Stamina of esports

SKY’S THE LIMIT

It took the coronavirus pandemic to wake the sleeping giant of esports betting. Iqbal Johal looks at how far the vertical can grow in the upcoming year

Unfortunately, it sometimes takes a catastrophic worldwide pandemic for things to change. When businesses and industries are forced to adapt and look at alternatives to survive, they can unearth solutions that were right under their noses but were never acted upon. Sleeping giants can wake years ahead of their time but are more than ready to thrive.

That’s been the case with esports in the gambling industry. A vertical that was considered a dark horse for operators and suppliers, which wasn’t expected to reach its potential for several more years. That was until disaster struck.

The coronavirus pandemic led to the suspension of all major live sport in mid-March and the industry had to look elsewhere to fill the void. Some turned niche, with several operators offering marble racing and table football. Instead of competing on how obscure they could go, it turns out they really didn’t have to look very far to fill it.

The esports product has been steadily rising in recent years. Statistics from Newzoo showed industry revenue grew by 22% year-on-year in 2019, and was projected to rise a further 15% in 2020 to $1.1bn. The total esports audience was estimated to grow 12% in 2020, to $495 million people worldwide. These predictions were made before the pandemic.

But the gambling industry wasn’t quite taking the plunge with esports before March, despite all the signs pointing to the vertical being a potential future moneymaker.

“Before the pandemic, esports was extremely niche,” explains EveryMatrix CEO Ebbe Groes to Gambling Insider. “When you look at our existing clients, they would have had esports appearing alongside other minor sport offerings such as cricket, darts and futsal, somewhere down the list.

“It was small back before COVID-19, but we did have the advantage that we were well aware of the space, and had just signed esports dedicated Luckbox as a client. We had already taken a step with esports, but in terms of introducing it and winning market share for our existing clients, we had done very little and had no results.”

And since the outbreak? In April, research from 2CV and ProdegeMR estimated revenue from esports betting will double to $14bn in 2020, after the vertical posted global gambling revenue of $7bn in 2019.

Furthermore, statistics from OddsMatrix – EveryMatrix’s sports betting solution – showed in the two months from the suspension of live sport in mid-March, there was a 40-times growth in the esports betting market, with 80% coming from sports titles Fifa and NBA2K. Plus, 10% of real sports players were now esports bettors, with a turnover on esports higher than 33%.

Groes pointed to the importance of ‘cross-over’ titles such as Fifa attracting sports bettors to esports, and while he was surprised at the initial boom in esports betting, he expects new players to stay with the vertical.

He said: “What was a big surprise to us was the interest it had and that it was completely different than we thought. We started pushing sports titles such as Fifa and NBA2K in mid-March, which is the single biggest thing for the rise in popularity.

“Then by the end of March, we had as many Fifa games live in a week as we had football games in the week pre-COVID, around 3,000 live events per week.

“When live sport fully resumes, we’ll probably have three or four more times Fifa events than live football events. When we started we didn’t have any, which is a staggering development.

“I am pretty confident that new players will stay with esports. While people are starting to bet on football again, esports betting hasn’t dropped three weeks into live sport returning. We had a period where esports was growing weekly but now that’s more stabilised.

“I think instead of becoming a minor sport ranked in the late 20s, esports will be at number four or five, when it comes to most popular offerings by sportsbooks.”

It’s been a stark learning curve for suppliers such as EveryMatrix, and indeed operators, to how far esports can go.

And the general consensus is esports can stand alone as an offering, rather than being a bolt-on to other verticals. There are several reasons that make esports an attractive product and even standout, in comparison, to live sports.

The fast-paced nature of esports is to its obvious advantage, as well as the familiarity of watching players sports

Ebbe Groes

“IT SHOWS A WILLINGNESS TO BET ON THINGS THAT ARE ENTERTAINING, EASY TO UNDERSTAND AND FAST PACED. ESPORTS HAS ALL OF THESE QUALITIES BUT IT WAS JUST NOT UTILISED BEFORE. IT TOOK COVID-19 FOR SPORTSBOOK OPERATORS AND SUPPLIERS TO REALISE THIS AND NOW WE HAVE. WHAT HAS BEEN LEARNED CANNOT BE UNLEARNED SO THIS WILL BE A STEADY PART OF THE OFFERING GOING FORWARD, AND WE HAVE ONLY SEEN THE START OF IT”

“WE ABSOLUTELY BELIEVE THIS PERIOD WILL RESULT IN A PERMANENT GROWTH FOR ESPORTS. THE LOCKDOWN RESULTED IN ESPORTS GETTING SUCH A HUGE PROFILE BOOST THAT WE FULLY EXPECT IT TO ACCELERATE ESPORTS BETTING GROWTH OVER THE LONG-TERM” - Paul Brel

bettors will be familiar with through Fifa. And given its football ties, the rules are already understood. Also, when it comes to betting on a second division match in Denmark – Groes’ native country – to a high quality Fifa game, the EveryMatrix CEO is choosing the latter every time.

“While players like to bet on the Premier League because they watch a lot of games, what about the rest of the time?” asks Groes. “They bet on lower leagues in countries they have no idea about, or fast-paced sports like table tennis. But it’s very unlikely people would spend a Saturday afternoon watching table tennis and having beers with their friends while rejoicing on table tennis, but they’re betting on it. It shows a willingness to bet on things that are entertaining, easy to understand and fast paced. Esports has all of these qualities but it was just not utilised before. It took COVID-19 for sportsbook operators and suppliers to realise this and now we have. What has been learned cannot be unlearned so this will be a steady part of the offering going forward, and we have only seen the start of it.”

Another interesting topic when it comes to esports betting is the use of data. The trouble with live sports betting can be the delay by several seconds when someone is making an in-play bet, with the operator using the delay as an insurance policy against a customer betting with realtime data inside a stadium. Also, the fact data providers have data collectors who manually record data from their observations. But the advancement in technology at esports’ disposal could make live betting a seamless, and delay-free experience, something that could put it ahead of live sports.

“Live sport data is recorded in a way that is less speedy and accurate to what you can do with esports, where you can generate a feed directly from the game with every event that is going on,” Groes points out. “This is electronically generated so the data feed is on another dimension, but we have not started that yet. But we could plug into a potential API directly from the game engine itself which means a zero second delay on anything. With esports, the delay can be removed. There are so many things that can be done to enhance the entire experience that can’t be done for normal sports. I expect in a year from now we’ll see esports products we don’t see today.”

The comparisons between esports and live sports is a point reiterated by Loot. Bet, a dedicated esports bookmaker, operated by supplier Livestream. Head of communications at Livestream Paul Brel, also touched on the real-time data point made by Groes, agreeing that this is a major element that makes esports betting so attractive, rather than the use of expensive data gathering systems.

Brel tells Gambling Insider: “From an operator’s perspective, the fact all data is received from tournament operators in real-time with no delays makes esports betting more precise and faster.

“In terms of betting mechanics, esports and traditional sports are already very similar, sharing the same key principles. All operators provide betting offerings on a range of disciplines, and customers select what they would like to bet on, while live trading is similar for both sectors.”

For the esports-first bookmaker, unsurprisingly they’ve been one of the beneficiaries to the boom. This is despite focusing more on the traditional esports titles, such as CS:GO and Dota, with only 24% of Loot.Bet players occasionally betting on traditional sports. While before the pandemic, ‘crossover’ sports titles hadn’t been popular with the bookmaker, this all changed in March with Fifa generating more bets than popular esports titles StarCraft 2, Rainbow Six and Call of Duty combined, which led to an expanded offering of sports titles.

But before the pandemic, business was growing for Loot.Bet, with monthly bet volumes tripling over the course of 2019, and its user base increasing to a “sizable” amount.

While Groes called esports “niche” pre-March, Brel disagrees and said esports betting in general had been significantly growing.

But with that prior growth, and a new audience of sports bettors betting on titles they’re familiar with, this has led to a dramatic rise in recent months.

As Brel puts it, growth has been “dramatic to say the least” in lockdown. “During the first couple of weeks, we saw betting volumes, traffic and new registrations on our platform surge by around 20%, 30%, and 50% respectively.

“Subsequently, betting volumes grew by roughly 20% each week – much more than we had anticipated, even considering our significant natural growth and the numerous major events in the esports calendar.

Savak Limbuwala

“The fact that esports, and hence esports betting, is rapidly going mainstream shouldn’t really surprise anyone who’s been paying attention to technology and popular culture over the past decade or so.”

Accessibility is another key factor to esports’ growing popularity. It’s an immersive vertical that doesn’t discriminate in ways physical sport might. While playing sport might be limited if you have a physical disability or poor weather, esports has no such drawbacks. “Anyone with the necessary gaming hardware can play the esports they follow, whenever they want, from wherever, and plug-in to a vibrant community of like-minded individuals around the world,” Brel points out, which can make fans feel more connected.

The popularity might only increase, considering the attraction esports has to the younger generation. Loot.Bet research shows 78% of its users are aged 18-25, as the generation Z audience, those born in the mid-to-late 90s, are more interested in video games and digital communication rather than traditional sports. With this in mind, estimates before the pandemic suggesting that esports will catch up with all sports combined (in terms of betting volumes) within 10-20 years, and reaching the $100bn mark, might happen sooner. Brel also believes new players will remain interested with esports for the rest of their lives, making clear that esports betting isn’t trying to compete with traditional sports.

Brel concluded: “We absolutely believe this period will result in a permanent growth for esports. The lockdown resulted in esports getting such a huge profile boost that we fully expect it to accelerate over the long-term.”

They say timing is everything and that couldn’t be more apt for Winners.Bet. The esports-first bookie, part of esports resource Win.gg, went live in January, just in time to reap the benefits of the rapid growth.

As Winners.Bet COO Savak Limbuwala says, 2020 is the true breakout year for esports betting, and those late to the party risk missing out on the rewards.

He told Gambling insider: “The launch of our betting site was an organic step in the development of the business, with our brands providing esports fans with a set of comprehensive, end-to-end esports resources.

“In terms of how far esports can go, there really is no limit to its potential, with its ease of access, inclusive element of the games and ever improving tech. I see no reason why esports can't be challenging the traditional global sports of football, basketball and tennis in the year to come.”

Limbuwala agrees with the previous contributors that technology is the main driver for esports to thrive, which makes it a 24/7 vertical, and that the younger generation will lead to its continued growth.

He adds: “Its main advantages over traditional sports lies with the technology. As long as you have access to a decent internet connection, you can play, watch or talk about esports anytime, anywhere.

“With the huge growth of esports in general, the younger generation of sports bettors are the ones who will continue to drive the vertical onward and upward for years to come.”

There has been a lot of learning taking place during the coronavirus pandemic regarding esports. Suppliers and operators now know a massive opportunity with the vertical presents itself. Expect the innovation with data and technology to take esports betting to great heights over the next 12 months. Expect operators to focus on esports as a standalone product, and also expect plenty more esports-first bookmakers to appear in the coming months.