Game on: Propelling esports betting to the next level

Some of the numbers attached to esports are truly mind-boggling. To give you a snapshot of the scale of this industry, its global audience is forecast to grow to more than 450 million in 2019, according to Newzoo, while the esports economy is poised to surpass $1bn in 2019 and could reach anywhere between $1.8bn and $3.2bn by 2022. An esports staple in the form of Riot Games’ League of Legends is played by some 100 million active users globally, while 16-year-old American Kyle “Bugha” Giersdorf recently pocketed a cool $3m after being crowned world champion of Fortnite, a game with 200 million registered players worldwide.

Without wishing to go overboard on the stats, it is no exaggeration to say that competitive gaming is an extremely big business. However, it is also still in its infancy when you consider how much growth potential and interest in gaming there is around the world, particularly in Asia. Today, esports is challenging and, in some cases, traditional sports in terms of viewership, with betting riding on the coattails of its success. “Esports is a huge market and it really is going to be massive,” says online gambling and esports consultant Paul Fitchford. “All of the upcoming gamblers, or the punters of the future in the next five years or so, are going to be esports fans – possibly more so than football [fans].”

Besides tuning in for the big live events, esports fans also visit the main platforms to watch streamers broadcasting their gameplay to audiences across the globe. The most famous pro gaming streamer is Tyler “Ninja” Blevins who had 14.7 million Twitch followers and an average of 50,000 viewers a week before his surprise move to Microsoft-owned Mixer this summer as part of an exclusive partnership. The 28-year-old American has also amassed over 22 million YouTube subscribers, so it’s fair to say he’s quite popular. With this dedicated following and an insatiable appetite to watch him and others play games like Fortnite and Apex Legends, it has given rise to betting on streamers.

Live the stream

This facet of esports betting is arguably one of the biggest innovations and growth areas right now. Seattle-based esports betting platform Unikrn recently launched its own streamer betting offering, christened simply as Unikrn Streamer. The technology leverages AI trading bots developed in-house, alongside computer vision technology, to capture what’s happening on the screen, and predictive analytics to generate live pricing in real time. By being fully automated, which removes the need for traders, this regulator-approved solution is fully scalable.

“The traders are actually AI trading bots and it creates live odds as you watch your favourite gamer play Fortnite, Apex Legends or PUBG,” explains CEO and co-founder Rahul Sood via a Skype video call. On the computer vision part of the operation, he says: “We capture what is happening on the screen and we aggregate the data that we are collecting. We analyse it and we have to apply some predictive analytics because it is a stream and there might be a slight delay between when the user sees it and when the stream is actually happening. We then create odds on events that are happening in the game.”

Rahul Sood, CEO, Unikrn

The five-year-old start-up isn’t alone, though; a number of other esports books, including Cyprus-registered GGBet, also offer streamer betting. However, Unikrn has taken it to the next level with AI trading bots and algorithmic technology. “I think the streamer betting as a proposition is really cool,” says Luke Cotton, COO at esports agency Code Red Sports and a former online gambling industry professional. “It’s something that is exciting and could, in theory, provide a pretty differentiated way of acquiring and retaining customers. I think it is genuine innovation and is something that people will want for the long term.”

To illustrate the popularity of watching people play online, at any one time there are 10,000 individual channels streaming content for Fortnite across all platforms. Amazon-owned Twitch is still the leading platform with around a 75% market share in terms of total livestreamed hours watched in Q2 2019, according to data by StreamElements and Arsenal.gg. Its nearest rival is YouTube Gaming with a 17.6% share. The Google-owned platform says 200 million logged-in DAUs watched more than 50 billion hours of gaming videos in 2018. The also-rans – at this stage – in the livestreaming sphere are Facebook Gaming and Mixer, with an estimated 7% share between them of livestreamed hours.

Filling in the gaps

Scheduled esports competitions run pretty much around the clock, 365 days a year. If you just take multi-player armed combat game CS:GO as an example, events take place around 44 weeks of the year. During this period, there’s an average of around 16 hours a day of matches to watch and bet on. Despite all this content, Unikrn also launched Unikrn Virtual alongside its streamer betting service earlier this year. Virtual lets players bet on a database of historical matches from CS:GO and Street Fighter V. The historical match information is randomised using Unikrn’s regulator approved RNG. So far, it’s proved to be popular with users.

“Our customers really like it because they are so into esports that they could sit there and watch it all day,” says Sood. “We have [scheduled esports] action 24 hours a day but the gaps are enough that having Virtual and Streamer is super helpful for us.”

Unikrn Virtual product fills natural lulls between scheduled esports competitions

Traditional bookmakers have been deploying virtual sports like horseracing and football for years as a way of providing customers with action to bet on 24/7. It’s also handy for filling in natural lulls between live sport or when there is scant opportunity for particular players to have a flutter on their preferred sports. As things stand, standard esports betting is Unikrn’s most popular product, yet Virtual is already a close second, followed by Streamer.

Esports platform GLHF.gg – a joint venture struck between Mr Green Group (55%) and Gamingzone Entertainment (45%) prior to William Hill’s £242m acquisition of Mr Green – has been working on its own streamer betting offering. Although GLHF.gg CEO Niklas Grawé is tight-lipped on the actual mechanics of the upcoming product, he sees real potential with the concept. “Looking at esports and gaming, I think the biggest part of this market in terms of eyeballs is on streamers. There’s a huge market and opportunity there if we succeed in engaging them. Users are used to donating money to the streamers, so why not gamify that experience either with a micro type of betting or in some other way.”

Free and easy

In the Nordics alone, GLHF.gg’s main target region, the platform claims there are 650,000 daily followers spending an average of 100 minutes a day watching competitive gaming. Gaming Innovation Group-powered GLHF.gg, which beta launched in June and has 15 staff dotted across Stockholm, Berlin and Sofia, already has around 40,000 users per month and is monetising almost 5% of these users. As well as the free-to-use site, or “engagement platform” as Grawé describes it, there is Malta-licensed betGLHF.gg where real-money markets are posted for all the popular games and their competitions.

In Grawé’s opinion, the F2P option is essential in communicating with and acquiring hard-to-reach esports enthusiasts. Yet, while users can earn GLHF Gold through challenges, raffles and match predictions to spend in its online store on real gaming gear, skins and esports experience, converting these fans into esports bettors isn’t the core aim. “Essentially, we have a two-product strategy. The free-to-use [product] is supposed to stand on its own two legs, so it’s not like we see it just being a funnel into other sites at all. We see it growing into its own engagement platform over time where people can do cool stuff with teams, partners and streamers.”

GLHF.gg’s Niklas Grawé believes betting will become a much more integrated part of the viewing experience

Indeed, innovation around F2P products and the whole gamification element is going to continue to be important for esports betting platforms. It’s similar to how many of the major traditional bookmakers offer their own F2P games as a marketing tool and a means of acquiring new users and cross-selling them into betting. A prime example is Sky Bet’s Super 6 football scores prediction game which garners over one million users some Saturdays. So, in the same way the major esports titles (with the main exception being PUBG) harness F2P as a way of hooking players in, the betting industry could look to replicate this micro-transactional business model.

Fitchford witnessed the viral success of Super 6 first-hand during his spell at Sky Betting & Gaming before departing to co-found Tournament.gg, a white label F2P esports solution. “Esports is very free-to-play-driven,” the 34-year-old says. “It doesn’t translate terribly well with traditional marketing. You can’t go onto Google and bid for an esports gambler. That’s not the way that they’re going to find your brand. I personally think the way to really communicate with this market and the demographic is to give them something for free – you need to capture them in a different way.” He adds: “Valve games, so Counter Strike and DotA, have a Pick’em system where you predict the winners of each game and that naturally filters down the brackets until you end up with the final two. That’s huge.”

Breaking the mould  

As betting becomes a more accepted part of esports, it’s not beyond the realms of possibility that it will become more integrated into live streams. In a similar way to how Twitch experimented with on-screen game predictions via its interactive overlays and panels (Extensions) when screening NFL games, one could imagine this being applied to esports betting. In turn, the lines between esports, F2P games and betting could become increasingly blurred. Grawé says: “One of the problems when people talk about betting is that you see a sportsbook or a casino in front of you. I think one of the innovative changes that will come is that betting will no longer be what betting is today but will be a lot more of an integrated part of the experience.”

Because these are digital games, obviously there are a dizzying array of indisputable data being collected on matches that could be served up as betting markets and overlaid on streams. Indeed, Sood has stated in the past that the amount of betting markets that can be created for an esports match is far higher than traditional sports. These derivative markets could go even further than what’s on offer. For example, it could be odds on how many headshots with a certain weapon during a CS:GO match or how many times Street Fighter’s Ryu executes his trademark flying uppercut during a three-round bout.

All this data seems set to drive pre-match and live esports betting in the future. “There is just so much data being collected on esports,” Sood says. Fitchford concurs: “The data that’s available for esports is just getting better and better. Absolutely everything is tracked, like how many people are killed with a certain gun or how many times this spell is used. You could automate so many markets [so] it’s all fed automatically and there is very little trading happening.”

Insert coin

Such is Fitchford’s belief in esports’ potential, he is confident it will eventually be accepted into the Olympics and that within the next three to five years it will be a tier-one gambling sport. As well as dedicated sites like GGBet, Luckbox, Unikrn and LeoVegas-owned Pixel.bet, you can find esports betting these days at most online bookmakers. Pinnacle, the low-margin, high-volume bookmaker based in Curaçao, accepted its first esports bet way back in 2010. Betting limits at the time were €100, but triple-digit YoY growth in the vertical since then means that limits are now €10,000 for regular esports competitions and as high as €250,000 for the big events.

While traditional sportsbooks like Pinnacle, Betway and Parimatch are ahead of the curve when it comes to their involvement with esports and esports betting, other operators could be accused of merely paying lip service to it. “I think most major operators see esports as a nice thing to have,” says Fitchford. “It sits there and it probably makes a few quid. You might make a few hundred grand over the course of Wimbledon, but Wimbledon is once a year, whereas esports could be making you 10 grand a day. The schedule is that jam packed,” he states emphatically.

These are still early days, though. “You have to remember that esports betting is still pretty nascent,” Sood says. That said, Unikrn’s AI-powered Streamer, Virtual and Umode (users bet on their in-game performance against the house) hint at the future directions esports betting could take. Indeed, streamer betting generally could disrupt this sector when you consider a total of 3.7 billion hours of live gaming video was watched across Twitch, YouTube, Facebook Gaming and Mixer in Q2 2019. “People tend to say that when esports hits TV it becomes mainstream,” says Sood as he dismantles a common misconception. “But the reality is TV is not mainstream. In the future it is going to be streaming online and TV less relevant. TV needs esports more than esports needs TV,” he concluded.