When the coronavirus pandemic hit, esports was one of the only verticals which was able to continue “as normal”. But as restrictions are starting to lift, and we edge closer to a new year, Ashley Washington (pictured below) – Senior Product Owner at Bayes Esports – asks whether 2022 is going to be a big year for esports betting.
The COVID-19 pandemic has been a wildcard for many industries, both a catalyst and a destroyer in one. While we’ve seen things like travel and cinema struggle to compete with protective measures and restrictions, esports and gaming have proven to be some of the more enduring industries in entertainment. Not just for playing and watching, but betting as well.
One of the main reasons for this is likely the fact that most aspects of gaming can be enjoyed right from the comfort and safety of your own home (or studio). But, one could also argue that being stuck at home lends itself to a great deal of focus in areas where it otherwise can’t be offered due to obligations outside of the house. In other words, being stuck at home for more than a year can be a great reason to dive into the finer points of League of Legends or return to your roots with CS:GO.
With casual play and spectator interest comes a great deal of movement in the space, and the high concentration of this attention throughout the pandemic has brought a wealth of new insight and growth along with it. Thanks to the peaked interest and newly acquired expertise of players, a bit of a rise in new punters was also something that could be seen in the heat of lockdown. But what does nearly two years of all of this mean for the esports betting industry in 2022?
A lot of the initial increase in new punter participation has tapered off, but an undeniable upward trend continues to be present for the industry as a whole and there are multiple reasons for that.
Content trends
The momentum and direction of the esports and esports-adjacent sectors rely greatly on the life cycles of its core titles – League of Legends, Dota 2 and CS:GO. These titles make up 90% of esports betting revenue alone. From this perspective, it’s safe to assume that there is a relatively stable year ahead of us. League of Legends, Dota 2, and CS:GO continue to go strong without much weakness in sight.
One aspect is definitely the interest of the casual player base and potential spectators but the competitive ecosystem certainly plays a key role in cementing a title’s influence. While major competitions for the titles have been missing a live audience throughout the pandemic, things have greatly improved with the introduction of vaccinations. This means that we may see a return to the inclusion of spectators in future events.
While the lack of spectators didn’t necessarily wreck the chances of success for betting (mostly the opposite happened), the possible return to fully operational competitions should work wonders for renewed interest in what are essentially the “Super Bowls” of these titles. That’s great news for betting!
Of course, not all titles thrive. We’ve seen Overwatch struggle and essentially die competitively in the last year with many factors at play. Due to lawsuits, fan disappointment in Overwatch 2 news (or the lack thereof), and the seeming disintegration of the competitive scene itself have greatly decreased competitive interest not only in Overwatch itself, but in the betting industry for the title as well.
The past year also did not prove to be the year for Battle Royale either – a question that has been raised and put aside repeatedly in the last few years. The boom and plateauing of Battle Royale illustrated the rollercoaster of validation for esports in a concrete and microcosmic fashion. Over the last five years, we’ve seen the release of the genre’s largest titles – Fortnite, Apex Legends and PUBG – as well as a slew of franchise-specific adaptations, the most notable being Call of Duty Warzone.
Despite the popularity on the casual level, and the occasional competition, the difficulty of spectating and the complexities of consistent and useful historical data acquisition (for live modeling and other things useful for bookmakers) make it very difficult to target this genre for both competitive success and betting.
There is also the question of whether or not Valorant will take off in 2022. This remains to be seen, but Riot has undoubtedly taken many steps in the right direction in an effort to set Valorant up for success. With echoes of CS:GO and Overwatch, it may have just the right mixture of familiarity and novelty to become a major contender for the next core title in the near future. The format lends itself not only to spectating but to betting as well, thanks to its unique but well-formulated meta.
Consumer betting trends
Something can certainly be said of betting itself becoming more popular in the next year. The rise in popularity and tremendous growth of crypto and its many uses has found overlap in the betting industry as well with more punters making use of crypto to place bets. Why crypto? There’s no perfect reason but the security and anonymity of payments play well with the nature of betting and there tend to be less fees for the use of BTC across the board.
In the case of crypto, however, the very things that make it favourable for betting could be what make it the most risky element as well. Widespread popularity in nearly anything involving money attracts a great deal of pressure regarding regulation (more on that later), and crypto is not immune to that attention.
Most businesses, bookmakers included, will likely struggle with the lack of transparency of their crypto customer base. Additionally, refunds for crypto payments are not always offered and exchange rates – as most of us are well aware – vary greatly which may mean heavy losses in some circumstances. Regardless, crypto enthusiasts from all shades of “gamer” may find themselves at home en masse within the betting sector, should support for these payments spread even further.
Betting trends in B2B
On the B2B side, there are also some things that point to an increase in interest and future market development, as well as some emerging risks. On the M&A front, there has been quite a bit of activity. Some of the year’s highlights include Entain’s acquisition of the betting entertainment company, Unikrn, Esports Entertainment Group’s acquisition of B2C platform Bethard, and Kambi’s acquisition of esports data and technology specialist, ABIOS.
The M&A action isn’t limited to agreements between providers, it includes data deals for these purposes between providers and publishers as well – a notable matchup being that of the exclusive data partnership between Riot and Bayes Esports for League of Legends data. Official data is a coveted component in the tournaments and betting equation and the acquisition of that data by various parties is going to continue to be a hot topic in the next year.
While the acquisitions themselves may prove valuable for the market, the gesture made by these companies making those agreements and buying those platforms speaks to the rapidly growing interest in grabbing hold of high value real estate in a booming industry. We will absolutely see more of this.
Organisational setbacks
Once the data and content is acquired, however, there are still some aspects to consider and, perhaps, some learnings to be iterated upon when it comes to tournaments specifically.
With so much fruitful content in the mix, there is a great deal of success – and revenue – to go around but there are also some potentially chaotic implications for betting, even when it comes to something as simple as a scheduling mishap. One textbook example of timing conflicts wreaking havoc on betting momentum would be this year’s unfortunate overlap of Dota 2’s The International and League of Legends Worlds Championship.
This overlap in majors scheduling introduced viewership engagement conflicts which inevitably impacted betting revenues. One can never be sure of exact losses in scenarios like this but it’s hard to argue with the idea that sequential windows for these majors might have created a more optimal solution for viewers, organisers, advertisers and punters across the board.
Scheduling issues are unfortunately only a single aspect of the characteristic lack of organisation that plagues the industry as a whole. Unless we continue to see improvement there throughout 2022, we could be seeing issues like this resurface again and again.
Regulatory setbacks
And, of course, as the speed of growth and engagement increases, regulation closely follows. While this, quite obviously, comes into play regarding things like the aforementioned popularity of cryptocurrencies, regulation also manifests itself in other ways that can put a damper on the industry’s influence regionally.
Most notably, this year saw the Swedish government’s refusal to categorise Dota 2’s The International as an “elite sporting event”. This meant that many competitors and their accompanying teams would be unable to enter the country due to restrictions put into place as a result of the COVID pandemic.
This refusal has greater meaning than just the tournament’s non-feasibility in Sweden – it echoes the still-existing lack of formal acceptance surrounding organisational esports across the globe. With the amount of success and activity we’ve seen, 2022 could be the year in which this changes.
The mostly online nature of the whole affair raises questions about how to regulate online betting in perpetuity. There are some places, like Canada and Australia, where online gambling is usually limited to platforms that are locally based and therefore also subject to tax.
It’s no surprise then that many of the larger platforms are based in (or moving to) areas where this regulation may be more lax to avoid extra taxes and fees. This conflict is not new to betting, but continued growth will without a doubt increase pressure to expand the comprehensiveness of this regulation, especially if these burgeoning platforms continue to flock overseas to settle.
Organisational esports itself is hard to regulate, in that information about the games and who is involved can be wildly inconsistent creating a gray area in data distribution and its uses – like betting. One case of this is player age. In the majority of cases, it’s not legal to bet on games where players under the age of 18 are involved.
This specific data can be hard to come by, putting bookmakers and data distributors at risk. Whether or not we can expect to see improvements in data on that level is yet another one of the greater mysteries of esports data and betting.
With all that said, we are left wondering if 2022 is going to be a big year for esports betting. Setbacks aside, it does appear that the only way is up – the question is, rather, how far up? The stage is certainly set but, in this case, we’ll just have to stick around and find out.