Esports captures the zeitgeist of 2022. Sadly, its US online gambling industry pioneer will also come and go this year. Today, Vie.gg users found out that the legal gambling site will cease operations on Nov. 1.
The Esports Entertainment Group (EEG) site debuted in April in New Jersey. Not only was Vie.gg’s US debut, but the esports betting app was the only legal one of its kind in the country.
Now that other US online gambling operators are planning on launching legal US esports betting sites, Vie.gg is shutting down.
The Vie.gg notice says:
We have made the difficult decision to close Vie.gg. The site will remain open until November 1, 2022. Until then, you will be able to log in to close your account. Any accounts remaining open at that date will automatically be closed and any remaining balances of $1 or more will be returned by check, sent to the address registered on the applicable account.
The customer notice closes with a referral to customer support for additional questions, as well as “thank you for playing on our site.”
Investors seem to like the news. EEG’s stock, GMBL, closed up more than 2% today and an additional 1% in after-hours trading.
Esports May Need a New Classification
Not exactly US online casino gambling and not really online sports betting, esports is a way to gamble on video gaming. Usually, the wagers are associated with multiplayer games.
On Oct. 7, EEG CEO Grant Johnson told Bonus that he’s in favor of Senate Bill 2986, which the New Jersey Legislature introduced in September.
His Q&A with Bonus reads, in part:
What do you think of NJ’s proposed legislation making esports-only betting licenses possible?
I think it’s absolutely a step in the right direction, given esports wagering is still relatively nascent. It really needs to be dealt with differently than the mature sports betting licenses. One of the key issues, from an operator standpoint, will be cost associated with the license.
Most companies in the esport area are far smaller operators than the traditional sportsbook or casino brands.
Is separating esports better for you than its current sports categorization?
Absolutely, it’s a different product. It needs to be separated and also not associated with a skin.
Or if it is, they have to be radically less expensive.
Today, Johnson told Bonus:
[Regarding] NJ, it really is a bit of continuation from your initial story in that esports was categorized [the] same as sports. So the skin is seven figures a year, which is waay [sic] too much for esports in its current stage as an evolving vertical.
Had the market not turned so radically, we had anticipated raising capital and then adding a sportsbook. But by the time we were approved, clearly the world had changed.
We are restructuring to last through to more stable markets. [And] at this time NJ, Spain, and the UK are all jurisdictions that we don’t have the required capital to stay active in. So we are reducing our burn and putting some cash back in the bank.
These are stressful times and companies need to make difficult decisions. This falls into the difficult but necessary category.
EEG May Have Foreshadowed Vie.gg’s Fate
In EEG’s quarterly trading update on Oct. 13, the Malta-based esports betting and iGaming company talked about cost-saving measures.
After the EEG financial update that included this statement, GMBL stock prices shot up 11%:
The Company implemented a number of initiatives including a reduction of its workforce, the removal of duplicative functions, de-emphasizing parts of the business which do not support its long-term strategic plans, and implementing a more ROI-focused approach to marketing spend, among others. These changes have already resulted in a reduction of the monthly cash burn rate.
EEG didn’t mention Vie.gg in the trading update – at all.
In the earnings update, Johnson says:
We are pleased with the initial positive impact of our restructuring efforts and the progress we are making in our strategic pivot towards further leveraging our esports assets, including BETGROUND, our proprietary esports player-versus-player skill betting platform. However, there is still much work to be done and many challenges ahead to right-size the business, lower our cash burn and further reduce our debt and our reliance on capital raises.
So it seems as though BetGround will stay as Vie.gg goes. The update did note BetGround’s “inaugural launch” at the Hard Rock Hotel and Casino Atlantic City.
So EEG, and the online gambling industry as a whole, won’t be abandoning esports betting after Vie.gg says “game over.”