When the United States Supreme Court ruled to lift the federal ban on sports betting in the US, it opened the floodgates of business opportunities not only for sports in America and the rest of the world, but in esports as well. However, banking on such ventures might not be the safest bet.
“In the last few hours, our dream became real, and our company just became substantially more valuable,” read the title of a blog post by Rahul Sood, CEO of Unikrn, an esports betting platform.
Sood’s post succinctly describes the reactions of companies and startups that just found a market ripe for the taking. Electronic Sports and Gaming Law founder Bryce Blum noted the ruling’s impact on the esports gambling industry, which raked in $5 billion in 2017. As the ruling in favor of legalized gambling is put into effect, it only signals surging revenues for the industry in the years to come.
The Supreme Court just struck down the primary law restricting sports betting throughout the US.
This will have a profound impact on the esports industry and we’re so underprepared for it. ~$5B wagered on esports last year – about to skyrocket.
— Bryce Blum (@esportslaw) May 14, 2018
But while legalized gambling gives esports even more room to grow, it also leaves space for more elephants to come in.
Match fixing or ‘throwing’ has long been a problem in esports. A larger gambling industry only gives players more incentive to bet against themselves and intentionally lose a match for some quick bucks.
One of the earliest match-fixing scandals in esports erupted in 2010, with South Korean Starcraft II players throwing matches for financial gain. One of the game’s biggest stars at the time, Lee “Life” Seung-hyun, was among those embroiled in the scandal, and he was convicted and banned for life from participating in esports in South Korea.
Another big scandal came about in 2013, when Russian Dota 2 player Alexei “Solo” Berezin was caught for betting fraud and banned for life from Starladder, a mainstay professional league in the CIS region. The incident even gave birth to a meme when the Dota 2 community found out that Solo won $322 dollars for betting against his own team, with ‘322’ becoming a frequently-used phrase used to mock bad plays and implying an intent to throw games.
Such incidents illustrate a slippery slope that comes along with legalized esports gambling. Life’s case was uncovered by a police investigation, rather than an active effort by esports to ensure clean play. Solo’s lifetime ban from Starladder was later relegated to only one year, and he now plays for one of the top teams in Dota 2.
There is no overarching regulatory board for gambling in esports, game publishers, leagues, and teams are left to their own devices when it came to dealing with instances of match-fixing. There have been precedents, such as when Valve imposed lifetime bans on 21 Dota 2 players from Peru, Vietnam, the Philippines, and Malaysia from participating in Valve competitions due to match-fixing scandals.
Valve also had its fair share of dealing with another gambling scandal in its other esports title, Counter-Strike: Global Offensive (CS:GO). CS:GO’s infamous ‘skins’ economy, where players used cosmetic modifications for the game’s weaponry or ‘skins’ for betting and gambling.
While the economy proved to be lucrative for many at first, things came to a head when skins began to be valued at thousands of dollars that even younger players were being exploited to spend their parents money just to buy overpriced skins. Soon enough, Valve was forced to shut down the game’s major gambling and betting platforms and reopen them under new brands and a stricter legal policy.
While these past scandals may do little to dissuade the esports industry from the lucrative beckoning of legalized gambling, it would do well to approach it with caution.
Whether the industry as a whole would choose to regulate the inevitable esports gambling frenzy or not, more and more people will still walk away with more money in their pockets. Legalized gambling will guarantee more revenue and exposure for the industry, for better or for worse.
But whatever the case may be, the esports industry would do well to not think of embracing legalized gambling as a safe bet.