How gambling can be good for esports

This article is an opinion piece and does not necessarily reflect the views of the Daily Dot.

Disclaimer: Bryce Blum is the director of esports at Unikrn, a company seeking to increase esports engagement and viewership through wagering.

Wagering is coming to esports in a big way. You’ve probably seen the recent headlines surrounding Vulcun, Alpha-Draft, and Unikrn. Some see this as the beginning of the end. It’s not. Gambling will be a net boon for the esports industry.

The global sports betting market is worth up to $3 trillion. That’s more than the GDP of India, Russia, or Canada. What’s particularly scary about the scope of the industry is that it’s largely under-regulated. Globally, only 15 percent of the sports betting market is legal and visible to regulators. In the US, that number dips to just 3 percent. As a recent ESPN article on the subject noted, sports betting is a “mammoth market that is being capitalized on by organized crime and used as a vehicle to launder large sums of money.”

This is a scary situation for traditional sports, and it should be for esports too. Gambling creates incentives for match fixing and other risks to competitive integrity. Traditional sports have been marred by such scandals in the past, from the Black Sox throwing the 1919 World Series to more recent controversies throughout the world of European soccer. 

Unfortunately, esports fans have already experienced similar scandals to call their very own. Last year, for instance, the Daily Dot exposed a match fixing ring in the Counter-Strike: Global Offensive (CSGO) CEVO Professional Season 5. One of the best North American teams (iBUYPOWER) was dominated in the first round of the event, which many expected them to win—it was later determined they threw the match, with several players receiving proceeds from bets placed against iBUYPOWER through the wagering site CSGO Lounge.

It’d be easy to conclude that these circumstances suggest esports betting should be shunned. It shouldn’t be.

Gambling can make esports even bigger and better. The esports industry needs the courage to think about this problem differently. It needs to integrate wagering into the fabric of the community, regulate wagering activities, promote competitive integrity, and work collaboratively to combat any consequences that may arise.

Before we go any further, let me lay my biases on the table. I played professional poker before going to law school. I also currently work Unikrn, a company seeking to grow and legitimize esports wagering. I enjoy gambling, but I certainly understand all the harm it can cause, especially in terms of addiction. Even considering these risks, esports betting has the opportunity to be a net positive for the industry. That’s why I got into the business. In fact, I started writing this article before I began working for Unikrn. All the facts, figures, and analysis you’re about to read are what convinced me to work for the company—not the other way around. To put it another way: here’s what convinced me gambling could be good for the industry I care deeply about.

Why regulation is key

Whether you like it or not, esports gambling is only going to get bigger. This simple fact must frame the entire debate surrounding the role of wagering in the esports industry.

People enjoy wagering for a variety of reasons, and it flourishes even in markets where it’s illegal. Gambling is also part of the life blood in many cultures. The U.S. still outlaws sports betting, but throughout Europe, Australia, and many other parts of the world, sports bets can be placed on a smartphone or at kiosks in stadiums. There’s also a certain hypocrisy in a country that continues to see sports betting as a societal evil, yet has lotteries in 43 states, and allows commercial gambling in some form in 48 and racetrack betting in 40. Gambling is commonplace in the US, even if the legal framework surrounding it is inconsistent as a result of lobbying and other factors.

If we truly want to safeguard competitive integrity, the worst thing we can do is ignore the rise of esports wagering and allow an unregulated market to thrive. 

Enter Adam Silver, the current NBA commissioner, who has taken the public stance that sports betting needs to be legalized in the US and that leagues need to work with, rather than against, wagering companies in order to ensure the integrity of competitions. 

“One of my concerns is that I will be portrayed as pro sports betting,” Silver told ESPN in a recent interview. “But I view myself more as pro transparency. And someone who’s a realist in the business. The best way for the league to monitor our integrity is for that betting action to move toward legal betting organizations, where it can be tracked. That’s the pragmatic approach.”

Silver came to this conclusion in the wake of a 2007 FBI investigation which revealed that NBA referee Tim Donaghy influenced the outcome of games over the span of three seasons. As Silver reflects, “But for the FBI knocking on our door and notifying us about Donaghy’s betting, none of the systems that we then had in place had captured any betting by Tim Donaghy.”

What kinds of systems need to be put in place? An open line of communication between competition organizers and companies taking bets is a vital first step. The promotion of well-entrenched wagering platforms—companies with more at stake that have ample resources devoted to and experience in identifying outlier activities—is also crucial.

Returning for a moment to the Counter-Strike match fixing example I cited earlier, the betting was largely undertaken by one person (on behalf of the players that threw the match). Duc “cud” Pham placed 10 max bets on the underdog through his separate Steam accounts. This type of activity simply isn’t possible on a wagering site with extensive account verification and bet monitoring.

Other benefits

Recent research has actually established a link between sports betting and viewership numbers. But this science simply confirms what anyone who has ever placed a bet on a sporting event has long known: gambling makes you more likely to watch and be invested in the outcome of a game. 

In response to the NBA’s recent shift in its public stance on the subject, long-time owner and sports icon Mark Cuban bluntly summarized the value of sports betting: “We have always known betting, fantasy leagues and daily [fantasy] sports have driven interest and viewership. We did everything possible to encourage it while publicly condemning gambling. I’m glad Adam [Silver] is putting the hypocrisy behind us and putting it all up front.”

Executives throughout the sports industry agree on this point, and the emergence of fantasy sports has only served to bolster the common understanding within the industry. Gambling is great for engagement.

Esports wagering is no different. In fact, wagering offers a unique opportunity to push even more mainstream viewers to events. That type of engagement is good for everyone involved. It drives sponsorship dollars, which in turn should increase player salaries and competition prize pools. This money may not be the answer to all esports woes, but it’s a decent start.

Increasing salaries and prize pools will only serve to help solidify and expand the professional class of esports athletes. While some games—League of Legends and Counter-Strike come to mind—are there already, increasing the size of the sponsorship and viewer pie could be pivotal for less popular and newer esports seeking to support full-time employment for players, owners, and support staff. Spikes in salaries would also help more players obtain the type of individual representation that is sorely needed to help balance the power disparities that exist throughout the industry.

Managing the downsides

Gambling addiction is real, and a real problem. To a certain extent, embracing esports wagering comes with a human cost. The esports audience, meanwhile, is younger, more impressionable, and in many cases not legally permitted to gamble. These issues certainly weigh on me, as they should for anyone working in the industry.

That being said, the fear of mass addiction to esports betting isn’t particularly grounded in addiction statistics. Sports betting is actually an extremely uncommon cause of gambling addiction—according to a recent survey conducted by the National Council of Problem Gambling, less than 1 percent of callers to the Nevada Council on Problem Gambling Helpline identified sports betting as their most problematic form of gambling. This isn’t to diminish the impact addiction can have. It’s simply important perspective for the ongoing debate on the role of gambling in esports.

Perhaps more importantly, integrating wagering into the fabric of the industry creates real opportunities to combat potential negative consequences. According to a study conducted by the National Council of Problem Gambling, only 1 percent of compulsive gamblers enter state-funded treatment annually. This is particularly disheartening because that same line of research suggests that such treatments are actually enormously effective. Our focus needs to be on bolstering these efforts—we can actively promote responsible wagering, streamline opportunities for people who struggle with addiction to identify themselves, and link problem gamblers to available services. We also need strong protocols in place to prevent underage gamblers from having access to the system.

This is the approach Adam Silver plans to take. In a recent New York Times Op-Ed, Silver listed what a comprehensive, league-backed wagering platform should look like: “mandatory monitoring and reporting of unusual betting-line movements; a licensing protocol to ensure betting operators are legitimate; minimum-age verification measures; geo-blocking technology to ensure betting is available only where it is legal; mechanisms to identify and exclude people with gambling problems; and education about responsible gaming.”

Silver has this one spot on. Esports should adopt his forward-thinking stance and implement every bit of the comprehensive system he envisions. Gambling addiction will always be a problem. But such problems are more likely to flourish in an unregulated industry; wagering companies and competition organizers should work together to identify problem gamblers and get them treatment immediately. Underage gambling will won’t stop. But legitimizing and regulating wagering activities with strict age verification, is the best way to ferret out such behavior.

I’m not trying to encourage anyone to gamble. I just want to open people’s minds to the possibility that an esports gambling ecosystem is not the evil many envision it to be. I’d actually go even further: If esports wagering is appropriately integrated and regulated, it will be enormously beneficial for the industry I love.

By taking such a forward thinking approach, the esports industry can harness the strengths wagering brings to the table. At the same time, it can minimize the risks to competitive integrity and other potential harms that plague under-regulated traditional sports gambling markets.