Rivalry (RVLY) is an online esports betting-forward brand that also offers sportsbook and casino gambling. Because of that esports-first mindset, Rivalry Co-founder and CEO Steven Salz told Bonus his company is waiting to see how state laws evolve before it considers offering its products in the US.
One reason for that may be that, at the moment, there are no esports-specific laws in the US. Each state also determines individually whether it will allow sportsbooks to offer bets on the outcomes of video gaming tournaments. Also, operators are taxed at the same rate whether gamblers are placing esports or sports bets. The most recent example of that principle is the Kentucky sports betting marketplace that launched last month.
Rivalry’s reservations may not be uncommon. Unikrn was considering a US entry, but the standalone esports betting platform owned by Entain (Entain PLC 669,60 +6,29%) announced today it would shut down even its existing operations in Brazil, Canada, and Chile.
Unikrn will later be offered through Entain’s sportsbook brands. In the US, one of those Entain brands is BetMGM Sportsbook, which is jointly owned by Entain and MGM Resorts International (MGM Resorts International 32,85 -0,85%).
UPDATE: 12/18/2023
On Dec. 18, New Jersey lawmakers advanced a bill that would create “additional Esports-only permits for sports wagering.”
SB2986 has already passed in the Assembly. It’s on its second reading in the Senate and moved to the Senate Budget and Appropriations Committee on Dec. 18.
At the moment, the proposed legislation doesn’t appear to change the tax rate for esports betting operators. Those operators are taxed at the same rate as sportsbooks.
Rivalry Talks Esports Betting
Regardless, Salz told Bonus on Tuesday that Rivalry will continue leaning into its esports expertise.
That’s especially relevant now, considering the five-week-long League of Legends World Championship (Worlds) kicked off in South Korea on the same day he spoke to Bonus. The company’s new ad campaign is centered on Worlds, with ex-professional Brazilian esports player and influencer Gustavo “Baiano” Gomes at its core.
The campaign’s theme is Baiano searching for ways to help LOUD, the Brazilian esports team, do well at Worlds.
Its commercial appears at first to be showing Baiano making a Faustian bargain. However, viewers soon realize the “half-human-half-goat” the social media influencer visits represents Rivalry.
The Rivalry mascot gives Baiano voodoo dolls of individuals from competing teams.
Rivalry explained the campaign to Bonus today:
The campaign will see Baiano and Rivalry use various forms of dark magic on the effigies throughout the tournament on social media to “influence” match results and tap into Brazilian fans and their religious-like passion for national teams. Rivalry performed its first curse on Monday on GAM Esports ahead of their match against LOUD, resulting in a 2-0 win for the latter team.
The campaign is the latest example of Rivalry’s ability to creatively leverage internet influencers to insert its brand into tentpole esports events and build rapport among next-generation fans.
Rivalry hopes the ad push will help it surpass last year’s Worlds earnings when esports bettors generated 40% of the company’s total sportsbook handle during the period from Sept. 29 to Nov. 5.
That figure isn’t surprising, as Worlds is a big deal to more entities than Rivalry.
As an illustration, The Verge reported on Sept. 26 that miniskirt-wearing K-pop band NewJeans wrote a new song for Worlds. Indeed, this year’s anthem for the championship is a four-minute-long track called “Gods.” Posted on YouTube on Oct. 4, the “Gods” song set to an anime had 20,104,782 views and 691,000 likes as of today.
Meanwhile, here’s that curse Rivalry and Baiano placed on GAM Esports of Vietnam on Monday. As of today, it’s been viewed nearly 180,000 times.
It translates as, “Are you able to sleep, GAM Levi?” seven times, then “… you’ll wake up tired!”
TÁ CONSEGUINDO DORMIR GAM LEVI? 😈
TÁ CONSEGUINDO DORMIR GAM LEVI? 😈
TÁ CONSEGUINDO DORMIR GAM LEVI? 😈
TÁ CONSEGUINDO DORMIR GAM LEVI? 😈
TÁ CONSEGUINDO DORMIR GAM LEVI? 😈
TÁ CONSEGUINDO DORMIR GAM LEVI? 😈
TÁ CONSEGUINDO DORMIR GAM LEVI? 😈ADO, A-ADO, VAI ACORDAR CANSADO! pic.twitter.com/RLsF3YTWGy
— Rivalry LoL (@Rivalrylolbr) October 9, 2023
Baiano reposted a post from the Brazilian esports team today that says “the queue is short to enter our store”:
tá pequena a fila p entrar na nossa loja pic.twitter.com/nOscpLRByK
— LOUD 🇧🇷 (@LOUDgg) October 12, 2023
The Worlds Beyond ‘Worlds’
The esports betting Super Bowl comes in two parts.
First is Worlds.
Next up is Dota 2‘s event, The International, taking place from Oct. 27 to 29 in Seattle.
However, because the esports betting Super Bowl doesn’t last all year, Rivalry offers diverse products.
For example, the company announced Rivalry Slots on Tuesday. The branded online casino games will supplement its 24 other online slot options to be introduced to Ontario gamblers “in the coming weeks.”
The Q2 2023 earnings report released on Aug. 29 shows:
Casino has helped offset historical esports seasonality slowdown in Q2, contributing toward revenue diversity and growth, adding $57.5 million in handle during the second quarter.
Rivalry’s total Q2 2023 revenue of $8.5 million represented a 60% increase over Q2 2022.
Also during that earnings call, Salz told investors:
On the marketing side, Rivalry’s social media presence and content strategy continues to be central to engaging our digitally native target customers and grew steadily throughout the quarter. In Q2 we saw an average 25% sequential increase in followers across all our channels and a 180% increase in engagement year over year. By all metrics, Rivalry’s brand engagement as measured by its social and content reach is, by orders of magnitude, the largest brand in the esports betting category globally and in many cases has the most engaged social property in our markets for any betting brand, period. This is a testament to not only our deep Gen Z and young millennial demographic understanding in the betting category, but the consumer product category as a whole.
Steven Salz Talks to Bonus
The questions from Bonus are in bold.
Salz’s answers follow, verbatim. He talks to Bonus about his Isle of Man-licensed, Toronto-headquartered brand’s current strategy.
With team members in more than 20 countries, Rivalry is applying for licensure beyond its Australian bookmaker and Ontario iGaming agreements.
Do you plan to enter the US online gambling market?
While we currently don’t have near-term intentions of entering into the US market, we are keen to see how regulation continues to develop across the states. We also have been approached for B2B-related opportunities for some of our original products. So that is another angle we are evaluating constantly.
Apart from the US being home to many esports fans, the nation has an audience that appreciates high-end, premium products like those we offer on Rivalry and is a good culture fit generally for our brand and the specific audience we’re targeting: internet-smart Millennials and Gen Z who grew up playing video games and engaging with online content.
We’ll continue to monitor how the US industry develops and weigh our opportunities there, but for now, we’re prioritizing different markets where we’re seeing greater traction and return.
Would you enter the US iGaming market with esports first? Why?
Whether we were theoretically entering the US or another market, we will always lead with an esports-facing product and brand.
While Rivalry has been able to show that esports can generate a meaningful amount of action, the bigger opportunity that we see is in the demographic itself. Approximately 95% of Millennials and Gen Z play video games in some capacity,— to which betting on esports can serve as a powerful top-of-funnel into a portion of this emerging demographic.
But it can’t end there. This is a customer cohort deeply accustomed to interactive and engaging products, and they are well-connected to internet culture and online trends. It’s not enough to just offer esports betting to customers — the entire experience across the product suite, marketing, and brand needs to be connected and relevant to the gaming consumer to engage them.
Anything less creates a disconnect between the user experience and the brand, which ends up being a bottleneck to the business. When there’s continuity, however, you’re able to build on a unique experience that you’ve created for users and have a clearer understanding internally of how you then move forward with your products, design, and marketing in a way that’s cohesive and digestible for customers.
It’s this understanding and execution that has allowed Rivalry to drive high-growth acquisition of this coveted audience, where 97% of our active users are Millennials and Gen Z.
Is your audience the same for esports, sports, and casino betting?
When you distill Rivalry down what we’re doing, the company is about defining what the future of betting entertainment looks and feels like for Millennials and Gen Z.
We are building for this emerging demographic first and foremost, and everything trickles down from there into our product philosophy, design thesis, and offerings. To that end, there’s minimal differences in how we need to approach marketing because the products are all designed from scratch in a way that’s meant to engage this audience while fitting into our overarching brand proposition organically.
The strategy is to create premium and elevated betting products vs. the spreadsheet-like and transactional experience that users can easily find elsewhere. This is why customers come to Rivalry, and we’ve been successful in tastefully injecting entertainment into the betting experience throughout our sportsbook product, casino with Casino.exe, and most recently, by developing our second-ever original game, Cash & Dash.
In a way, having a differentiated and fundamentally entertaining product ends up marketing itself through word-of-mouth, allowing Rivalry’s business to achieve growth based on quality and merit rather than inducements.
Do esports and sportsbook betting have a similar audience?
It varies but there’s certainly some overlap in the audiences and their interests. There are sports fans that watch esports and vice-versa.
One of the competitive advantages of leading with esports is that you are able to acquire the latter customer which has gone primarily uncontested in the sports betting space, offering a more desirable CPA. The esports fan also behaves differently than mature sports bettors. They are more casual bettors, wagering smaller amounts and eager to participate in the enhanced viewing experience vs. bonus and margin hunters.
Generally speaking, the casual bettor is often looking more for brand convenience. By that measure, we can meet the needs of an esports fan that also likes to bet on traditional sports because we offer both products as opposed to users switching between multiple apps and having their money tied up in different places.
There’s a lot of value in targeting specific communities and we expect that more operators will consider pursuing similarly nuanced strategies in the future for this reason.
Do esports and sportsbook betting have similar marketing strategies?
Yes and no.
Oftentimes, the marketing practices are similar but the mediums and channels are different.
Legacy sportsbooks are opting for traditional sports team sponsorships and brand signage at stadiums; whereas esports-focused bookmakers are pointed more at digital and streaming.
It’s all about meeting your customers where they are and communicating to them in relevant ways. For Rivalry, that means working with gaming creators on Twitch and developing well-produced content or finding creative ways to insert our brand into their favorite forms of entertainment and add value to it.
Among the demographic that we’re targeting, we find that entertaining and creative content goes a lot further in building brand equity than giving out free money to bet with.
Do the same marketing approaches reach esports audiences?
Most sportsbooks are all-in on traditional sports and deploying related marketing to their core customers.
There’s likely to be some overlap between traditional sports fans and gaming consumers, but at the end of the day, if your product doesn’t cater to that audience there’s no tangible benefit to be gained in that scenario.
One of the advantages Rivalry has is that our core customer and who we’re trying to engage is crystal clear. Our product, marketing, and brand can all be tailored for a targeted audience and their specific interests, whereas legacy sportsbooks are pursuing a much broader customer cohort.
From a brand perspective, the latter causes most legacy sports betting brands to look and feel homogeneous while we’ve been able to demonstrate that dialing in on a specific community with relevant marketing and entertainment generates immense business value.
Is esports doomed to be in sportsbooks with esports betting lines?
The real issue is that most operators will put the esports betting segment against traditional sports and be disappointed by the disparity in market size. But again, to do so is overlooking the larger opportunity that can be gained by participating in it.
Sportsbooks are competing against each other with virtually the same products and offers – at the end of the day, what’s really separating one from the next? Not only does esports provide that unique edge, but it unlocks a much bigger demographic of players that can then be cross-sold into traditional sports and casino.
As long as operators continue looking at esports as a percentage of the online sports betting industry and nothing else the segment will likely remain unappetizing for most. Over time, and especially as markets mature and the rush to acquire customers settles down, we expect the segment will start to see more traction as sportsbooks look to differentiate their products from competitors.
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