Q&A: Pinnacle Sports on eSports

eSports betting has exploded into the mainstream consciousness over the past year, with lengthy articles published on Bloomberg and ESPN.com examining the booming industry.

Bloomberg’s headline shouted that the rise of eSports itself was fuelled by $2.3bn in online bets every year, while the ESPN article proclaimed that Las Vegas was embracing eSports betting as a potential way to appeal to younger generation.

What is clear is that eSports bettors represent a completely different demographic from traditional sports bettors and operators scrambling to expand their offering have to think carefully about the way they market their product.

With this in mind, EGR spoke to Pinnacle Sports customer engagement manager Mirio Mella to find out how bookmakers can appeal to this unique demographic.

EGR: There’s been a raft of mainstream media coverage of e-gaming and e-gamers in recent months – is the volume of betting on eSports growing with its general popularity?

Mirio Mella (MM): It is important to get away from thinking of all eSports as the same thing, but using the umbrella designation, it is our fastest growing sport judged by volume and player numbers. It also remains our seventh biggest sport, in terms of volume (based on 2015 numbers), which is remarkable for a sport that six years ago didn’t exist for us.

Our Head of Trading, Marco Blume, spoke on an eSports panel at ICE earlier this year where he predicted that within a decade it could be as popular as betting on soccer. In order, volume by specific eSport looks like this: Dota2; StarCraft 2; Counter Strike Global Offensive ; League of Legends & Hearthstone.

EGR: Are people who bet on eSports likely to only bet on eSports? Do they also bet on sports?

MM: eSports bettors are far less likely to come from a betting background; the traditional sports betting customer and an eSports betting customer have very different profiles. Our eSports Hub offers a separate destination and experience, and has content to help explain how betting works.

This isn’t to say our eSports bettors aren’t savvy. To handle increasing demand we have recently increased the number of eSports Traders to the point where it has become our biggest trading team.

At present our eSports bettors are fairly domain specific i.e. specialising within one eSport. In time this is likely to change, if only because in general as bettors becomes more sophisticated the context becomes less significant than the search for value, wherever that can be found.

EGR: Are bettors generally well-informed – is margin quite low?

MM: There are certainly customers who keep us on our toes. Because aspects of the industry are still immature – specifically availability of reliable data – eSports is more challenging to trade than any other sport. In this sense eSports customers can actually be more informed than we are, but as our trading model is the same as for all sports, we welcome these winners and use their behaviour to shape our lines.

Our lead eSports trader, Jonathan ”DarKFoRcE” Belke, is an ex-pro gamer as well as a former customer that was particularly successful. Luckily we were able to convince him to jump to this side of the fence. In terms of margins, as in general, we are the most competitive for eSports. On average our margins are just under 5% compared to an industry average of around 10%.

EGR: What are your limits? Are stakes generally quite low?

MM: Our limits are generally small by comparison to our main sports but outstrip the competition. For the recent Dota 2 Major Championship our limits started at $2,000 for the initial rounds, rising to $50k in the Final; for less high profile events we generally offer handicaps/match winner as standard at $2,000. For last year’s International we really pushed the envelope with limits at $100k for the final.

As mentioned before, eSports bettors are domain specific, by which I mean they are most likely to bet on one type of eSport. Their background is unlikely to be within betting, but their interests in a sense are similar to mainstream bettors.

One thing we quickly noticed when we offered eSports was that our customers were eager for more diversity and depth of offering. eSports, as an umbrella term, blends what are very distinct interests, so we quickly widened our offerings. By 2015 we had offered betting for over 400 different competitions, Counter Strike was the most recent addition in July 2014.

In the world of traditional sports betting, live betting is the most dominant market, and in this respect eSports seems to be no different. In response to customer demand, we have a regular and growing schedule of live eSports betting, which, as with other sports, is hugely popular, but exceptionally challenging from a trading perspective.

EGR: Given the relative ease of fixing a game, are there more concerns than other betting products?

MM: As a bookmaker it is not our place to make a judgement on this. From our perspective we apply the same level of scrutiny to protect our customers whether offering betting on eSports, soccer, handball or any other market. If we didn’t feel confident of offering fair markets, we would stop offering that sport/event.

eSports is growing at a phenomenal rate, but it faces some challenges in terms of cohesive governance. We have relationships with several sports’ governing bodies so wherever that authority within eSports lies, Pinnacle Sports is willing to develop a relationship.

EGR: Do you expect the sector to continue to grow? More markets, more volume etc.?

MM: eSports has been doubling in volume every year since we first starting offering it in 2010, this despite our competitors belatedly coming on the scene. We don’t envisage this changing. We are investing in eSports through our trading capacity and customer experience.

Our head of trading predicts that by 2017 eSports could eclipse a top-tier sport like ice hockey in terms of volume, which would be another watershed moment for what is an enduring phenomenon.

We thought surpassing 1 million eSports bets in December 2014 was a milestone – having offered our first bet in January 2010 – but we are now approaching the 2.5 million mark, so may need to reassess what we consider as significant.

Though our business is in essence to make forecasts, what we have learned from trading eSports is that it defies prediction.