Esports Staking Industry Emerges With YouStake, Rivalcade Partnership

Written By Will Green on August 23, 2016

[toc]Competitive esports players looking to take their game to the next level can already train with master players and apply for collegiate scholarships.

Now, they’re also one step closer to receiving financial sponsorship for professional tournaments. 

A partnership between staking marketplace YouStake and real-money esports tournament platform Rivalcade will allow anyone to stake a percentage of esports players’ entry fees and potentially win back that percentage of whatever the players wins. 

YouStake will handle the administration of the staking, including issuance of winnings, holding funds in escrow, and providing tax documentation. Rivalcade will host the tournaments, and receive $50,000 in esports sponsorships over the next 12-18 months, according to a release from the companies.

The partnership is currently live, YouStake CEO Frank DeGeorge said, with YouStake providing sponsorship capital for prize pools. While no esports players are yet featured for staking on the site, which made its name facilitating the staking of poker players, YouStake plans to replicate the site to allow for esports staking as well.

A match made in gamer heaven

YouStake allows players in skill-based events to crowdsource funds for upcoming tournaments through secure transactions as small as $20. Investors can then receive a return depending on the amount won by the player they’ve staked.

Rivalcade offers real-money tournaments with entries often in the $20 range across a variety of titles and genres, from FPS’s like Counter-Strike: Global Offensive, MOBAs like League of Legends, strategy games like StarCraft, and sports and fighting games ranging from Madden to Mortal Combat X.

The partnership, believed to represent the vanguard of the nascent esports staking industry, at least theoretically will allow a greater number of participants to enter these types of competitions. It’s also banking on the continued growth of the booming esports sector.

Currently, many professional or semi-professional tournaments have entry fees in the sub-$100 range, making them not as prohibitive to unsponsored players as, say, thousand-dollar buy-in tournaments.

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Esports staking industry still emerging

The Wall Street Journal found in 2014 that at least half of the 6,600 players competing in that year’s World Series of Poker championship were likely staked to the aggregate tune of around $30 million

While the size of the esports staking industry is difficult to quantify at such an early stage, partnerships combining established gaming arcades with established investment platforms could be integral to its growth.

“I can see this partnership helping to double or triple the size of the market over the next few years. The challenge will be to provide the consistent quality experiences that the esports communities have been looking for,” said Rivalcade CEO Scott O’Leary.

DeGeorge said the minimum amount of money for staking esports players would fall even lower than $20. He notes that, given the esports industry’s current growth trajectory, players and fans alike could soon find a critical mass of tournaments with much higher entry fees, and unsponsored gamers could increasingly turn to a staking platform.

Esports by the numbers

A recent report from Narus Advisors and Eilers & Krejcik Gaming found that there were 4,680 esports events that paid out $65 million in prize pools in 2015. That same report projected that by 2020, both figures will grow dramatically, with estimated payouts surging by nearly 200 percent to $189 million.

According to DeGeorge, esports qualifier events—the type semi-pro players looking to qualify for larger tournaments might be most compelled to enter—offer $20 million in prize payouts annually.

A 2015 SuperData report found that amateur esports tournaments earned $28 million annually, but were oversupplied relative to demand. That same report found that greater than one-third of American esports fans participate in online amateur tournaments.

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