Photographer: Andrey Rudakov/Bloomberg

Legal Sports Books Get Ready for Billions in E-Sports Betting

  • E-sports gambling market on pace to reach $7.4 billion
  • "This is the future of sports," says Sky Betting’s Smith

If e-sports -- a.k.a competitive video gaming -- really are the next big thing in sports, then betting on e-sports is the next big thing in gambling, and established bookmakers are getting ready.

"This is the future of sports, and we have to focus on that so we don’t get left behind," said Adam Smith, spokesman for Sky Betting. "We just need to put ourselves in the shop window a little more."

Most regulated sports books outside the U.S. already offer bets on e-sports, but up until recently most of the action happened in the dark, unregulated by authorities. That appears to be changing. Washington-based video game developer Valve said in July that it would take action against the gambling sites that illegally used its software as currency. The move shuttered a number of unregulated sports book -- the biggest, called CSGO Lounge, shut down last week -- and will push a number of e-sports gamblers to established gambling houses.

"We see this as a major opportunity," said Moritz Maurer, head of e-sports at London-based Genius Sports, which provides odds, live data feeds and integrity monitoring services to its clients. "If you want to invest in e-sports gambling, this is the time."

Unregulated Market

The unregulated e-sports gambling market, most of which relied on a virtual currency called skins, was on pace to reach $7.4 billion this year, according to estimates from Eilers & Krejcik Gaming and Narus Advisors. That’s 12 times larger than the e-sports bets at regulated books.

Not all of that money will migrate -- the total includes underage users and people who have been playing in black markets like the U.S. About $2.2 billion of those wagers translate easily to the regulated world, Maurer said.

At Sky, that means more marketing, making their offerings clear to the e-sports crowd -- mostly young men who don’t consume sports in the more traditional ways. Denmark’s Danske Spil redesigned its e-sports book, creating a look more in line with what gamers are used to. It has embedded broadcasts with e-sports analysis, a chat function and team rankings, all alongside the odds.

Sky, Danske

"We can’t approach them the same as our normal bettors, because the e-sports bettors are a group for themselves," said Kasper Nemeth, Dankse Spil’s e-sports manager. "Instead of trying to make them traditional sports bettors, we’re giving them their own playground."

If they succeed, the haul could easily exceed $2.2 billion. Books like Sky and Danske offer more betting options per e-sports match, including live betting, a popular option that lets punters wager on odds that change in real time. They also offer more security. Regulated books have age verification, detection software that reports suspicious activity, and programs in place to help problem gamblers, all under the oversight of regulatory bodies.

For now, e-sports are a small part of the regulated sports betting market, on par with "average European sports" like volleyball and handball, Smith says. "So far our e-sports user base has grown organically. We’re looking to change that now."