Esports Reality vs. Potential in the US Legal Gambling Space

You would be hard-pressed to find any glimmer of optimism coming out of the COVID-19 crisis in the US but the rise of esports on the legal gambling scene may just be one. Although the actual presence of esports betting in the US hasn't caught up to its potential, acknowledgment of its merits alone is a "Win" for the platform.

The future is certainly bright for esports in the US thanks to the exposure it gained during the coronavirus crisis. Esports has benefitted from a combination of being in the right spot at the right time and its global popularity during its rise to prominence in the US legal betting scene.

The question is whether or not its potential can match reality in North America, especially since real-time sports has returned to the landscape in such a big way.

A Little Esports Betting Background

Although not a major factor just yet in the US legal sports betting industry, esports does have quite an impressive following around the world. Games analytics and market research website Newzoo predicts that esports will have 495 million viewers in 2020 which is an 11.7% increase from 2019. The same study projects that viewership will reach 646 million by the end of 2023.

As of today, New Jersey, West Virginia, Nevada, Colorado, Washington, and Tennessee allow esports betting with varying degrees of success. With increased exposure and new uptick in popularity especially among young gamblers, esports is expected to become a force in the overall sports betting industry in the not-too-distant future.

Goldman Sachs expects revenue from esports betting in the US alone to hit $2.96 billion in the US by 2022. Worldwide, esports is expected to generate $14 billion in bets - double the $7 billion in bets it was responsible for in 2019, according to market research firm ProdegeMR. As of June of this year, trailblazer New Jersey recorded $582,639,000 in esports revenue since going public a little more than two years ago.

What Is Needed to Elevate Esports Profile?

States like New Jersey are in the midst of legislation that would deem esports a "sporting event", thus opening up the array of bets available on the "sport". All eyes will the on the Garden State as they attempt to pave the way for esports and attempt to cement its status as a legitimate event worthy of promotion and eventual gambling dollars.

The one problem that remains is the fact that most of those that take part in esports tournaments globally are under the age of consent in most states (18). Fears of sports betting attracting minors is of legitimate concern, but one that is being addressed during this legislative period in New Jersey.

Education

Perhaps Moritz Maurer, the CEO of GRID, a technology platform specializing in esports data solutions said it best at the ESI Digital Summer, stating that “I think generally the key to all of this is education. I think educating stakeholders, educating regulators who might not spend the majority of the day on Twitch. This is exactly what has to take place.

“But this is one of the things that is always with us and with the conversations we have with our partners. Education is at the forefront of everything, getting people comfortable with it, and showing them the great potential that is there for this industry.”

It's all about creating and maintaining an audience that is informed, just like in the traditional sports betting realm. More education will create a more comforted and therefore willing bettor which will benefit the platform greatly.

It's All About Millennials

The US legal sports betting industry is always looking to attract new audiences and markets. Esports takes care of the millennials and Generation X-ers all by itself. Research has shown that younger generations are increasingly tuning out traditional sports meaning that sportsbooks needed a way to engage younger bettors.

Attracting this group and maintaining their attention is a work-in-progress so far but there is a tangible appetite to grow the esports platform. The "what" and "why" are there, now comes the hard part of "how" to best exploit them.

Experts Weigh In

Eilers & Krejcik Gaming partner and gambling industry analyst, Chris Grove recently commented that “Maturity needs to happen across a number of facets of the landscape. Esports needs to mature in terms of the formalization of leagues, franchises, schedules, rules, and integrity. Game developers need to mature in terms of their willingness to engage with the betting aspect”.

According to Co-founder and CEO of GameCo, Blaine Graboyes, “This is an opportunity to rethink our business, rethink our customer, rethink our offering... The [operators] we focus on working with are the ones that are using this as an opportunity for disruption and innovation, because the time is now to do it.”