Esports: Resilient to Crisis

Firstly, can you explain a bit about the evolution of esports betting? When did the vertical first come to your attention as a viable form of betting?

It was during the time when me and my brother studied in the UK. Our first idea was to develop an algorithm that would help League of Legends players make better decisions. But once we were able to quantify the state of the game, we realized the information is much more suitable for the betting market.

The esports betting market was, and to some extent still is, in its infancy stage. Many operators tried the same trading approach they use for football betting – and they got burned. The amount of data inputs used in esports is incomparable to traditional sports. There were some attempts to develop esports betting products, but the result was millions of euros gone, with no tangible result. That was only good for us, as it gave us the competitive advantage. Having a profitable product tested by the best names in the betting world is something special.

Have you seen consistent growth in the vertical?

Definitely! You can look at it from two perspectives. Esports as such – popularity is growing, fan base is growing, prize pools are growing. The ecosystem still has a lot of work to do, because only a few selected esports teams generate any profit. But the industry is growing rapidly by double digits every year.

The second perspective is the betting world. And what can be a better indicator of the growth than Betfair Exchange, where we worked in those years as market makers and liquidity providers? When we started, the monthly volumes were maybe thousands of euros. We are now in autumn 2020 and traded volumes on esports have already passed €100m ($118m) for this year.

The vertical is usually associated with a younger demographic. What do you think is needed to get older bettors interested in esports?

This is a very difficult question, and honestly, I would just not do it. Our approach is to always understand and fulfil customer needs. So instead of forcing esports on the older generation, why not offer compelling products for Generation Z?

The esports fan base is far from being satisfied with the current betting market and there is a lot of potential. So my advice would be to continue doing what works for your older customers and prepare great esports products for your younger generation.

One issue some bettors have with esports is whether it is possible to ensure integrity and combat match-fixing. How do you ensure integrity within esports betting?

This is a very important topic for us, because not only do we provide our odds feed to betting operators, we also trade on Betfair Exchange. So we have skin in the game so to say. If we miss any match-fixing issue, we can lose a lot of money. But the positive side is we have unique market insights, allowing us to spot any suspicious activities on the market. That way, we can protect ourselves and also our customers. There is also the Esports Integrity Commission, which is doing a very good job of investigating any and all match-fixing issues. As an extra precaution, we do not cover low-tier tournaments with prize pools below $10,000: quality over quantity.

Has the current pandemic impacted the trajectory of the esports vertical? Have you seen an increased popularity in your products during this time?

Yes, definitely. We are approached by two types of customers; either established operators trying to tap into the esports market by providing top betting offers, or companies starting with new esports-only betting websites. The first type of customer is looking for live-odds feeds and risk management, while the second type is interested in our Esports Betting Iframe. That is a betting platform where we utilized all our experience and designed it to fit exactly into esports fans’ needs. Operators can just connect it to the wallet and offer top-tier esports betting in a matter of weeks. Odds, streams, statistics, chat, everything done by us, so operators can focus on marketing and customer care. The feedback so far is great.

Do you expect the pandemic to have any long-term effect on esports?

The pandemic demonstrated one thing: esports is resilient to crisis. The speed in which all professional leagues transitioned to fully online mode was impressive. And right now we are in situations where many countries have a second wave of the COVID-19 pandemic. Will it influence traditional sports? We don’t know. But we know for sure esports will go forward. All the people who had doubts about esports, or didn’t know what esports was, now have a much better understanding.

During the pandemic we have seen a number of operators make use of celebrities and sports stars to increase the popularity of certain esports events. Do you think there is merit in this strategy?

I would even propose to be more courageous, and cooperate with streamers and esports players. They are the superstars of today, even though they are not as visible. But why? Because most of us consume content “the old way.” If you look at how Generation Z consumes content, it’s Twitch, Tik Tok, Instagram. The power behind influencers on these platforms is enormous. Why not use it? Esports players and streamers are much more relevant than any pop star or football player, except the really top ones. 

Finally, as we look towards the future of the vertical, what are your expectations for esports betting in the next five years?

We are currently working on a comprehensive esports betting market report that will cover exactly this topic. What I can tell you right now is that the growth will continue. In the next five years? My prediction is esports will surpass the betting volumes of  American football or cycling. The main focus will be on user experience. Betting will be different. Forget about complicated overviews of odds and handicaps. It will be super easy and it will be a natural part of the esports experience.

Do you think it can ever overtake traditional sports betting in its popularity ultimately, or is this unrealistic?

Never say never, but this seems like a far stretch. On the other hand, esports is on the way to be in the top five sports by betting volumes in the next four years and top three will definitely come as well. So this fact alone should be enough to get all operators interested. However, horse racing and football betting is still on top and will stay there for some time.

Carl Friedmann

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