eSports Betting Guide: Top Verticals and Games
Esports Betting Report

Esports Betting: Overview Of The Market And Frequently Asked Questions

eSports Betting Guide
Much of the talk surrounding the growth of esports has focused on the eye-popping numbers surrounding viewership, the proliferation of live events with big prize pools, and the continued entrance of mainstream sponsors into the space.

Less discussed has been the slice of the esports economy based around wagering. It’s a large, diverse market than spans multiple products, formats, levels of sophistication – and it may end up being one of the primary engines driving broader growth for esports.

This page explores the contours of the market for gambling on and around esports, and offers answers to some of the most commonly asked questions regarding the intersection of esports and wagering.

What products make up the market for esports betting?

There are two major verticals and a handful of secondary verticals that together form the market for esports betting:

Primary verticals

  • Skin betting: Skin betting refers to betting sites that allow betting using in-game items. Skin betting sites span various genres and products, including: match betting, roulette, lotteries, raffles, coin flips, slots, and blackjack.
  • Esportsbook betting: Just like traditional sports betting, but on esports events and outcomes instead of stick-and-ball sports.

An in-depth treatment of these verticals follows a few sections below.

Secondary verticals

  • Fantasy esports: Akin to fantasy sports sites, but with a substitution of esports for traditional sports.
  • Challenge sites: These sites allow players to compete against one another (or in groups vs groups). Generally players pay an entry fee to compete and are rewarded via a prize pool connected to the entry fees.

How big is the market for esports betting?

In terms of handle (i.e., total amount bet or wagered), the market for esports betting is measured in terms of billions of dollars.

That may seem like a substantial amount – and by some measures, it is – but in relative terms, it makes esports betting a material, but minor, part of the global market for betting. Consider:

  • In 2015, Nevada sportsbooks did $4.2bn in handle.
  • In 2015, New Jersey’s online casinos likely exceeded $2bn in total handle.
  • The daily fantasy sports industry did roughly $2.9bn in handle in 2015.
  • The global market for sports betting is measured in terms of hundreds of billions, as is the global market for casino.

What esports do people bet on?

The answer varies by vertical.

Popular esports for skin betting

CS:GO is the dominant title in the skin betting vertical, accounting for some 85% of activity. Remember, skin betting is not a single product but rather a class of products, so betting skins doesn’t necessarily involve betting on CS:GO. To put it another way, market share speaks only to the estimated market share in terms of use of items from a particular game at skin betting site.

Popular esports for sportsbook betting

The following chart shows our estimated distribution for esportsbook handle. As is the case with skin betting, a handful of titles drive almost all of the action. CS:GO is not nearly as dominant in this vertical as in the skin betting vertical, but nonetheless remains a significant force:

Betting by Esport

You can get a closer look at the relative offerings for titles on any given day via our esports odds tracker.

Additional titles

In addition to the games above, you do see some betting action on a handful of additional titles, including:

  • Call of Duty
  • Heroes of the Storm
  • Hearthstone
  • SMITE
  • Vainglory
  • World of Tanks

Vertical: Skin betting

Skin betting is more of a class of betting products that all share a common characteristic: skin betting sites generally don’t involve any cash component.

Instead, players load their accounts with skins and then also have the ability to win skins via games (or via an internal currency acquired while playing those games).

How big is it?

Skin betting is far and away the largest vertical in the esports betting market. While visibility into the vertical is somewhat limited, and confirming data is far more difficult than in the traditional online gambling market, I am confident (based on direct observation and channel checks) in estimating that total skin betting handle across all products will exceed $6bn in 2016.

What kinds of games are available?

You can find a skin betting equivalent for almost every traditional online betting product. Some of the most popular products in the skin betting vertical, ordered loosely by contribution to overall volume, include:

  • Sports betting (generally, but not exclusively, on esports matches)
  • Jackpot / lottery-style games
  • Roulette
  • Coin flip
  • Raffles / mystery boxes

 

Read more about skin betting here.

Vertical: esportsbooks / cash betting

The next vertical by size is what I generally refer to as esportsbook betting, although I’m sure someone will come up with a better name at some point. Whatever you call it, what I’m talking about here is the traditional sports betting model – cash betting on competitive outcomes – applied to esports.

The vertical is made up of a mix of established sportsbooks that are adding esports to their product mix along with new operators that are focusing exclusively on esports.

How big is it?

Visibility is again an issue with these sorts of estimates, but based on my conversations with major operators in the space, I feel comfortable with a range of $550-$600mm for total handle for esportsbook betting in 2016.

That estimate only includes online betting at sites regulated in established jurisdictions, and does not account for esports betting handle generated from dark grey / black markets.

What types of bets are available?

Broadly speaking, esports betting is similar to traditional sports betting in terms of the types of bets offered:

  • Match bets
  • In-play bets
  • Exotic wagers like parlays

In practice, esports betting is underdeveloped relative to the traditional sports betting product, a topic that we’ll get into further in the following section.

Esportsbooks vs traditional sports betting

While it’s true that esportsbooks and traditional sportsbooks share a fair amount of DNA at the core, the products as they currently stand converge more on some points than others.

A few of the fundamental similarities between esportsbook betting and traditional sports betting include:

  • Fan experience: The majority of people who bet on esports do so as an extension of their engagement with a given match, support for a particular team, or affinity with a certain player.
  • Core audience: The demographic of the esports betting cohort has a significant amount of overlap with the demographic of the sports betting cohort – and the two are arguably moving closer together with each passing year.
  • Underlying product: The fundamental platform required to deliver an esports bet is functionally identical to a sports betting platform (even if the inputs are not – more on that below).

Some of the core points of divergence include:

  • Pricing maturity: The traditional sports betting industry is light years ahead of the esportsbook product in terms of the ability to accurately price bets. There’s simply a lack of expertise and available traders.
  • Data availability: While data for live sports isn’t perfect, it’s again a world away from the data available for esports. That may seem counterintuitive given that esports take place in a digital environment, but the reality is that access to quality match data remains a significant hurdle for esportsbook activity.
  • Velocity: There are simply far more professional sports matches than professional esports matches, and more events to bet on within a typical pro sports match versus an esports match.
  • Limits: The betting limits at all major books that we’re aware of are substantially lower than the betting limits offered for sports like football and basketball.

Major players

  • Pinnacle: First major online sportsbook to embrace esports, and – by my estimate – the largest bookmaker for esports by handle.
  • Unikrn: New online bookmaker that focuses exclusively on esports. Arguably the highest-profile of all esports-first betting sites.
  • BetGenius: Data provider that offers an esports product to bookmakers and does work around match integrity.
  • Sportradar: Data provider that offers an esports product to bookmakers and does work around match integrity.

Read more about esportsbook betting here.

  • Sites
  • Bonus
  • Offers

Vertical: Fantasy esports

Fantasy esports is broadly similar to the fantasy sports product for traditional sports.

The dominant product within the vertical is daily fantasy esports.

How big is it?

Fantasy esports sites have been drawn into the larger legal and legislative dustup surrounding daily fantasy sports. As a result, the revenue potential of the product has been dampened; I estimate that there will be under $10mm in total handle for fantasy esports in 2016.

Major players

  • DraftKings
  • Esportspools

Read more about fantasy esports here.

Vertical: Head-to-head

This class of product shares a lot of similarities with “skill betting” products that allow players to enter competitive contests for money around games like online pool, chess, and so on.

How big is it?

The vertical is relatively new and highly fragmented. My working assumption is that the vertical collectively generates less than $25mm in handle annually. This estimate does not include the broader skill-betting vertical and only speaks to challenge sites focused primarily on major esports titles like League of Legends, Hearthstone, and so on.

The regulatory landscape for esports betting

With any new wagering product comes some degree of uncertainty regarding how regulators will respond. I believe that the broad similarities between esports betting and traditional sports wagering will likely lead regulators to approach the two products in similar ways.

But the all-digital context of esports and cultural pressure could each give regulators cause to consider developing a separate framework for esports betting. That process could suppress operator interest or produce an esports betting product with limited consumer appeal.

There is also the interesting question of whether gaming regulators will demand “under the hood” access to esports titles, in essence deciding that the product should be scrutinized as a slot machine or RNG-driven virtual sport would be.

If regulators make such a demand, the predictable response from game developers (a polite “no thank you”) could chill wagering supply. That approach may seem illogical (no similar inspection is required of the NFL). But the fact is that an RNG does dictate some of what occurs within many esports. That “some” may be minor in the bigger picture, but nonetheless provides a potential rationale for regulatory intrusion.

The issue has yet, to the best of my knowledge, to be raised in any European licensing jurisdictions.

Chris Grove
- Chris is the publisher of ESBR and a partner at NarusOps, a company that develops esports-related assets.