eSports Multibillion Dollar Question

As one of the fastest growing industries today, eSports is starting to garner the attention of not just investors, but also gamblers. The interest in eSports from sports bettors is predictable, given that this industry generated $325 million in revenue in 2015 from merchandise, media rights, advertising, and tickets alone. In fact, according to the market research firm Eilers & Krejcik, the unregulated eSports betting market generated around $7.4 billion in betting turnover in 2016 and is expected to reach $23 billion by 2020. As this unregulated market continues to grow, casino owners have started to work with state legislators to attempt to bring a new regulated market into play.

The foundational issue concerning gambling on eSports is whether competitive gaming is a sport in the legal sense. If eSports is considered as a sport, it becomes easier for it to achieve stability and governmental recognition. On the other hand, if eSports is not a sport, then an entire new body of law would need to be developed before legislators around the world are comfortable to regulate and allow eSports gambling.

Currently, the legality of online eSports betting in the U.S. is decided on a state-by-state basis. In 2016, for the first time ever, Downtown Grand in Las Vegas opened an eSports lounge where fans can place bets on their favorite eSports teams. The casino had been trying for months to get permission from Nevada to open the lounge, but did not receive permission until a day before one of the largest League of Legends matches, IEM Oakland. When Nevada was arguing whether to legalize eSports gambling, it argued that eSports were already a sport, and there was no need for additional provisions or legislation because it already had laws in place to govern sports gambling.

Likewise, in other countries, such as South Korea, the Korean eSports Association (KeSPA) was successful in working with the Korean government to have eSports considered as a legitimate athletic activity under the law. Now that eSports are considered to fall within the same category as traditional sports like soccer and baseball, KeSPA and the Korean government have passed a set of rules that govern all aspects of eSports, such as players’ rights and health, and regulations of tournaments being held. In the United States, the WESA (World eSports Association) has been established to monitor the eSports league. WESA was established to “professionalize eSports by introducing elements of player representation, standardized regulations, and revenue sharing for teams.” The necessity of WESA has become more apparent in recent years, as eSports has experienced controversy in regards to accusations of match fixing and doping scandals.

Currently, the debate over whether eSports should be considered a sport is the most important question facing the industry. The lack of certainty around this issue contributes to the largely ‘wild west’ style unregulated gambling that is presently taking place. A proper classification of competitive gaming, on the other hand, will provide greater certainty to gamblers because a framework would exist for answering many of the yet unanswered questions. This would, in turn, encourage more participation from the general public and lead to greater profits for the gambling industry.

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