The future of gambling? Video games

The video gaming industry is expected to grow by 30 percent from $15bn in 2014 to $19.6bn by 2019 in the US alone, according to forecasts by financial services giant PWC.

A growing number of websites let gamers put their money where their mouths are, allowing them to bet real cash in video game challenges and tournaments.

“Critics argue this is simply a strategy to soften people up and get them into gambling with real money”

Across the world, e-sports have become increasingly popular as a test of strategy, reflexes and team work. Online gaming is very competitive and there are various websites that hold tournaments and head-to-head matches offering cash rewards.

The success of the gaming market has made gambling companies sit up and take notice. Websites have been set up where punters can bet on online games. The most popular and advanced site to provide this service so far is www.esportgaming.com

It is a community-based betting platform that allows you to bet on teams and players 24/7 based on the games available.

Strategy

Currently the most popular games are Dota 2, League of Legends and Counterstrike. This system uses parimutuel odds which is different to losing to the house or betting against the site.

The site uses a zero-sum system where the losers always pay the winners and there is no motive for the site to ensure a certain amount of losers. It takes between 2.5% and 9% commission.

This website also offers non-cash betting for those that want to bet for fun – critics argue this is simply a strategy to soften people up and get them into gambling with real money.

Many gamblers are unaware that sites such as Skybet, bet365, Betfair also have e-sports categories. Most of these have been around for less than two years and offer only a ‘team to win’ option.

With the betting site acting as an intermediary, organising the tournaments and collecting buy-ins, you will never have to worry about the logistics. There are strict rules in place to prevent players from being cheated.

Partnership

Websites such as Gfinity and WorldGaming.com are hosts of huge tournaments and challenges for competitive gamers. WorldGaming was formerly known as Virgin gaming is probably the biggest out there.

“E-sports are at the stage where they now needs to be regulated by gambling commissions”

It has launched a new platform focused on gaming and tournaments that incorporates streaming, live events and a hub for gaming enthusiasts. Its partnership with EA Sports has helped it grow rapidly.

Right now it seems that more players are gambling with virtual money mainly because of age restrictions. Fifa and Call of Duty are two of the top games that are used to compete across the PlayStation and Xbox console systems, and we are now seeing betting markets where you can bet on yourself to beat a certain player or bet on real-life football games with virtual money.

Fifa 16 has a game mode called Ultimate Team where you play matches to earn coins to spend on creating the best side possible. Due to its success, a website called futgalaxy.com has created an online gaming platform that is set up to provide a different way of spending coins.

Earning coins

You can use ‘winnings’ to bet on real-life matches, open packs or enter the Futgalaxy jackpot.

There are live odds on the website and you can choose how many coins you want to bet on that game. For example, MK Dons to beat Chelsea in the FA Cup fourth round was 5/1, so putting 200,000 coins on them to win would earn you 1,000,000 coins if successful. You can then use it for Ultimate Team on your console.

Michael Collins, a frequent gamer and e-sports gambler, uses Futgalaxy to increase the coins he has for Ultimate Team. “It’s so easy to add small amounts of money to turn into coins so that you can bet to double or triple the amount you have so you can get the best players in game.

“Using Fifa coins is such a cool way of betting on real-life matches. Once you have the coins you can then buy a player and trade it in game for more money, but bets on Futgalaxy have not always worked out in my favour.”

Young influencers

Various Fifa YouTube stars have promoted this website at the start of their videos or have made videos of themselves using it. For example, Nepenthez, a Fifa YouTuber with 1.2 million subscribers, made a video on how the site works, how to place bets and withdraw money.

Similarly to esportgaming.com this website doesn’t have real money betting markets but it is a way for underage people to get into gambling.

According to the Ipsos Young Persons Omnibus Survey 2015, 11% of children had played gambling style games at some point, the majority via mobile apps.

Another similar website to this is the social-betting start-up BetGame who won William Hill’s accelerator programme scheme. It is an app that lets two people place a bet on the result of a console of PC video game like Fifa.

BetGame works by overlaying its app on mainstream console and PC games to monitor the outcome and determine the winner. It also integrates with live-streaming gaming service Twitch, which attracts 100m visitors per month.

Social betting could be a route into markets where gambling is restricted but available to all ages because winning is all down to how skilled you are at the game.

For ideas like this to work they need to think of different ways to sell stuff in the form of media partnerships and signing up influential YouTubers.

The majority of audiences that watch YouTubers are 21 and under, meaning that William Hill will be partnering a company who are promoting gambling to young people, potentially attracting negative publicity.

There is growing concern, though, that teenagers are being attracted to different forms of betting facilitated by third-party providers.

Gambling experts and counsellors are warning that betting in the gaming industry especially is a potential stepping stone in betting for under-18s.

However, this is new territory for many, with Catherine Sweet from gamcare.co.uk admitting: “It is not something we have recorded data on via our helpline to date, so we have very little information on this category of gambling.”

Supply chain

Sarah Harrison, chief executive at the Gambling Commission, said: “We will continue to monitor developments in this area, and it should come as no surprise that our approach to e-sports will be similar to that regarding other sports betting market products.”

According to bloomberg.com, UK bookmaker William Hill has taken 14,000 bets on games as of September 2015, of about £250,000 ($395,000) in total. Four times that much will likely be bet this year.

At the Malta i-Gaming Seminar in November 2015, Marco Blume, head of sportsbook at Pinnacle Sports, stated that e-sports have grown exponentially in the last three years. Regarding betting turnover, it is now the 7^th most bet on ‘sport’ at Pinnacle.

The combination of competitive head-to-head video gaming and online gambling looks to be a lucrative combination for betting companies. E-sports are at the stage where they now needs to be regulated by gambling commissions.