[toc]On a day when the Fantasy Sports Trade Association Conference was underscored by reports of a potential merger between the two largest DFS operators and regulatory uncertainty in New York, the association snuck in a panel at the end of the conference agenda on what some consider to be the next frontier of fantasy gaming: fantasy esports.
DraftKings’ Esports Manager Evan Walker, AlphaDraft founder Todd Peterson and Sportradar’s Enterprise Sales Director Brian Josephs all participated in the panel.
What is fantasy esports?
Fantasy esports is more or less identical to traditional daily fantasy sports, except that esports players or teams are substituted for the NBA, NFL, MLB or NHL players who would comprise a normal DFS lineup.
Sites like the FanDuel-owned AlphaDraft, eSportsPools and DraftKings are the largest players in the real-money, fantasy esports space. Other sites, such as Vulcun and Fantasy LCS, offer fantasy esports in virtual currencies.
League of Legends is the most commonly offered title at this stage of fantasy esports’ relatively short development, with some sites also offering Counter-Strike: Global Offensive and Defense of the Ancients 2.
The panel’s running joke Tuesday was that fantasy esports enthusiasts might be overlooked now (the panel was by far the least-attended of the conference), but would be the belles of the proverbial FSTA ball in the future. There could be something to that.
A recent report from Eilers & Krejcik Gaming and Narus Advisors estimated that roughly $16 million will be wagered in fantasy esports contests this year.
While that number constitutes a small fraction of the nearly $600 million annual non-skins esports betting market, fantasy esports is still believed to be growing, with the report estimating hundreds of thousands of paid active users.
Fantasy esports by the numbers
If one thing is clear, there’s an education gap between the gaming community and everyone else — regulators, lawmakers, media organizations, marketing and event companies, and the general public — when it comes to esports. (It’s telling that the first question posed to Tuesday’s panel was: “What is esports?”)
A similar education gap exists with fantasy esports. Peterson noted on the panel that just as many DFS players might be unfamiliar with titles like LoL, Dota2 or CS:GO, as esports fans are unfamiliar with DFS.
He went on to say that while the average age of a DFS player is 29, the average age of an esports player is between 16 and 24.
While that may be the case, a recent SuperData report found that 60 percent of U.S. esports fans use fantasy esports sites or esports betting sites, with the hardest-core fans doing so at a rate of three times that of casual fans. The same study found that 27 percent of esports fans tracked player and/or team stats to help with their esports gaming decisions.
So while there is a cultural and knowledge divide between some traditional fantasy sports players and fantasy esports players, the Venn diagram might overlap a bit more than first thought.
The two groups live and play in the same ecosystem and in the same contest format. And since they both play types of fantasy sports, their games are also susceptible to the same regulatory scrutiny.
Betting still a dirty word
At the very end of Tuesday’s panel, someone asked the panelists if skins wagering — the multi-billion dollar, entirely unregulated industry centered largely in online CS:GO-related wagers — had any place in the future of fantasy esports.
The panelists visibly clammed up and didn’t immediately respond. Terse clauses like, “I’m not sure it’s entirely legal” and “we’re not interested in that,” were eventually uttered. Afterward, one panelist told ESBR he wasn’t allowed to say the “b-word” on stage.
The daily fantasy sports industry maintains that its products are skill-based, and therefore do not constitute illegal gambling in a majority of American states. Fantasy esports, as a subsection of DFS, fall under that same definition.
The pesky fact remains that a burgeoning unregulated gambling industry exists in a space parallel to fantasy esports, largely in the form of skins wagering.
Fantasy esports lounges?
One way casinos could harness the power of fantasy esports is through the creation of esports lounges.
In Las Vegas, the Downtown Grand’s Seth Schorr has developed an esports lounge. That establishment could be among the first in the country to take fully regulated, real-money, land-based esports wagers this fall.
In New Jersey, developer Glenn Straub said last week that his Revel casino project would offer an esports lounge, but it is not known if the Revel plans to offer wagering on esports.
One of the forms of wagering most likely to be offered at an esports lounge would be head-to-head wagering (where players wager on themselves to win matches of tournaments), a form many believe to be legal in several states due to the predominant skill involved in such a wager.
Panelists Tuesday were not asked about this form of wagering.
While esports lounges represent a new frontier of the live event casino experience and a vehicle to potentially accelerate the regulation of certain types of esports wagering, they could also be adapted to feature fantasy esports lounges, just as several NFL, MLB and NBA stadiums feature daily fantasy sports lounges.
Overwatch among titles driving future growth
Blizzard’s May release of its new title Overwatch generated a reported 7 million players during its first week, as well as massive buzz within the gaming community.
Citing these figures, Peterson noted that the game might represent the next major opportunity in the fantasy esports community.
It would appear that offering fantasy esports on other hugely popular titles, such as Dota 2, StarCraft, or Hearthstone, which none of the real-money fantasy esports sites currently offer, represents a similar growth opportunity.
DraftKings is actively exploring expanding the fantasy esports titles it offers. The company currently only offers fantasy contests for League of Legends.
Fantasy esports thrives on data availability
Another driver of industry growth will continue to be the partnership between fantasy operators and data companies, such as Josephs’ Sportradar.
“Someone from this room is going to take a feed from Sportradar and create something seamless,” Josephs predicted at one point, noting that the most dynamic fantasy esports products of the future would likely tackle consumers’ shorter attention spans.
The Sportradar sales director could’ve been speaking aspirationally, but his point about data remains. Esports is a native-to-digital product that is mired in data and fantasy sports products often thrive when they’re able to work with robust data streams.
But such a partnership between data companies and operators can only go as far as the information that game makers are willing to provide to the data companies.
Companies like Valve, Riot and Blizzard are akin to the NFL, the NBA or the NHL. Esports title developers own the data pertaining to their games and then can choose to sell that data to the Sportradars of the world, just like the professional sports leagues do.
Just as some professional sports leagues and sports wagering companies have forged partnerships with data firms like Sportradar, look for fantasy esports operators to explore potential data partnerships as well.