UK Gambling Commission: We’ll Work To Minimize Risks From Emerging Esports Betting Markets

Joss Wood July 19, 2016
The UK Gambling Commission’s (UKGC) annual report for 2015/2016 lists esports betting as an “area for continuing future focus.”

The UKGC already allows its licensees to offer esports betting, but it expressed concern over several areas of the growing market.

The UKGC noted that it was not alone in considering the issue:

“The growing market in esports and computer gaming has scope to present issues for regulation and player protection – issues which are being examined by gambling regulators in other international markets.”

Read the full report here.

Industry growth makes esports betting impossible to ignore

The report introduction by UKGC CEO Sarah Harrison lists esports as one of the “emerging products” in the industry. From its current global base of $594 million in annual revenues, Eilers & Krejcik Gaming estimate that real money esports betting will grow to over $10 billion in the next four years.

Each figure is the base case scenario in the report “Esports & Gambling: Where’s The Action?

The bullish case sees growth to $13.6 billion by 2020, and that excludes the value of skin gambling which was estimated to grow from $7.4 billion this year to $19.7 billion by 2020—both figures the base case.

The potential for skin gambling has probably taken a big hit with the decision by Valve to shut down access for skin gambling sites to its Steam platform, but even so the figures for the industry are likely to be staggering.

It is this phenomenal growth trajectory that has lifted esports betting up the priority list for the UKGC, and other regulators around the world.

Skin trading, the line between social gaming and gambling

The UKGC report’s comments about esports are sparse, as it is clear that the UKGC is still in the process of understanding the key issues.

“These issues range from the emergence of real money esports betting markets, to trading in-game items which blur the lines between gambling and social gaming. Our focus will be to understand developments, including engaging with key stakeholders, and we will work wherever we can to ensure the risks associated with these, particularly to children and young people, are minimised.”

It can be expected that the UKGC will work with the new UK governing body for esports, the British eSports Association (BEA).

The BEA will work to the Department for Culture, Media and Sport (DCMS). The DCMS is also the parent body of the UKGC.

Several other quasi governing bodies have been established by the private sector, including the UK based Esports Integrity Coalition (ESIC); the World eSports Association (WeSA) and the World eSports Council (WeSC).

All are likely to be keen to help the UKGC in its process of understanding the issues surrounding esports competitions and betting, but there is the strong possibility that these private sector bodies may provide conflicting advice.

Match fixing is a wider priority for the Commission

Sarah Harrison sees the problem of game integrity and match fixing as a wider issue that affects many betting products.

“We will continue to focus on giving consumers confidence that markets are not rigged, or subject to fixing, and otherwise are kept free from crime.”

She sees this objective as being achieved through a strong partnership between the regulator and the industry.

“Keeping crime out of gambling, preventing unlicensed gambling, and maintaining integrity, for example in relation to sports and sports betting, are highly dependent on strong partnerships and effective powers. We will continue to use these to the full.”

For the UKGC, the “onus will be with the operator to use the very same approaches that are used to design products and understand customer ‘profitability’, to guard against crime and problem gambling.”

The lessons learned from other sports betting activities are highly likely to form the basis of controls over esports, although the particular nature of esports may merit additional regulations specific to the activity.

Image credit: James Jones Jr / Shutterstock.com

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