Is Esports Betting Finally Gaining A Foothold In The US?

Over the past five years, few products have been hyped to the level of esports betting. Every conference delves into the topic, and esports betting is continuously brought up as an emerging or future vertical whenever sports betting is discussed.

While popular in other parts of the world, in the US, esports betting is the epitome of overpromising and underdelivering. But could that be changing? Is esports betting about to catch on in the US?

To be clear, betting on esports is far from a novel idea, but as an emerging vertical in the US, it appears to have a maturation timeline similar to Baby Yoda. In the US, esports betting has fallen flat, and that has pushed it to the backburner, with most operators ignoring the vertical.

That said, there are a couple of reasons to be optimistic:

1. The COVID-19 pandemic forced gaming operators out of their comfort zone and beyond their bread and butter products.
2. The spread of legal sports betting in the US has opened new opportunities for esports betting in new jurisdictions.

This column will take a deep dive into each of these factors.

COVID-19 Pushes the Gambling Industry Into the 21^st Century

Coronavirus exposed the need for two things:

1. Internet gambling.
2. Betting options beyond the major sports leagues.

A string of good news on the coronavirus front points to a possible return to normal happening sooner rather than later. However, the pandemic’s impact will reverberate for years, and its memory is unlikely to disappear overnight.

In the US, the gaming industry was particularly hard hit. Unlike Europe, where online gambling is readily available, US gaming markets rely on land-based casinos and retail betting outlets. COVID-19 demonstrated the folly in the US aversion to modernizing gambling.

There are already signs that the industry is looking to shore up the weaknesses exposed by the COVID-19 pandemic. From lottery to casino to poker to sports betting, online products are all hot topics heading into the 2021 legislative sessions.

But online sports betting will only be useful if sports can avoid a shutdown. That may have seen impossible 12 months ago, but 2020 proved it could happen. The unprecedented shutdown of major sports leagues in 20202 caused sports betting operators to get creative with their offerings. Some turned to sports likely to be found on The Ocho, while others turned to emergent products like esports.

Regulators could very well look to non-sports events like esports to keep gambling tax revenue flowing into state coffers in the off-chance of another shutdown. Furthermore, gaming operators have also learned the lessons of 2020 and are starting to future-proof their businesses. That is already occurring with the rollout of cashless gaming.

Legal Sports Betting Brings Esports Along for the Ride

Esports betting is authorized in eight states, as well as the District of Columbia.

However, each locale has restrictions on esports betting, with most requiring regulatory approval or sanctioned events, as well as some states expressly prohibiting betting on events where participants are under 18 – a not uncommon occurrence in esports.

Here is the list of states where esports betting has been approved, with restrictions:

1. Colorado
2. District of Columbia
3. Nevada
4. New Jersey
5. Oregon
6. Tennessee
7. Virginia
8. Washington
9. West Virginia

Most states with legal sports betting do not expressly mention esports betting. That puts esports betting’s fate in the hands of regulators. The exception is Indiana, which prohibits esports betting.

Four other states currently disallow esports betting:

1. Iowa
2. Mississippi
3. New York
4. Pennsylvania

And esports betting is still in limbo in the remainder of sports betting states:

1. Arkansas
2. Delaware
3. Illinois
4. Michigan
5. Montana
6. New Hampshire
7. New Mexico
8. North Carolina
9. Rhode Island

As noted above, COVID-19 could expedite regulators’ decisions on esports.

Of course, the popularity of esports betting in the US is still an open question, particularly if it’s offered alongside traditional sports betting.

Sorry Esports, the US Isn’t That into You

From Downtown Grand to Luxor, casinos have jumped on the esports bandwagon, with limited success.

Several networks have also jumped into esports, including TBS and ESPN. There is no shortage of data indicating huge audiences for esports, but the results have been disappointing by network standards.

An exception was the esports racing events held by NASCAR during the quarantine. These events were nearly as popular as standard NASCAR races. However, the sim races were quite different from the typical esports event and competed against zero other professional sports.

Latest esports TV Ratings:@iRacing @NASCAR @fox @fs1 = 1,240,000 (#2 All Time, 20%+ Week Increase)@IndyCar @NBCSN = 169,000@EAMaddenNFL ESPN2 = 140,000@RLEsports ESPN2 = 95,000 pic.twitter.com/kAeUSB0MRi

— Manny Anekal (@mannyanekal) April 28, 2020

Many esports enthusiasts have cautioned the industry that you can’t force-feed esports to its audience. That esports requires a level of authenticity. Short of another sports shutdown, it’s hard to see networks and US audiences shifting to esports in large numbers. As such, authentically supplying esports in the US is still a riddle wrapped in a mystery inside an enigma.