Unikrn CEO Rahul Sood explained:
“We are not only partnering up with BIG, we are actually investing in them! We want to create value for the team but at the same time we are completely hands-off when it comes to the daily operation or anything roster related. And we support them through financial backing and business development!”
— Unikrn (@UnikrnCo) January 12, 2017
The investment raises the prospect that Unikrn may be considering offering real money esports betting in Germany.
The BIG team roster includes well known German players who have already built a strong following in the country:
Fatih ‘gob b’ Dayik said:
“We are happy to partner up with Unikrn, who were really excited to become part of our new team and the BIG family. Unikrn strongly believes in our vision and wants to help us in the background, which allows us to concentrate more on our training and the upcoming tournaments.”
Currently Unikrn only offers real money esports betting in the UK and Australia. The rest of its business offers social sports betting globally using the Unikoins virtual currency.
In both cases, the license is through Luxbet, a subsidiary of Australian gambling operator Tabcorp. Unikrn struck a deal with Tabcorp in April 2015, in which Tabcorp provides the regulated real money platform for Unikrn’s esports betting activities.
Within the partnership, Unikrn provides “access to live viewing, live discussions and competitive odds to gaming fans globally, including in the US.”
The global growth in real money sports betting is a powerful motivator for Unikrn and Tabcorp to expand the reach of the esports platform. According to Eilers & Krejcik Gaming, real money esports betting could generate revenue in excess of $10 billion by 2020.
In Germany, the 16 states — known as Länder — largely determine the legal status of online gambling.
A regulatory framework which only permits sports betting via 20 license holders. The 16 state established that via an interstate treaty.
Unfortunately, the treaty has effectively collapsed after several federal German courts ruled it both unconstitutional and contrary to EU treaty law.
In effect, Germany is currently without any online gambling regulation, so entering the market requires no license or approval.
Attempts by the states to replace the existing treaty have so far failed for lack of political agreement. It may be five years before a new system covering multiple gambling activities is implemented.
This level of disarray doesn’t mean that there are no taxes to pay.
Sports betting is explicitly excluded from liability for VAT (the EU sales tax). However, other gambling is liable and overseas operators are required to pay the tax under the EU VAT Directive that came into force at the beginning of 2016.
Germany has a wealthy population of over 82 million people. Average GDP per head is around $41,000 — that’s about the same as New Mexico or Michigan. Germany is second only to the UK in its importance as a gambling market in the EU.
The lack of regulation, high propensity to gamble and high levels of disposable income are only one side of the market which might make it attractive for esports betting operators.
As a next step from its UK and Australian operations, Germany probably offers Unikrn the most attractive market opportunity.
Sponsoring BIG could well be a strategic move that will begin to give Unikrn increased brand recognition in the market, leading to a subsequent real money market entry.