Esports Entertainment Group CEO bullish on NJ launch

Sharpr is a weekly newsletter covering the intersection of esports and betting.

Jan 27, 2022

Hi everyone, and welcome to another edition of Sharpr.

It was another whirlwind week in the gaming space led by the third $1+ billion acquisition in the last three weeks. The question is, will we go four-for-four?

On a personal note, I wanted to give a quick shoutout to everyone that takes the time each week to read Sharpr - it means a lot. We launched our first newsletter last week to a widely positive response and healthy amount of subscribers. Here’s to more 🥂

- Cody

In this week’s edition of Sharper…

Esports Entertainment Group CEO on New Jersey launch
Implications of the pending ESL, FACEIT acquisition
Latest headlines and industry metrics

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Esports Entertainment Group opens shop in New Jersey

⚾ The lead-off: Esports Entertainment Group (NASDAQ: GMBL) revealed Monday that it had received approval from the New Jersey Division of Gaming Enforcement (NJDGE) to legally accept bets in the Garden State.

Esports Entertainment Group took its esports betting platform VIE.gg to market the following day in New Jersey, kicking off a five-day “soft play” period in which the online sportsbook will be limited in registrations and hours of operations. Following this testing period, EEG intends to launch its sportsbook in full, allowing New Jersey bettors to wager on a variety of prominent esports such as Counter-Strike: Global Offensive, League of Legends, and Dota 2.

EEG has secured a commercial relationship with Bally’s Atlantic City Hotel & Casino to lean on its casino license as an online sportsbook operator.
Esports Entertainment Group CEO Grant Johnson tells Sharpr that while its sportsbook will initially be siloed to esports, its offerings “will continue to expand,” including the addition of traditional sports markets and fantasy.
Johnson estimates that the company will generate $1-$2 million in revenue in New Jersey in its first year.

It was less than a year ago in July 2021 when New Jersey lawmakers passed legislation to include esports betting in the state’s legal sports betting industry. This law permits licensed state operators (which now includes the likes of Esports Entertainment Group) to accept bets on esports up to $100, with a potential winning bet of up to $500 without one-off regulator approvals. If sanctioned by the NJDGE however, that wager limit could increase. Johnson mentions he and his company will work closely with both New Jersey regulators and the Esports Integrity Commission (a non-profit company focused on safeguarding competitive integrity in esports) to see more esports events through to approval.

🍨 The scoop: The meaningfulness of EEG’s clearance in New Jersey is rooted in its position as a purely esports-centric sportsbook. While New Jersey has introduced esports into the state’s sports betting industry, few operators have leveraged this new category.

Following its soft play phase, EEG will present one of New Jersey’s first opportunities to see how esports can perform in the U.S. with a more consistent stream of markets. New Jersey should prove to be a good testing ground for esports betting too — the Garden State posted a record $10.93 billion in annual handle last year.

The wager limits imposed by the NJDGE will certainly make esports a much less attractive product for tier-one operators and slow its overall adoption. Johnson says he’s okay with that today, stating that the largest bet EEG has seen across all of its platforms in six years has been $400. And to be fair, the average size of an esports bet is $27 USD, according to gambling research firm Eilers & Krejcik.

American Affiliate CEO and gambling industry analyst Chris Grove is bearish however, suggesting the demand needed to fuel esports betting handle in New Jersey is not entirely evident.

“It's great to see more diversity of products coming to the U.S. market,” said Grove. “With that said, it's not clear that there's substantial demand for a dedicated esports betting site in the market, nor is it clear that the broader technology underpinning esports betting is at the stage where it can generate the sufficient breadth and depth of markets needed to capture maximum demand.”

EEG is pursuing additional licenses in other jurisdictions in North America as well — namely Ohio, Rhode Island, and Ontario. Johnson says the company is lobbying to have esports added to Ohio’s sports betting legislation, and if successful, expects VIE.gg may launch within the state sometime in 2022.

Does the ESL/FACEIT acquisition run interference with betting brands?

Saudi Arabian esports and gaming holding company Savvy Gaming Group threw its hat into the acquisition ring Monday announcing its intention to purchase esports tournament organizers ESL and FACEIT for approximately $1.5 billion ($1 billion for ESL, and $500 million for FACEIT). As a result, ESL and FACEIT will merge to create a “leading competitive gaming platform” under the name ESL FACEIT Group. The deal, expected to close in Q2 pending regulatory approval in multiple jurisdictions, raises questions about the implication of this deal on ESL’s long-standing relationship with gambling brands.

ESL which is owned by Sweden-based Modern Times Group (and also includes tournament/gaming events company DreamHack), manages a number of top esports events and leagues for games such as Counter-Strike: Global Offensive and Dota 2.
While FACEIT has rubbed shoulders with betting sponsors in the past such as Pinnacle through now-discontinued leagues Esports Championship Series and Flashpoint, ESL has pursued betting much more prominently.
ESL holds a global betting partnership with Russian bookmaker 1xBet for the CS:GO division of its ESL Pro Tour, which includes a number of top Counter-Strike esports league properties such as the ESL Pro League, Intel Extreme Masters, DreamHack Open, and ESEA Premier.
In the past, ESL has held partnerships with the likes of Betway, GG.bet, and Puntt.

Gambling brands have played a noticeable role in ESL’s esports events, not only from the perspective of accepting sponsorships, but also that of its competing professional teams, which very often dawn betting signage on jerseys. Betting has become a deeply integrated part of Counter-Strike in the same way it has for football (or soccer, depending on where you’re from).

Saudi Arabia’s stance on gambling is different. Under Islamic law, the country prohibits all types of gambling acts in the country, which may alter ESL’s long-term approach to betting. Several stakeholders tell Sharpr they suspect this change may see ESL FACEIT Group reject betting sponsors in the future. Middle Eastern governments however appear to be unrestricted in owning shares in gambling properties, whether domestic or internationally, regardless of whether the general population can participate or not. The end result of how this deal impacts esports betting ultimately remains to be seen.

Perhaps worth noting is that Savvy Gaming Group’s CEO Brian Ward appears to have stakes in multiple gambling entities, including online casino game developer LottoInteractive, where Ward presently serves as the CEO, and Crypto Millions Lotto, partner of Italian Serie A club Atalanta B.C., where he sits on the company’s advisory board, according to his LinkedIn.

🗞 In the news

Mobile sports betting will go live tomorrow in Louisiana; sportsbooks can accept bets on esports for specific events with regulatory permission.
Sports betting and crypto platform BetU has partnered with odds feed provider Oddin to underpin its esports betting product.
Esports betting platform Thunderpick is hosting the “Thunderpick Bitcoin Series,” a Counter-Strike tournament featuring a prize pool paid entirely in Bitcoin (NASDAQ: BTC).

📈 By the numbers

Viewership from this past weekend’s Call of Duty League 2022 Kickoff Classic, the league’s season opener, was down 22% against last year’s edition.
One week after PUBG: BATTLEGROUNDS made its transition to free-to-play, the game developer revealed the title had saw a 486% increase in new players.
While 71% of Millennial gamers reported watching video game content late last year, the entire audience for this content grew 18% to 1.2 billion people this year, generating more than $9 billion in revenue, according to Nielsen.

🗓 Upcoming events

Jan. 17 — Feb. 2: Pinnacle Winter Series #1

Jan. 28 — Feb. 4: BLAST Premier: Spring Groups 2022

Jan. 10 — Mar. 10: LVP SuperLiga 2022 Spring

🃏 The lines

LCK Challengers League: Gen.G (+165) vs. DRX (-250)

League of Legends Pro League: Invictus Gaming (+220) vs. Rare Atom (-333)

League of Legends Champions Korea: KT Rolster (+235) vs. Gen.G (-357)

Contact us

Have a tip, or want to just get in touch?

Reach me directly at Cody.Luongo@wagers.com