The stories that mattered in 2023
Sharpr is a weekly newsletter covering the intersection of esports, betting, and Gen Z
Hi everyone, Cody here.
We’re nearing the end of 2023 and it’s time for my annual round-up of the year’s biggest stories and trends.
It also means that Sharpr will have successfully taken another trip around the sun. Two years running and still going strong with more than 1,500 subscribers and thousands of reads each month. I’m so incredibly thankful for the opportunity to continue writing and for those that read my work.
Wishing everyone a happy, healthy, and successful new year 🥂
In this week’s edition of Sharpr…
The rise, and fall, of Unikrn.
Skin gambling makes an unsettling comeback.
The intersection of livestreaming, creators, and gambling.
If this newsletter was forwarded to you, please consider subscribing.
Sponsored by Abios
Do you want to reach a new audience? Discover Abios Odds Feed.
With fast, automated modeling and access to real-time data, Abios delivers esports markets with high uptime to sportsbooks that want to find a new growth vertical and enter a market with untapped potential.
Tap into product features such as same-game bet builders, player props and flash markets to reach the esports audience and differentiate your sportsbook.
The rise, and fall, of Unikrn
Entain spent a whopping $63M to acquire esports-focused operator Unikrn in 2021. And the rest is, well, history.
Despite completing the acquisition, Unikrn remained dormant until the platform was officially relaunched in December 2022. The company came out of the gate relatively strong with several deals in an effort to gain market share quickly. Notably, the operator teamed up with Team Liquid and signed a multi-year partnership with event organizer BLAST.
But as quickly as Unikrn attempted to push into the space, it became clear the venture wasn’t returning on the investment.
In October, Entain revealed it would wind down Unikrn and roll up its products into the company’s existing portfolio of brands, shelving the platform less than a year after it went back on the market.
Entain’s former CEO Jette Nygaard-Andersen later offered more context to Unikrn’s abrupt ending on the company’s Q3 conference call, acknowledging that reaching profitability would be “really capital-intensive.”
While Unikrn’s closing took up most of the oxygen, it was bookended by Luckbox shutting down and Midnite undergoing layoffs. The collision of negative stories arriving within weeks of each other was more coincidence than anything else, but all contributed to a stark outlook on the sector.
Why it matters: Entain’s entry set lofty expectations on the esports betting industry that ultimately weren’t met. The sentiment from industry peers and onlookers once everything fell apart was loosely: "if Entain can’t make esports betting work, then who can?”
I rejected the idea that Unikrn’s collapse meant esports betting was dead in the water, though it did offer some perspective on the space—and more importantly—what’s working for some and not for others. The TLDR from that story is this:
“The opportunity in esports betting is much greater than esports betting itself. It’s an opportunity to engage an untapped demographic of bettors, differentiate product offerings, and future-proof businesses by gaining street cred with the next generation of consumers.”
Looking at esports purely as a percentage of the overall sports betting industry will continue to result in disappointment for the time being, and the victors today are the ones using gaming as a top-of-funnel and brand differentiator.
Highly recommend reading the round-up from Earnings+More on the topic.
Skin gambling makes an unsettling comeback
Skin gambling, an illicit form of online betting where users use virtual in-game items with real-money value to bet online, made an unsettling comeback this year.
The noise kicked off in May when G2 Esports, a prominent global esports team, signed a deal with skin betting site CSGORoll.
Counter-Strike publisher Valve, who (not by its own volition) has long been at the center of the skin betting controversy, jumped in a few weeks later to curb skin gambling with an update to its Terms of Service.
Meanwhile, Australian authorities ended up banning CSGORoll after an investigation into the site.
Arguably the biggest story on the skin gambling front came in July when I popped the lid on an underground casino scene festering in Roblox. It’s the same playbook, just with a decidedly younger audience (62% of Roblox users are 16 and under).
Roblox Corporation told Sharpr over the summer that it was taking action against these sites, but as it stands today, Bloxflip–which had 1.3M registered users as of January—is still operational.
Meanwhile, Twitch made an effort of its own to curb the rise of skin betting on its platform, barring streamers from promoting these illicit sites in an update to its terms of service.
Why it matters: The surge of unregulated skin gambling indicates that this space is still alive and well, despite the discourse around it settling down for a few years.
What’s become abundantly clear this year is that the skin gambling blueprint can very easily be applied to new games. Like with Bloxflip, these platforms can be highly infectious among the respective communities they are targeting, allowing them to achieve scale well before game publishers or regulators catch wind.
Ubisoft revealed last month that Rainbow Six Siege would get its own skin marketplace where users can buy, sell, and trade virtual items. It wouldn’t be surprising if bad actors were already planning a Rainbow Six-specific betting platform ahead of its full marketplace launch in 2024.
The intersection of livestreaming, creators, and gambling
One of my “defining stories” from last year was Twitch’s long-winded entanglement with unregulated operators coming to a (relative) end.
The livestreaming platform banned a handful of black market operators–including Stake, DuelBits, Roobet, and Rollbit–last year. Twitch followed up in August to add more names to its blacklist and extend its ruling to prohibit the promotion of skin betting. The company noted that gambling content on the platform had dropped 75% since updating its policy in October 2022.
But the story took an unexpected turn when one of the initially impacted sites, Stake, launched its own livestreaming platform Kick to continue executing its strategy.
While morally questionable (mostly due to the site’s lack of meaningful customer verification), Stake’s strategy with creators and gambling has been nothing short of a sweeping success. The online crypto operator has a track record of partnering with A-list streamers to broadcast themselves gambling to their followers, and that strategy has played a big role in lifting the company’s revenue from $105M in 2020 to $2.6B last year.
Stake has only deepened its investment in the space since, in some cases investing nine-figures to secure the best gaming talent. Last month, the company also signed Nick “Nickmercs” Kolcheff, one of Twitch’s most-followed creators and highest-earning gamers in the world, in a one-year, non-exclusive deal.
Why it matters: Using gaming to reach younger consumers is a well-worn strategy in other industries, and it's beginning to materialize more in sports betting.
Underdog Fantasy named Kolcheff as an ambassador this past summer.
FanDuel has had a partnership with gaming creator Dr Disrespect since 2021.
PrizePicks inked a sponsorship deal with esports team TSM in September.
My prediction is that the intersection of betting and creators will grow steeply in 2023 as regulated operators vie for an elusive customer that’s not engaging with traditional sports or media in the same way as their more mature counterparts.
More broadly, it represents one of the ways shifting consumption habits may make traditional methods of customer acquisition and engagement obsolete while new strategies emerge.
🗞 In the news
Team Secret has signed a partnership deal with Stake and Kick.
The Call of Duty League will be broadcasted exclusively on YouTube for the 2023-24 season.
Sony studio Insomniac Games’ video game plans have been leaked in a data breach.
📈 By the numbers
Allstar.gg raised $12M from Drive Capital.
FTN Network has closed a $3M seed round.
ESPN Bet was estimated to have 5% and 11.6% GGR share in New Jersey and Massachusetts, respectively.
Contact us
News tips, feedback, and sponsorship inquiries.
Reach me directly at luongomanagement@gmail.com 📩 or on Twitter 🐦
All figures are quoted in US Dollars at the current exchange rate unless otherwise specified.
*Disclaimer: I am a full-time employee of Rivalry.