The moments that defined esports betting in 2021
Sharpr is a weekly newsletter covering the intersection of esports and gambling.
Hi all,
Welcome to the first edition of Sharpr, a weekly newsletter covering the intersection of esports and gambling. My name is Cody Luongo – I’ve spent a majority of my career as a journalist reporting on this very sector, including authoring my own column at Esports Insider known as the ‘ESI Gambling Report,’ and I’m incredibly excited to be launching this new platform in partnership with Wagers.
Each week, Sharpr will provide comprehensive coverage of the regulated esports betting market in the U.S. and internationally, including news, analysis, expert commentary, performance of major events, and much, much more. Backed by a team of gambling industry experts, we’ll strive to establish Sharpr as an essential resource for following the emerging market.
Whether you’re a gambling industry stakeholder or esports and gaming enthusiast, Sharpr will have something for you.
Thanks again for reading!
– Cody
In this week’s edition of Sharpr…
Defining moments of 2021
Stakeholders predictions for the year ahead
Latest headlines
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The moments that defined esports betting in 2021
✍🏽 Preface: The esports industry rounded out 2021 on yet another bright note, riding the coattail of the associated boost provided by the coronavirus outbreak the year prior. In 2021, the sector saw an increase in investment, a series of esports and gaming companies complete or announce plans to trade publicly, and a collection of blue chip commercial sponsorships.
The industry’s betting sector has experienced similar growth over the last two years. Rising alongside the onset of the pandemic, esports became a lifeline for many operators as traditional sports leagues went offline, drying up the revenue of sportsbooks and brick-and-mortar casinos. Operators sought to add esports markets and content to their platform while others deepened existing offerings. All the while the U.S. continued to undergo a major regulated market transformation.
While 2020 may very well be marked as the “year of esports gambling,” this past year was a different story. The resurgence of traditional sports leagues had once again pushed esports back into the periphery of operators, especially as the likes of DraftKings, Fanduel, and others resumed prioritizing key sports league partnerships.
This past year did not come without its fair share of tailwinds, however. A number of key transactions and activity had left the sector off in a better place than it was before. A few key moments that defined this last year:
🦄 Entain acquires Unikrn
Sports betting and gaming operator Entain shook the house upon revealing its acquisition of esports betting platform Unikrn.
Entain is one of the world’s largest sports betting groups, and has both domestic and international reach across legacy brands such as bwin, Ladbrokes, and BetMGM.
Complementing the acquisition, Entain hired Justin Dellario from Twitch as its head of esports to lead the charge into this market as “part of a greater drive into interactive entertainment.”
While we’ve yet to see Unikrn activated under the Entain banner, it’s expected that the company’s backing will help esports betting more readily mobilize this upcoming year.
🇺🇸 Esports betting in the U.S.
The esports betting landscape is still far from developed in the United States, although state regulatory legislation does point towards brighter times across the horizon. As sports betting legislation is drafted and launched, many states are opting to address and maintain laws that permit wagering on esports. Key activity from this year includes:
Connecticut became one of several states to offer a blanket approval on esports wagering. The Constitution State launched sports betting in October 2021.
New Jersey lawmakers passed A637 to include esports betting in the state’s legal sports betting industry. Garden State operators are authorized to accept bets on esports of up to $100, with a potential winning bet of up to $500.
The Nevada Gaming Control Board appointed several members to the Esports Technical Advisory Committee, a panel of individuals tasked with providing recommendations to the NGCB in an effort to better facilitate esports betting opportunities in the state.
According to UNLV International Gaming Institute Director of Research Brett Abarbanel, there will be more tailwinds in the U.S. this next year, too.
“Esports betting in North America will continue to develop on a regulatory front, which should continue to drive it further into mainstream public betting interest,” Abarbanel told Sharpr. “I think this will largely be in settings that parallel betting in the sports sector, which continues to grow state-by-state in the U.S. and provincially in Canada”
🎮 DraftKings teams up with FaZe Clan
One of the most prominent deals involving esports and betting came in late-2021 when DraftKings revealed its first official esports sponsorship deal with FaZe Clan. The partnership will see FaZe Clan and DraftKings collaborate on a series of content activations, including an original series and podcast featuring branding from both sides.
FaZe Clan is one of the largest esports organizations globally. The organization reportedly boasts a combined social media reach of over 350 million across its network of content creators and personalities.
FaZe Clan is planning to debut on the NASDAQ through a SPAC merger in Q1 2022. The transaction implies FaZe Clan’s valuation is in excess of $1 billion.
DraftKings will also sponsor FaZe Clan’s Counter-Strike: Global Offensive team. CS:GO is one of, if not the most popular esport to bet on.
🚔 Esports integrity takes center stage
The Esports Integrity Commission (ESIC) has had a busy two years. The non-profit company focused on safeguarding integrity and prosecuting cheating in esports had spent more than a year in an aggressive series of probes into suspicious activity within the amateur and professional Counter-Strike space. The esports watchdog’s first big inquiry in September 2020 implicated 37 CS:GO coaches, with more instances of misconduct cropping up throughout the following year.
The Esports Integrity Commission saw a 270% uptick in work in 2020.
The September 2020 coaching bug report was said to cost ESIC $50,000.
While integrity flare ups are difficult for industry bystanders to watch, the scope of ESIC’s work these last 24 months had shined a bright spotlight on the organization’s meaningful work in the space – and more importantly, why its services are so desperately needed in esports.
What’s ahead in 2022
With the esports industry growing exponentially each year, there’s plenty of reason to believe its betting precinct will experience similar growth this year. To gain better clarity on esports gambling’s trajectory, Sharpr reached out to a variety of industry stakeholders to get a sense of what’s to come in 2022.
Blue chip publishers dig in
The likes of Activision, Riot Games, and Take-Two are rarely seen flirting with gambling brands. However, the general consensus this year is that the esports betting sector will begin to receive buy-in from blue chip game publishers. The Call of Duty League welcoming its first-ever betting partner this past year for example may be a good indicator that this is just the beginning.
“I expect at least one of the major blue chip game publishers to accept direct sponsorship for its leagues from a betting sponsor,” said Rivalry CEO & Co-founder Steven Salz. “It's our belief as their user ages, as the esports mature, and as the audience becomes more comfortable with the inevitability of people watching competitive matches and wanting to put money on the outcome of them, that publishers will become much more receptive to gambling.”
“Publishers are beginning to understand that gambling will be part of the big picture in esports whether they support it or not, and that pretending it doesn't exist does neither themselves or their fans any favors,” said Midnite Marketing Director Sujoy Roy. “While we saw some progress last year but I'm looking forward to making bigger strides in 2022. If this happens, we'll see properly-licensed operators able to take market share.”
Regulatory refinements, operations in the U.S.
In the U.S. particularly, regulation surrounding esports wagering is disparate among the many state municipalities where sports betting is legal. While a number of countries across Europe have established sports betting legislature wrapped neatly into one law, the U.S. is dealing with regulatory frameworks on a state by state basis, and much of the attention is being allocated towards traditional sports, not esports.
Esports is playing bridesmaid to more established betting categories in the uprising of legalized sports betting, and its position within states’ legislature is often hamstrung by way of bet limits or additional regulatory hurdles. The result has painted esports as a far less favorable offering for operators, though future regulatory refinements, as we saw in New Jersey, may brighten the handle’s outlook. Stakeholders believe the definition of esports will go through additional regulatory refinements, especially in light of the various format in which competitive video game wagering may occur.
“Behind the scenes, a lot of work is being done to help establish the standards for wagering on esports competitions, big and small, professional and amateur, which all create their own unique challenges,” said G3 Esports CEO Anthony Gaud. “The definition of ‘esports’ in regards to wagering will go through an evolution as competitive video games played in parimutuel formats will expand the genre significantly. One thing to be concerned about is that continued expansion in unregulated skill-based gaming is causing state regulators to actively investigate how companies operating in this space are protecting consumers.”
“We believe there is substantial esports wagering already taking place from fans in the U.S. on offshore, illegal websites,” said Esports Entertainment Group CEO Grant Johnson. “It’s our belief that given the choice, most [bettors] will chose to work with a regulated operator. Our reasoning is that fans will appreciate the additional transparency and protection they get, as well as the additional comfort of knowing there is a regulator providing oversight.
The year of mobile esports
The accessibility of smartphones has helped mobile esports become a fast-growing sector of the gaming industry, and the prospect of its betting category may see some of the benefits, as well.
“Mobile esports has been such a mainstay of the esports scene in Southeast Asia, and I think 2022 will finally be the year that we see this show up in a big way in the West,” said UNLV Research Director Brett Abarbanel. “Mobile esports offers so much opportunity for overlap with betting, particularly with the ease of platform integration. If you’re already engaged with your mobile device, you’re primed to be engaged in betting on the same device.”
Rise of Valorant wagering
Since its launch in June 2020, Valorant has become one of the most popular games globally. According to Active Player, the first-person shooter title has sustained more than 13 million players in the last 30 days – almost double that of Overwatch’s 6.8 million players. The title’s marquee tournament, Valorant Champions, was the tenth most-watched esports event of 2021, placing it amongst heavyweight esports such as League of Legends, Counter-Strike, and Dota 2.
Valorant’s rise in prominence has placed it on sportsbooks’ radars. Those offering markets on Valorant – such as Midnite and Rivalry, for example – acknowledge that while the title shows signs of potential, it’s still a budding category.
“Valorant betting is growing slower than I expected, so while it's an interesting acquisition hook it's not a big revenue generator yet,” Midnite’s Sujoy Roy tells Sharpr. “It will be some time before [Valorant] challenges Counter-Strike for turnover. The big esports categories remain the same with CS:GO and [League of Legends] bringing in the most revenue.
Tier one operators get in the mix
2022 may very well be the year more tier one operators get in the mix with esports offerings of their own. With many key learnings and planning over the course of the last two years, top operators are more prepared to take products to market.
“I think this year we are going to see a lot of tier one operators make headway into esports,” said PandaScore CEO Flavien Guillocheau. There has been a lot of learning and preparation over 2021, and now [top operator’s] are ready to market their product, better engaging with esports bettors, and make a space for themselves in esports.
“Suppliers can assist this push with deeper, more engaging markets as well as new ways to bet on esports through bet builders, micro-betting, and continued product innovation.”
🗞 In the news
The Advertising Standards Agency has ordered UK-based esports bookmaker Midnite to remove marketing materials said to encourage “socially irresponsible” gambling behavior.
Tiidal Gaming, the operators of esports-focused betting platform Sportsflare, has announced the appointment of Tom Hearne, formerly of theScore, as its new chief executive officer.
Esports Entertainment Group’s skill-based Madden NFL 22 wagering tournament at the Hard Rock Hotel & Casino Atlantic City (which was scheduled to take place this weekend) has been postponed to March 19-20.
Russian bookmaker 1xBet has inked a three-year deal with Brazilian esports organization MIBR to sponsor its men’s and women’s CS:GO teams.
Rivalry has hired Liam Doherty from Zillow as its VP of marketing, leaning on his background developing campaigns for the likes of Popeyes, Nike, Adidas, and more.
📈 By the numbers
The Call of Duty League 2021 Finals saw a peak viewership of 238K, notably down 28% from the previous year’s finals, which drew 331K viewers.
Counter-Strike, League of Legends, and DOTA 2 are estimated to account for 90-95% of all esports wagers, according to Rivalry CEO Steven Salz – though, Riot Games’ Valorant is increasing in prominence.
The Halo Championship Series Kickoff Major in Raleigh surpassed franchise viewership records, netting a peak viewership of 267K.
🗓 Upcoming events
Jan. 18 – 24: Funspark ULTI Finals
Jan. 28 – Feb. 4: BLAST Premier: Spring Groups 2022
Jan. 21 – 22: LEC Spring 2022 - Week 2
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