The stories that defined esports betting in 2022
Sharpr is a weekly newsletter covering the intersection of esports and betting
Hi everyone, and welcome to 2023.
I hope all of my readers had a relaxing holiday break and had the chance to take some time away like I did.
Sharpr will resume its regular weekly programming starting today, and I’m excited to get back at it. To kick things off, we take a look back at the moments and stories that defined esports betting in 2022. This will roughly mark the one-year anniversary of the newsletter too, and you can read the 2021 edition here, for those that are interested.
Big thanks to my subscribers for sticking around, and if you’re new here, welcome to the club. We won’t disappoint.
Let’s dig in.
In this week’s edition of Sharpr…
Rivalry achieves first-ever profitable month.
The great Twitch gambling saga comes to an end.
Nevada takes major strides in esports regulation.
Esports Entertainment Group’s explosive downfall.
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The stories that defined esports betting in 2022
It’s been a busy year for esports betting.
It’s been three years since the global pandemic brought esports betting into the limelight in an unignorable way, and the sector has continued to grow steadily since.
Esports operators have scaled, more sponsorships have rolled in (for better or worse—more on that below), and significant regulatory developments have taken place. We even saw Activision–one of largest game publishers in the world—welcome betting partners for its flagship esports properties, Call of Duty League and Overwatch League.
The esports industry, on the other hand, is now undergoing its own “esports winter,” with investor interest quickly cooling off as the space is pressed hard to show signs of profitability. Meanwhile, the larger games industry is undergoing a transformative shift where publishers now make a majority of their revenue through in-game transactions from games that are free-to-play.
This change is shedding a strong light on esports as a powerful driver of the long-term player engagement publishers need to monetize games in a live-service world. In the fight for consumers’ attention, esports can be a difference maker, and that may continue to put wind in its sails in 2023.
Now, onto the news: the stories that defined esports betting in 2022.
Rivalry achieves first-ever profitable month
With some bias of course, I can say that Toronto-based sports betting and media company Rivalry achieved one of the most notable milestones in the space after revealing it recorded its first-ever net profit in October.
The announcement arrived during Rivalry’s Q3 2022 earnings, which outlined several other record achievements including a $70.3M CAD betting handle (up 203% year-over-year), and revenue of $7.1M CAD (up 93% year-over-year).
Esports drove over 90% of the company’s sportsbook handle from an average customer who is 25-years old.
Esports has long been viewed as an accessory for operators with many doubts around the actual market opportunity and value in this category. Rivalry is silencing naysayers and extending its market leadership position beyond other operators who have made an impact on this space with their esports betting products (it’s a short list, in my opinion).
Rivalry features traditional sports betting too, as well as a recently launched casino product, but the company is also wisely using esports as an entry point to a younger demographic of bettors that legacy operators aren’t paying mind to. (Disclaimer: I’m a full-time employee of Rivalry).
You can read some of my favorite past coverage on Rivalry below:
Rivalry flexes market leadership in esports, next gen consumers during Investor Day
Rivalry to bring eccentric ads, unignorable creative to Ontario launch
The great Twitch gambling saga comes to an end
What has felt like a never-ending debacle, and one I’m admittedly exhausted from writing about at this point, was streaming platform Twitch and its entanglement with gambling.
The TLDR here is a story of rampant unregulated casino content being livestreamed to viewers, a number of which were likely underage (21% of users are between 13 and 17 years old), over the course of several years. Popular creators with massive followings became known for their gambling streams, broadcasting themselves winning and losing millions of dollars of house money to young and impressionable audiences.
This conflict drummed up plenty of mainstream media interest, and there were a number of key points throughout the last year that would ultimately force Twitch’s hand.
Danish esports organization Astralis quickly terminated a partnership with Roobet due to public backlash.
Chipotle removed its advertisements from the “slots” and “poker” categories on Twitch in May following a petition calling on brands to stop supporting this damaging content.
Countless outcries from the platform’s top creators demanding Twitch to take action on curbing this content.
On October 18, those on the frontlines got their wish as Twitch published an updated policy prohibiting livestreaming a list of blacklisted sites including Stake, Duelbits, Roobet, and Rollbit. Sports betting, fantasy, and poker remained unaffected, but “slots, roulette, and dice games” that are unlicensed in the U.S. or other jurisdictions without consumer protections would be on the chopping block.
I’m not a frequent Twitch user, but given that nothing has come across my desk since this change was put into effect, my assumption is that the new policy has done its job in ousting bad actors from the platform.
Some streamers have taken to other platforms like Instagram and Twitter to continue milking their black market sponsorship deals, while Stake has gone as far to create its own streaming platform, which I recently said some not-so-nice things about.
Nevada takes major strides in esports regulation
It was March when University of Nevada, Las Vegas, International Gaming Institute’s Dr. Brett Abarbanel told me the regulatory process in esports in the U.S. needed streamlining.
Abarbanel, who is one of eight members the Nevada Gaming Control Board appointed to its esports betting committee in 2021, would go on to make the change she wanted to see in the industry, working diligently with regulators to spur meaningful change in the Silver State.
The committee is collaborating with the state Attorney General’s office to produce a regulatory framework to support esports betting by 2023.
The regulatory proposal would enable sportsbooks to accept wagers on esports matches without the need for special approval from the Nevada Gaming Control Board (a requirement of the current framework).
A hearing to present the framework to Nevada regulators took place in December, but the meeting concluded before reaching the topic.
In 2020, when the pandemic stripped the world of live sporting events, Nevada regulators approved a record 12 esports events–but there hasn’t been any since.
If approved, the proposed framework would incorporate a whitelist of pre-approved esports events that would make the segment a much more attractive endeavor for operators in Nevada, saving time, energy, and resources.
Esports Entertainment Group’s explosive downfall
Esports Entertainment Group has been featured in my newsletter more than any other company in 2022, and mostly for all the wrong reasons.
The online gambling operator kicked off 2022 largely on the right foot, receiving approval from the New Jersey Division of Gaming Enforcement in March to legally accept bets in the Garden State.
The CEO at the time, Grant Johnson, said he was “bullish” on the firm’s launch in New Jersey, taking its esports betting platform VIE.gg to market the following day with expectations to generate $1-2M in revenue in its first year.
A few weeks later, EEG hosted a skill-based esports wagering event at the Hard Rock Hotel & Casino in Atlantic City, a first-of-its-kind activation in the states. The two-day tournament leveraged EEG’s proprietary tech LanDuel (which was later taken down after receiving a cease-and-desist from guess who) to allow players to legally place bets on themselves in 1-vs-1 matches of Madden NFL 21.
I was admittedly impressed with some of the things EEG was doing at the time. I felt that a software that could bring in a younger demographic to casinos was valuable, and while the esports betting market is severely underdeveloped in the U.S., being the first company to offer such a product in NJ was an interesting prospect.
But it wasn’t long after that the company started unwinding fast.
Citing considerable monetization difficulties, EEG opted to sell its esports assets (Helix eSports, ggCircuit, and Esports Gaming League) in an effort to “aggressively cut costs,” an early indicator of what was to come.
Continuously plummeting share prices, which had seen upwards of 98% drops in value as the company continued to burn millions of dollars quarter after quarter.
In October, EEG shuttered VIE after revenue figures for the platform fell incredibly short, failing to generate more than three-figures in its lifetime.
Finally, CEO Grant Johnson was ousted by the board of directors in December, ending a long tenure with the company.
I’ve covered EEG into the ground at this point, so I’ll keep this concluding paragraph brief in saying that while the company’s downfall has been swift and painful, it shouldn’t tarnish what esports betting could be in the United States.
Vie was a very misguided project from the start: launching guns blazing stateside where esports betting is sorely underdeveloped and unacknowledged compared to other regions like Europe, Latin America, and Southeast Asia. What could the product have been with proper marketing and adequate consumer touchpoints? I guess we’ll never know.
I spoke to this more recently, which you can read here.
🗞 In the news
Rivalry released a report detailing esports betting trends in 2022.
Esports Entertainment Group appoints Alex Igelman as CEO.
Epulze has announced a data partnership with Oddin.
Former Sports Business Journal editor James Fudge has launched an esports betting coverage site, The Esports Advocate.
📈 By the numbers
There were 532M esports viewers worldwide in 2022, according to Insider Intelligence.
Mobile Legends: Bang Bang was the most popular mobile esports title in 2022 with 331M hours watched (excluding China), per Esports Charts.
The League of Legends World Championship was the most-watched esports tournament of 2022, courting 142M hours of watchtime.