The NBA is going to Disney World before anyone even wins a championship. The NFL and NHL are going forward with plans to return to a new normal. And even with Major League Baseball going about destroying itself, eSports’ cameo as a major sports betting option in North America figures to soon be over.
That doesn’t mean that the wildly popular, much-hyped next-greatest-thing-of-the-
Sports betting industry stakeholders including DraftKings chief executive Jason Robins and Mark Balch, head of product and partnerships at Bayes Esports Solutions, a joint venture of Sportradar and Bayes Holding, see tangible progress for the billion-dollar industry that can be accounted for in dollars and participation figures.
“I think one of the best things about this is more people will know what eSports is,” Balch told PlayUSA. “The biggest problem we’ve had over the years is education. People simply don’t understand it, or what it is or what happens. I think that is being solved very rapidly right now. A lot of people know what it is and a lot of people understand its place and why it can be good as something that is essentially crisis-proof in a way where we can offer content and create content globally at a very high level, regardless of what’s happening in the world for whatever restrictions are being placed.”
COVID-19 mitigation efforts and health and safety protocols hadn’t allowed for the return of team sports until NASCAR and the Bundesliga resumed fan-free games in May. But eSports has been played throughout because competitors can cloister in their own havens of health and fans can maintain their immersive viewing experience on streaming platforms like Twitch and YouTube.
It’s a quarantine content machine. And it can be engaged in an instant.
“If another pandemic were to happen in a few years time, I think a lot more suppliers and operators and betting companies will have an eSports offering in place, just for the simple fact of making sure if nothing else is on, eSports will be on,” Balch continued. “And even at different times of the day, eSports is played globally 24/7. And there’s no real physical limitation.”
Just as the pandemic has triggered state legislators to at least consider enacting online gaming or adding it to their existing laws, eSports has proven to be a catalyst for regulators to consider sanctioning more competitions. The Nevada Gaming Control Board had allowed markets on just two eSports events before the pandemic but loosened since with events including eNASCAR among a dozen approved. Colorado, New Jersey – which had sanctioned just one event before the pandemic – and West Virginia allow them, as will Tennessee.
“Legislation has been forced to change very quickly, whereas before, I think it would have taken several years,” Balch said. “It’s now happened in several months. And Nevada is making changes very suddenly. And I think a lot of states will follow, which will mean the US will open up for eSports much faster than it would have even three, three or four months ago.”
Commerce is following the trail, as it had with sports betting as a general possibility in the US. Malta-based eSports Entertainment Group announced the formation of a New Jersey subsidiary in May as a beachhead for gaining betting licenses in the country.
eSports has grown in value and future stature at DraftKings
The appetite for eSports is established. Market analyst Newzoo asserts that the global eSports audience will reach $495 million in 2020, an 11.7% increase. The appetite for eSports betting has begun to reveal itself.
In a first-quarter earnings call, DraftKings Chief Financial Officer Jason Park said the public company saw an “acceleration in iGaming activity – which would include online casino and poker – after major sporting events stopped” and DraftKings‘ user base grow 16 percent to 720,000 during the quarter, he said.
Robins has expressed curiosity whether eSports will remain “sticky” when the major four pro leagues return, but acknowledges how “pent-up demand” transformed it from a minuscule part of the “Other” handle in the immediate weeks following the shutdown to a success with events such as simulated eNASCAR, Counter Strike, and Rocket League.
“I think eSports is [a] notable stand out,” he said on the call. “We launched [Counter-Strike: Global Offensive] and several others and it’s been really strong volume compared to what eSports traditionally had seen.”
The success of Madden DFS games has proven, he said, that customers’ appetite for football content is insatiable and not necessarily dependent on whether the players are virtual.
“To me, it kind of makes sense,” he said, “that there’s a lot of football fans that want football year-round and it’s probably even enhanced by the fact that there’s not a lot of other sports on TV, there’s a lot of people that are at home looking to watch things.
“So I think that’s something that we’re keeping an eye on and there could be some potential to extend the NFL season really throughout the year through simulated sports and I think it’ll also work for other sports, but in particular I’m excited about the NFL, because part of what the NFL product, it’s a scarce product. There are a lot fewer NFL games and it’s a shorter season than most of the other major sports. … There is a group that just loves the NFL and can’t get enough of the NFL. So I think if you can find a way to give them that NFL experience more year-round there’s something there.”
eSports global reach not as seamless as it would appear
Counter-Strike and similar game platforms were perceived as the perfect answer to a sports and sports betting landscape where humans could not interact in air terminals, locker rooms or on fields of play. In many ways, they are. Gamers don’t need the superstructure of trainers and coaches to buttress their daily activity.
Even so, venues like Fusion Arena in Philadelphia are being built to showcase them — they make for great spectacle when sports play out before adoring fans.
And there’s this matter of physics gumming up the works. All Internet speed is not created equal. And that impacts not only the gaming, but betting experience.
“Fundamentally, the Internet is simply not fast enough for the cutting-edge eSports competition. Reaction speed is the kind of global metrics of skill,” Balch said. “These players have insanely lightning-fast reaction speed, particularly something like Counter-Strike, of like just a few tenths of a second. So, if you were to stretch two teams, one team is in China, one team is in Europe, the amount of time it takes the internet for information to travel, is about a half a second or more.
“This completely eliminates the skill itself, because it’s so slow. So the actual data itself, even in the game servers, it’s just far too slow. So they don’t play an Asian team versus an American team because it’s just simply unfair because wherever the server is held, for example, if the [competition] is being played in China and it’s a Chinese team, they have a very small latency and the American team has a very large latency and it’s a massive disadvantage.
“So in times like this, you have to only really play against people within your region. So that’s Europe, America or Asia, and he can’t go any further than that. And the player who’s further away has a much bigger disadvantage.”
Balch called the conundrum “one of the biggest problems in eSport. It’s one of the biggest fundamental problems that we simply cannot solve just by being online.”
“The only way we solve this is by going to a physical location. And this is why Counter-Strike, DOTA and League of Legends have physical events because otherwise international competition can’t handle them.”
Competitions held where competitors are within the same country or on continents where there is reliably fast fiber connects present fewer problems.
But even countries where speed is fast enough to provide the latency needed for gaming and sports betting are at the mercy of physics.
“Technically, particularly, South Korea has amazing Internet function,” Balch said.”[But] it’s not necessarily the Internet within a country. It’s the Internet between countries. So, some are better than others.”
The connection between South America and Europe, Balch said “is really bad, usually.” So “things” are rerouted through North America, which creates latency problems in elongating the time between signals reaching its destination. Even with the advent of greater 5G cellular coverage, this remains the bane of sports betting operators attempting to sync their offerings with what customers are watching on television. Broadcasts can be up to a half-minute behind real-time with technological limitations of satellites and built-in buffers to account for content American sensors deem inappropriate for viewers, because, Monumental Sports owner and betting advocate Ted Leonsis said, mockingly, “We don’t want someone to curse.” Increasingly, sportsbook operators are turning to live streams on mobile apps to sync the experience. DraftKings now has a streaming deal with Sportradar for Bundesliga content.
We are delighted to announce a partnership expansion with @DraftKings to launch mobile live streaming in their sportsbook app!
For more info https://t.co/VYvM4vjH2Q
— Sportradar (@Sportradar) May 28, 2020
But the problem remains profound for eSports, where the grist of the game itself depends on data and speed. Alex Ovechkin, who plays for the Washington Capitals team Leonsis owns, has never buffered on a one-timer.
“This is what the tournament organizers deal with all the time, for example, for broadcasting, because satellite is nearly instant, but most of the eSports runs on the Internet and all this technical rerouting [impacts] latency,” Balch expounded. “Latency is extremely important for betting or trading anything.
“This is why we make it our business to understand where it’s being played, where the data is being held, how do we get the fastest possible access? Quite a lot of people even in the sports betting industry … don’t realize I could be watching a Twitch stream and that match could have been played five minutes ago. They just wouldn’t know, and that information is out there somewhere.”
eSports’ likely to be more ubiquitous part of sportsbooks offering
Sergey Portnov, CEO of Parimatch, said at the SBC Digital Summit that he doesn’t believe eSports can currently “carry success on its own,” but believes “from what I see, it blends so nicely with traditional sports. Overall, I believe that eSports should be a part of a portfolio.”
That’s been the case so far at Circa Sports in Nevada, where sportsbook operations manager Jeff Benson said eNASCAR has been the most popular of the eSports events he’s listed, including Overwatch, League of Legends and Call of Duty.
“Overall, positive responses as people kind of try and find the new offerings and things to bet on and start to understand those rules,” he told Play USA. “We’ll continue to book it, obviously, when we do reopen and some of these sports come back. But I think at that point it maybe won’t be the most heavily bet-on market, whereas right now it’s probably more popular than not, given that there’s no NBA and baseball and NHL and things of that nature.”
Sportsbooks operators continue to entwine themselves with eSports business, meanwhile, particularly in the more advanced European betting market. Bookmaker Betway two weeks ago announced its latest eSports sponsorship deal with the DreamHack Master Spring’s Counter-Strike: Global Offensive competition. Betway has previously sponsored individual teams and organizers.
An April study commissioned by consumer research agency 2CV and market researcher ProdegeMR predicted that global eSports betting revenue would double to $14 billion in 2020, with 36 percent of bettors surveyed claiming to have placed a wager on a contest in the previous three months.
“The eSports betting sector is at a crucial point at the moment,” Phill Adams, CEO of eSports betting website Puntt.gg said. “It is gaining increased interest from traditional betting operators as esports has been one of the main products available over lockdown. There are studies like this one that suggests that traditional bettors are discovering eSports for the first time.”
As owner of the NRG eSports team since 2015, Andy Miller has been yearning for a moment like this. As co-owner of the Sacramento Kings, he would have preferred it to arrive in a different way.
By end of week all traditional sports will likely be suspened. It will be just on-line esports carrying the sports/entertainment load. Crazy to think that it has come to this!
— Andy Miller (@amiller) March 12, 2020
It has been, as he predicted, a “big moment.” ESports’ power as a spectator and participation sport shows no sign of abating. It’s duration as a crisis-proof betting market will come into focus soon.