Esports Betting: Inside The Esports Gambling Market

Learn more about esports betting with our comprehensive guide to the intersection of esports and wagering below.

ESPORTS GAMBLING RESEARCH

Esports And Gambling: Where’s The Action?
Casino Attitudes Toward Esports
Skin Gambling 101

ESPORTS BETTING SITES

Below are select reviews of major bookmakers that offer esports markets:

Bet365 esports betting
Betspawn esports betting
Rivalry esports betting
betway esports betting
Pinnacle esports betting
Unibet esports betting

THE BASICS OF ESPORTS BETTING

Skin betting

Skin betting – also referred to as item betting – is more of a genre of gambling products as opposed to a unique product.

Our research suggests that skin betting is far and away the most popular way for esports enthusiasts to bet, but the murky nature of the industry complicates precise analysis of market size – and also raises questions regarding the long-term viability of the industry.

What it is

Following that swap – skins as the underlying currency instead of cash – skin betting is broadly indistinguishable from traditional gambling. Players bet skins on things like:

Esports matches
Coin flip games
Lotteries
Casino games like blackjack and roulette

How big is it?

There is low visibility into the skin betting vertical.

That reality complicates a precise analysis. But based on my research for Narus Advisors / Eilers & Krejcik Gaming (involving a mix of acquired data, channel checks, and a healthy amount of speculative modeling), I feel confident making the following observations:

Skin betting is far and away the most popular way to bet within the esports community.
The total handle across all skin betting sites – based – was on pace to exceed $7bn in 2016 prior to Valve’s crackdown.

Why it works

A few key attributes of skin betting help to explain its popularity:

Low friction: For the typical gamer, signing up for a skin betting site and placing a bet is a matter of a handful of clicks. The games are quick and generally have no learning curve.
Abstraction: The use of skins instead of cash is akin to the replacement of cash with chips in the casino, creating a level of abstraction that likely increases the typical willingness to wager.
Compelling value proposition: Many players might regard unused skins as having lower value than they actually do, and the chance to parlay those items into the acquisition of new (often random) assortments of skins can similarly be overvalued. That creates the perception of a value gap that allows players to justify wagering when they know it’s a long term losing bet (e.g., a lottery with a rake).
Low barrier to entry: Skin betting sites are often hyper-simple games, making it low-cost for a new operator to enter the market.
Highly social product: Videos of skin betting – especially massive wins – are popular on platforms like YouTube and Twitch.

Potential challenges

While the growth of skin betting has been impressive, there are material questions surrounding the near-term future for the industry.

Lack of regulation: The skin betting space is effectively unregulated. Such spaces have typically run into significant issues with fraud, or run afoul of key stakeholders (media, lawmakers, etc).
Legal ambiguity: The question of the legality of skin betting remains an open one. The example of daily fantasy sports is instructive when considering possible trajectories for a wagering product that attempts to operate outside of the legal / regulatory framework for gambling in the United States.
Saturation: There are dozens and dozens of operators, a landscape that is splitting revenue and liquidity. Compressing revenue and liquidity would likely result in a whole greater than the sum, especially for jackpot products.
Lack of product innovation: The simplicity of the product may well be an asset.
Lack of supporting structure: The small-scale nature of many skin betting sites also means that ancillary functions – marketing, affiliate programs, customer service, and so on – are undeveloped, a reality that may depress consumer interest.
Dependence on Valve: The entire product is built on the back of the Steam marketplace.

Skin betting – also referred to as item betting – is more of a genre of gambling products as opposed to a unique product.

What it is

Following that swap – skins as the underlying currency instead of cash – skin betting is broadly indistinguishable from traditional gambling. Players bet skins on things like:

Esports matches
Coin flip games
Lotteries
Casino games like blackjack and roulette

How big is it?

There is low visibility into the skin betting vertical.

Skin betting is far and away the most popular way to bet within the esports community.
The total handle across all skin betting sites – based – was on pace to exceed $7bn in 2016 prior to Valve’s crackdown.

Why it works

A few key attributes of skin betting help to explain its popularity:

Low friction: For the typical gamer, signing up for a skin betting site and placing a bet is a matter of a handful of clicks. The games are quick and generally have no learning curve.
Abstraction: The use of skins instead of cash is akin to the replacement of cash with chips in the casino, creating a level of abstraction that likely increases the typical willingness to wager.
Compelling value proposition: Many players might regard unused skins as having lower value than they actually do, and the chance to parlay those items into the acquisition of new (often random) assortments of skins can similarly be overvalued. That creates the perception of a value gap that allows players to justify wagering when they know it’s a long term losing bet (e.g., a lottery with a rake).
Low barrier to entry: Skin betting sites are often hyper-simple games, making it low-cost for a new operator to enter the market.
Highly social product: Videos of skin betting – especially massive wins – are popular on platforms like YouTube and Twitch. Streams of skin betting sessions are a common sight, and streaming platforms are often a significant source of traffic for skin betting sites.

Potential challenges

While the growth of skin betting has been impressive, there are material questions surrounding the near-term future for the industry.

Lack of regulation: The skin betting space is effectively unregulated. Such spaces have typically run into significant issues with fraud, or run afoul of key stakeholders (media, lawmakers, etc).
Legal ambiguity: The question of the legality of skin betting remains an open one.
Saturation: There are dozens and dozens of operators, a landscape that is splitting revenue and liquidity. Compressing revenue and liquidity would likely result in a whole greater than the sum, especially for jackpot products.
Lack of product innovation: The simplicity of the product may well be an asset.
Lack of supporting structure: The small-scale nature of many skin betting sites also means that ancillary functions – marketing, affiliate programs, customer service, and so on – are undeveloped, a reality that may depress consumer interest.
Dependence on Valve: The entire product is built on the back of the Steam marketplace.

Esportsbook betting

Esportsbook betting sits somewhere between fantasy esports and skin betting in terms of size and prominence in the market, but arguably has the greatest upside in the medium-term of any wagering product focused in or around esports.

What it is

Simply put, esportsbook betting is the traditional sports betting model applied to esports.

How big is it?

Our current estimates call for roughly $649mm in total handle for esportsbook betting in 2016.

Adoption of esports among major regulated online bookmakers has been rapid and comprehensive.

Why it works

I expect rapid growth for esportsbook betting to kick in as we approach 2020. There’s an extensive case behind that assertion, but the key points look like this:

Just another sport: Once the challenges of data and pricing are solved (more on those below), there’s little that sportsbooks will have to do on the platform side to embrace esports. The vast majority of systems and structures that underpin the multi-billion dollar sports betting industry will cross-apply relatively neatly to esports.
Attractive audience: The core esports enthusiast is an attractive customer for the typical sportsbook: Younger (think late twenties to early thirties) with disposable income (gaming is far from a cheap hobby) and a proven propensity to gamble. The appeal of that audience will likely drive sportsbooks to invest heavily in esportsbook product and marketing in an attempt to beat the competition in the race for a much-desired demographic.
Cross-sell potential: While it’s still early days, my conversations with traditional online gambling sites that are offering esports indicate that there’s a greater cross-sell potential to stick-and-ball sports betting and casino play than one might imagine. That may be a fluke or a function of early adopters, but if the trend holds and esports customer prove to be not only potentially valuable customers at some point in the future, but actually valuable customers in the near-term, we will see a massive push across several operators to establish a prominent place position in the vertical.

Potential challenges

The data problem: The lack of availability of reliable, robust data from esports matches across a wide swath of titles is definitely dampening the potential of esportsbook betting. Companies such as Sportradar and BetGenius have recently rolled out partial solutions on the data side, but the industry will need these solutions to evolve and expand in order for the full potential of esports betting to be realized.
Pricing is a challenge: While some sharp bettors can beat pricing on traditional sports like football and baseball, the skill of correctly pricing a wide range of bets for such sports is a relatively established one (and one that is frequently packaged as a data stream of pre-priced bets that operators can simply pipe into their platform). But the same cannot be said for esports betting, where there simply isn’t a deep pool of available talent for pricing even the simplest bets (e.g., match outcomes)
Developer ambivalence: The relationship between gambling and game developers is a complicated one. It’s also a dynamic relationship that continues to evolve on a week-to-week basis.

Fantasy esports

Fantasy esports – often abbreviated as DFeS – is one of the smaller branches of the esports betting industry.

While ad hoc and free-to-play versions of fantasy esports have been available for quite some time, the ascendance of fantasy esports kicked off in early 2015 as the genre rode the wave of interest and enthusiasm around daily fantasy sports.

What it is

Fantasy esports is broadly similar to traditional fantasy sports.

Participants create a lineup of esports pros competing in a given event or slate of events (salary cap model is most prevalent) and then that virtual lineup receives points based on how the real-world pros perform. The lineup that scores the highest wins the fantasy competition.

Fantasy esports – often abbreviated as DFeS – is one of the smaller branches of the esports betting industry.

How big is it?

Relatively small, at least when compared to skin betting or cash betting on esports. Right now there are a handful of primary sites for fantasy esports play:

DraftKings (offers esports alongside traditional sports)
EsportsPools (fantasy esports and additional games)

The two initial leaders in the vertical – AlphaDraft and Vulcun – both shuttered in 2016.

The stakes involved tend to be lower than on traditional DFS site like FanDuel.

Why it works

While the genre is relatively small, I believe there is a long-term place for fantasy esports betting in the broader esports betting landscape:

Engagement: Fantasy esports is a unique product that speaks to an audience looking for greater involvement than a simple sports bet can offer. Fantasy esports competitions give players a chance to dive into deep analysis (although such analysis is certainly also possible with sports betting) and to engage with their favorite players on a unique level.
Player vs player: Fantasy sports is peer-to-peer wagering, while other popular forms of esports betting are typically player-vs-house.
Safe entry point: Fantasy sports are a familiar, innocuous template that may serve as a palatable entry point for developers and brands that want to engage fans via wagering, but who are concerned about the cultural associations surrounding sports betting.
Deep data: esports is a data-driven product, and fantasy sports products tend to thrive in contexts with robust data availability.

Potential challenges

The size of the place that fantasy esports occupies in the landscape for esports betting could vary based on a number of factors:

Legal challenges: Daily fantasy sports is facing numerous challenges in a variety of states.
Liquidity challenges: While big prize pools aren’t the only thing that drives a product like fantasy esports, they certainly help.
Lack of competition: As mentioned above, there are only a handful of sites offering fantasy esports.

Understanding common esports betting odds and how they work

Esports betting is one of the fastest-emerging betting markets in the world today.

There is a growing global market for esports and as these games and the individuals that play them gain more fame across the globe, so the market for betting on the outcome of the top esports matchups also grows in size and scope.

For someone who perhaps took their first steps into the realm of online betting by wagering on sports, it can seem a large shift in culture to effectively be betting on the outcome of a computer game between two individuals or teams of competitors.

In truth though, the difference when it comes to betting on esports compared to sports is generally very small (we’ll get more into the divergent points below) and is no different to the distinctions you would find betting on football versus baseball.

Some bets are universal to esports betting and sports betting, while some bets are entirely contextual based on the game itself.

One of the most common bets you can find on esports betting, as well as sports betting, are money line bets.

So how can you read money line bets and how do they work when it comes to esports? Let’s take a closer look and find out.

How to read money lines

A money line bet is simply a wager on which of the two teams competing in the esports event will win. The shorter the esports betting odds of a team, the greater their chances of winning (in the bookmakers’ view), while the longer the odds of a team, the less chance they have of achieving victory.

So for example, if Samsung Galaxy are 7/4 to win their match against Rox Tigers who are 2/5, Rox Tigers are the clear favourites to win.

Do all esports betting sites offer the same lines?

The first thing to note here is that esports betting is still very much an emerging market and as such, many esportsbooks are offering an increasingly wide number of bets as they become more familiar with betting on these events.

The most common bets are available across almost every esport, including money line betting outlined above. However when you get down to more the context-specific bets that relate to a particular esport or tournament, then the bets offered from esportsbooks do vary considerably.

What you will tend to find is that specialist esports betting sites will likely offer a wider choice of markets and lines than non-specialist, however there are an increasing number of sites (such as Pinnacle, Betway and SkyBet) who are offering an extensive range of esports betting lines as the specialist esports betting sites.

Why does it matter which sportsbook I use to place a bet?

This means that for a wise punter, odds and value will be foremost when looking for a bet to place.

You want a sports book that offers not just an extensive esports service, but one that also has a proven tradition of offering good value odds most of the time.

In the long run, that will save you a lot of searching around looking for the best odds on a bet.

If you are not going to bet with a specialist esports betting provider, then the amount of esports betting offered by more general sports books does vary considerably from one site to the next.

Some sites only offer a very small esports betting service; others offer a service comparable to the specialist sites.

Finally, if you are going to be placing in play bets on esports, then you need to ensure your chosen site offers this service. Once again, this is not available across all esports betting providers at the moment, so it pays to do a little research to ensure these bets are available if you want to bet in play.

Other kinds of esports bets to place besides money line bets

The good news for esports betting fans is that the range of esports bets you can now place in addition to money line bets is increasing and that more sports books are carrying a greater range of esports bets than ever before.

Many of the bets you can place are dependent upon the particular tournament and esports in question as they are context-specific, but in addition to money line bets, you should be able to find the following type of bets readily available across most esports betting providers:

Match winner (2-way)
Match result (for esports events where drawn matches are possible)
Round winner/map winner bets (including bets on which team will win each individual round/map)
Correct score (where different scores are possible)
Over/under bets
First team to bets
Total maps played in a match (over/under bet usually)
Tournament winner bets/group winner bets
In play betting

As we have said previously however, the esports betting industry is still very much at a nascent stage. The likelihood is that there will soon be many more different types of esports bets regularly available across a wider range of tournaments over the next couple of years or so.

How does esports betting compare to regular sports betting?

Few betting markets have undergone such a rapid expansion as esports betting. Just a couple of years ago, this form of betting was almost unheard of.

Since then, the explosive popularity of competitive gaming and the accompanying development of a burgeoning betting scene alongside it has seen an increasing number of sports books offering esports betting to customers.

However, on the face of it, esports are radically different to a typical sports betting market.

What exactly am I betting on when I place an esports bet?

When you place a bet on a sports event, you know that you are placing a bet on a professional or semi-professional event that is subject to stringent criteria about participation. As such, you can be confident that the persons or teams competing are doing so entirely focused on achieving a win.

The biggest mistake a punter can make about esports betting is to assume that betting on esports is different.

For example, the 2016 World Championship Snooker tournament in Sheffield had a total prize pool of £1.5m. Compare this to the Dota 2 tournament The International 2016, which boasted a prize pool of more than $20 million.

To summarise, when you bet on an esports market with a top bookmaker, you are betting on the highest level gamer, many of them professional, in the top tournament events around the world that have the same strict rules and regulations regarding competition as any sporting event.

How do betting markets on esports compare to regular sports?

When you compare the range of bets available on esports to those offered on a mainstream sport, one thing is key and that is context. However, that is true when you compare one sport to another sport in terms of betting markets.

Context is key for esports as the bets available differ from one esport to the next because each game is different to the next. Nonetheless, there are a number of common bets which are available across almost all esports (and also on sports betting).

What other markets are available on esports are generally context specific, as they are for other sports bets.

Does placing an esport bet differ from placing a regular sports bet?

In addition, specialist esports betting sites like Pinnacle and Unikrn also offer more extensive in play betting.

Once again, you place bets in play on esports in exactly the same way as you would on any other sport.

How do the odds compare?

As you would expect, the odds on offer for esports betting are pretty much exactly the same as you would find for comparable sports betting bets. For example, if you have an American football game between the Denver Broncos – current Superbowl champions – and the Tennessee Titans, the worst team in the NFL last season, then you would expect the Broncos to be hot favourites.

In esports, it is exactly the same. If one team is markedly stronger than its opponent, then you will have comparable odds on that team winning as you would a mainstream sports team doing so.

BACKGROUND ON ESPORTS AND BETTING SITES

What’s in a name?

Alternative markets, however, like handicapped lines, correct score markets and proposition bets are much harder to find.

Growing pains on the horizon?

Another controversy from around the same time involved so-called “map glitching” by the team Fnatic at the Dreamhack Counter-Strike tournament.

It’s this latter sort of scandal that has the most potential to cause problems for sportsbooks and bettors.

Digital enhancements to gambling

There’s therefore no need for cameras or, indeed, much infrastructure at all.

That would seem to offer a lot of potential for integrated platforms for both online betting and spectating.

The digital nature of the games also creates ample opportunity for the collection of statistics, and gamblers love statistics. That, in turn, makes betting on it a more analytical, less feel-based endeavor.

Weak links in need of strengthening

The future of esports betting, then, depends a lot on how developers and leagues feel about it.

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