esports betting, you need to do it properly.”
Such was the message last month at Betting on Sports in September when Unikrn CEO Rahul Sood made the case for the esports-only brands as being the likely winners in the space.
Lang certainly feels that there are aspects of esports provision that differ from that of traditional sports.
“One thing I’ve asserted repeatedly since I joined Pinnacle and started learning more about esports is that esports fans act in a very different way to traditional sports bettors,” he says.
“As such you need an offering that speaks to them in their language. The jury is still out on whether an independent brand or an offering within an operator’s website is the best way to achieve this.
“For Pinnacle, our new esports hub is what we feel is the best of both worlds – the best value we can offer, the player favorite games and markets and educational environment that can improve a new esports bettors’ performance.”