Steve: Friess: Will Competitive eSports Rule The iGaming World?

State of Play is a column that focuses on the trending stories in the casino and gambling space with sharp and clever insight from senior staff writer Steve Friess. Over his 25-year career, Friess has contributed to publications such as Newsweek, Time, New York Times and more.

One big problem with the dizzying pace of legalized mobile gambling expansion in the United States and elsewhere is that the products all start to feel the same. Is there really a substantive difference between one legal app and the next in terms of the betting lines, the table and real money slots, or, if relevant, the poker offerings?

There is a rapidly approaching build-out of the industry as we know it. A few more of the straggler states will legalize sports betting in coming years, there’ll be a burst of jurisdictions that decide to add online casinos when lawmakers run out of COVID money and need other easy sources of tax revenue. Poker is probably forever stuck in its status with neither the business motivation nor a political movement to expand it.

So what else is there?

Gary Denham thinks he knows. He’s the founder and CEO of Wamba Technologies LLC, and, as of about a year ago, the holder of U.S. Patent No. 11,403,918 B2. Here’s the concept he owns the rights to, per the patent abstract:

A system and method of providing wagering over a computerized system. The system includes a computerized multi-player game. The game includes an integral game mechanics module for providing a game-play session over a computerized network. The game mechanics module is in real-time communication with a wagering module and there-through the wagering module automatically receiving real-time game event information. The game mechanics module provides a wagering option to a player in real-time that is selectable by a game-play action.

In other words, he owns the ability of anyone in the United States to integrate competitive eSports and money collection for wagering — and much more. And by eSports, we’re talking everything from Ms. PacMan and Tetris to World of Warcraft and Call of Duty.

At the moment, for the most part, online players can’t wager on the same platform where they play. There are online contests in many games, to be sure, but the financial side of that — payments and prize redemption — is managed somewhere else.

Denham’s patent would put it all in one place. This, in turn, makes it viable for mobile casino apps to host it.

It should make him very, very rich one day.

A $610M deal with casino firm seems imminent

When I interviewed Denham a few weeks ago, he was Zooming from the Mirage in Las Vegas where he was meeting with a “particular group of casinos,” he teased. He wouldn’t tell me who, but he did say he was on the possible brink of a $610 million deal “that would involve us licensing certain games to them and also have them investing into us.” The specificity of the dollar figure gave me the sense this is imminent.

His plan is to launch a platform of his own called Gamer’s Oasis and, also, support a platform created by whichever casino conglomerate he partners with.

“It would be us each helping to develop two platforms, one for them, and one for us, that wouldn’t compete with each other,” he says. “It seems like a good way to get us off the ground.”

Denham is what you probably expect — boyish, stubbled, spikey hair, in a trendy Affliction shirt with the cuffs rolled up and stylishly ripped jeans. At 41, he’s a little older than your typical would-be tech billionaire, but that’s not by his choice. A longtime gamer who came up with an idea, he tells me he first filed for a patent for “software that would allow video game players to compete against each other, where they could pay an entry fee compete and win money back” in 2012. He was still in his 20s then; it just took a full decade to nail it down, in part because of staffing issues in the U.S. Patent Office and a COVID-related stall.

In the meantime, though, the world he thought he would be taking this idea into took a radical turn. After the Supreme Court decision in 2018 unleashed the online gambling boom, the prospect of building out the technology via existing casino platforms took hold.

His case for how big this could get is quite compelling. The video game industry is a $200 billion business with some 500 million people playing games worldwide regularly.

“The eSports industry has the numbers, it has the participants, but the experience that they’re getting is really underwhelming right now,” Denham says. “It could be so much better.”

Like online poker with fewer regulatory headaches

Online poker has struggled in the modern era of legal online gaming because it requires specific legislative approval and gambling control board oversight. Denham’s eSports concept has a much easier road ahead; it’s considered a pure game of skill, and it’s already legal to compete for money in those games in most places.

“This is better than online poker,” Denham says. “We can offer this across the country. There’s very little limitation. There’s a couple of states that we have to avoid right now, but most of them are wide open. And the quantity of people playing is exponentially higher than online poker ever was. We should see some huge numbers.”

There are some wrinkles to iron out, for sure. If the idea is to have all kinds of people taking part in competitive esports contests — from the inveterate WoW player to the casual grandma playing Candy Crush — there has to be a way to ensure that people are playing against others of their level. Says Denham:

“What it boils down to is, people have to have the belief that it’s a fair and equitable setup. That’s what we’re looking to do as we apply our patent to the industry. We’ll be developing an environment and a setup in which players know that whether they’re Johnny Pro or whether I just suck, I can come in, I can compete, and I’ll have a fair chance of winning because I’m really playing against players at my skill level and regardless of classification, I could still win some good money. That’s something that really hasn’t been readily made available to the online eSports industry yet, but once it is, you know, this industry will soar. This will be $100 billion industry.”

Denham mum on FanDuel’s entry in the market

Denham anticipates his platform and whatever he arranges with that aforementioned “particular group of casinos” could take at least three years to bring to market. Yet in the meantime, FanDuel is doing something pretty much identical with its 1-year-old FanDuel Faceoff.

Faceoff, live in about 30 states, has not launched in Michigan, where I live and where everything else is legal. So I couldn’t test it out except to play some of the 13 games on the platform for free – and they’re pretty fun. Among is Wheel of Fortune, Boggle, Scrabble Cubes, Atari Breakout Blitz, and Gronk Spike Cornhole, so FanDuel is clearly spent money on name-brand offerings.

Denham declined to discuss FanDuel; it seems clear he doesn’t want to make a public statement about patent violations or potential lawsuits. Yet if Denham believes his hard-won patent is his unique asset in this industry, he can’t merely leave FanDuel alone and not pursue some patent protection. If he did that, his patent would be worthless.

Still, in a way, FanDuel is proving Denham’s predictions here. Casino apps will be looking for more to draw in players and keep them there. If he plays his patent cards right, he could run the table.

His vision is both lofty and grounded.

“Some day, people will be able to enter a random cornhole tournament and, over the course of a couple of hours on a Saturday, win $10,000 with a $100 buy-in.”