The struggles of esports betting: analysing the challenges

Jillian Dingwall January 21, 2025
The struggles of esports betting: analysing the challenges

In the middle of the last decade, esports rode naked into a vast sportsbook arena armed with nothing but a rusty sword. Competitive gaming was beginning to receive widespread recognition, and it was determined to earn its rightful place amongst the football and boxing heavyweights.

But, although esports has emerged as a pretty significant segment within the broader gambling industry, Vexio recently reported that it is struggling for acceptance among U.S. gamblers. True, it has faced unique challenges that have hindered its quest to level up to its more popular counterparts, but what’s behind it all?

A hero is born

Betting on competitive gaming began to take shape in the early 2000s when bets were initially limited to informal wagers among friends and small online communities. At the time, it was primarily focused on Counter-Strike and StarCraft, where fans bet on match outcomes using in-game items, a practice known as “skin betting”.

As esports exploded into mainstream recognition, it wasn’t long before the betting industry started paying attention to this potentially lucrative noob, and by the mid-2010s, major bookies began offering real-money betting on competitive video game events. Punters and gaming fans could now place wagers on match winners and tournament champions through fixed-odds betting. Hurrah!

Competitive video game wagering has seen substantial growth over the past few years. According to a report by PandaScore, the average amount wagered per bet in 2023 increased by 37% compared to the previous year, reaching €45.

Popular esports titles like Counter-Strike, Dota 2, and League of Legends dominate the market now, with new entrants like Valorant gaining traction. However, gaining acceptance among traditional gamblers remains a challenge, likely due to regulatory hurdles and a lack of familiarity among your more old-school bettors.

The challenges facing esports betting

Esports bettors differ significantly from traditional sports bettors. Demographically, the former tend to be younger (typically under 30), more tech-savvy and, let’s be honest, intimately comfortable with digital platforms. In terms of betting habits, they prefer live betting, with approximately 65% of bets placed on live events.

This contrasts with traditional sports bettors, who often place bets before the event starts. Lack of knowledge among the traditional sports gamblers is also a blocker, with many not ‘down with the kids’ when it comes to the esports community. I’m going to go out on a limb here and say it’s safe to assume that not many life-long horseracing punters would want to wager their hard-earned cash on a skibidi toilet gamertag, no matter what the odds. Whether this will change with the next generation, who have grown up more immersed in high-level gaming, remains to be seen. But it would be nice.

Brett Abarbanel, executive director of the International Gaming Institute at the University of Nevada, believes that although the demand for esports is evident in places, a lot of gamers aren’t familiar with the intricacies of a sportsbook, and so will gravitate towards more familiar platforms to place a bet.

“Where esports betting has been brought into the regulated market, it’s been brought in in a way that makes it look a lot like traditional sports betting,” Abarbanel said. “And that’s really not the way that esports fans and gamers have been engaging with it.

“Instead, they’re much more interested in engaging in digital spaces that don’t fit so clearly into existing regulations.

“So, the demographics that have an interest in esports betting, they’re getting gambling, they’re getting media, they’re getting entertainment as a whole elsewhere. They’re not really going to go to a normal betting site; they’re definitely not going to a physical sportsbook.”

The fragmented regulatory environment in esports is also hindering its progress. In the US, for example, esports betting is only permitted in 18 states, each with its own regulatory requirements. This has resulted in a headache of inconsistent legislation for any operators looking to offer esports betting nationally.

In addition, the legal age limit for betting is justifiably high in a gamer context. As the demographic of esports fans tends to be younger, a large portion of the market is already off the table. This, in turn, raises a whole load of questions about the risks of non-regulated, underage exposure to esports gambling.

The future of esports betting

Despite the challenges, it still looks promising, with several trends expected to shape the industry. As esports betting grows, more jurisdictions will likely implement robust regulatory frameworks to ensure fair play and consumer protection. Advances in AI and machine learning will enhance the betting experience by providing more accurate odds and personalised betting options.

However, that still leaves the issue of bringing completely different, gamer-friendly media platforms into the regulated market. Abarbanel added, “It’s not easy but that doesn’t mean we can’t do anything. We can’t just stick our heads in the sand and say, ‘I give up’. The biggest thing is we have to make sure we have education for not just regulators but also for the regulated industry.

“The big first step we can take is that regulated folk, and regulators themselves are aware of these spaces and think about incorporating them into the regulated space. And that doesn’t just mean legalising. Some regulators might ban it. That’s normal. Some might write regulations to allow it.

“The really big piece here is recognising this transformation of digital consumption.”

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