Earlier this month, Esports Entertainment Group (EEG) finally launched its online betting platform Vie.gg in New Jersey. EEG had fulfilled its five-day-long “soft play” phase, which it had been required to do by the state’s Division of Gaming Enforcement (DGE).
Bettors can now wager on authorized professional esports events, meaning competitions between video gamers. This gives EEG the bragging rights of being the state’s, and North America’s, first esports betting platform.
EEG CEO Grant Johnson gushed in a press release:
“As the first licensed esports-focused betting site in North America, we’re thrilled to fully launch the VIE.gg platform in New Jersey, one of the largest and most promising jurisdictions for sports wagering in the country.”
With a progressive approach to gaming regulation, New Jersey is the traditional jumping off point for new online gambling products in the US. That includes a booming online casino market, but also occasionally some more experimental products.
Billions and Billions
However, if there’s one area of the gambling world where its proponents have consistently overpromised and underdelivered, it would have to be esports betting. According to the latest data, there are over 3 billion gamers around the world. Popular games that would be considered esports include the likes of Call of Duty, Grand Theft Auto, Fortnite, Counter-Strike: Global Offensive, World of Warcraft, etc.
About half of these gamers live in Asia. Another 660 million are in Europe, and a comparatively paltry 261 million or so are in North America. According to a 2021 study by Statista, of those U.S. gamers, 20 percent are 18 and under, and 38 percent are 18-34.
That means many of these gamers can’t yet gamble legally in the US. However, the gambling industry surely sees huge future potential in those numbers. Last August, OPR writer Heather Fletcher pointed out the yet-to-be-realized potential of Gen Z. At the moment, Gen Z consists of those ages 9 to 24.
According to the National Council on Problem Gambling, older Zs already love to gamble. For instance, 40 percent play the lottery. But a coming exodus puts a damper on these upbeat stats. The median age of online gamblers is 34, and millennial gamblers were born between 1981 and 1996. Therefore, a sizable chunk of gamblers are about to age out. Even so, as we said in our previous coverage of esports betting, less than a year ago:
“Esports is a major phenomenon, but monetizing the craze has proven tricky.”
A Slow Burn, But Plenty of Fuel
“The industry is in its own way at this point.”
So says Reset Vegas owner Christopher LaPorte. LaPorte remains enthusiastically committed to eSports’ success, but wary of its more grandiose promises.
“Once the technology is fully refined, and once all the regulations are there—there’s a massive ceiling for this. We’re just very, very far from it.”
Even Johnson himself admits this is the case.
“It’s fair to say that there were a lot of over optimistic statements about eSports gambling.”
Even so, he believes that eSports gambling will one day rival sports betting. Like LaPorte, he says the road will be long, and Johnson puts a timeline to it:
“It’s going to be about 20 years.”
And it’ll have to start with the grassroots.
Esports Athletes + Time = Gamblers
Johnson cites the steady rise of esports among players.
“Five years ago, there were no esports programs at colleges and universities. Now there’s 200, and hundreds of full-ride scholarships and high school sports teams. So as those high school students get into college and get older—that’s where we’re really going to get traction and see growth. But it’s going to take time to get there. Is it there today? No, not by a longshot.”
Five years ago, as LaPorte says, people were touting esports as something that was going to be “bigger than the Super Bowl.”
Those predictions were in part because of all those numbers in Asia. Even though esports fans realized they represented only a fraction of Asia’s numbers, “you can’t put the toothpaste back in the tube,” as LaPorte puts it.
That’s especially true now that there’s a legit, legal online esports betting site. In time, such regulated options should replace the gray market sites, a process that’s already underway for sports betting and online casinos.
Hopefully, that will avert any future disasters like the 2016 fiasco surrounding Counter-Strike: Global Offensive (CS:GO). That’s when CS:GO and various sites allegedly allowed American minors to gamble away as much as $5 billion, using their parents’ credit cards. Calling it “bad optics” would be putting it mildly.
No matter. Johnson sees the silver lining in those grey-sites clouds.
“Those players are now four and five years older. They are now of legal age, and they already have a penchant for esports betting. So we know the market is there. Is there a mature eSports gambling scene in North America? Gambling scene? No. Betting scene? Yes.”
Soon, eSports bettors will have more and better options like Vie.gg. Johnson thinks bettors will have a clear preference for legal options, where they exist:
“They can choose to deal with regulated sites, where they know they’re protected for certain. . . . There hasn’t been a market-leading product like ours, that’s been tested through the regulatory framework, and that has a built-in handicap system.”
One of Johnson’s other beliefs? “There’s an established pent-up demand for a quality player-versus-player skill betting platform.”
‘I Don’t Get No Respect!’
With a share price that has remained below $1 since late February, EEG’s like the Rodney Dangerfield of eSports betting.
“There are other eSports betting companies that don’t even have a $7 share price,” says Johnson, “but don’t even own their own software. Obviously, we don’t have any respect in the marketplace.”
What EEG does have is respect from relevant regulatory bodies like New Jersey’s DGE. And they have credibility.
“Plus,” adds Johnson, “we now know what the process is and the other regulatory bodies will have a similar process if they want to go through it. So the next time will be much easier.”
That includes states like Ohio, where EEG hopes to next break online betting ground.
“We’ve had many, many conversations and in fact, presented in the Ohio’s legislature about getting esports into their regulatory framework. Ohio has very high interest with us and we have excellent partners there.”
EEG also wants to get out a licensed online esports book this year as well. It bought the peer-to-peer skill-based esports betting platform LANDuel, along with its parent company Helix eSports for $43 million in 2020. It will be undergoing a name change in the near future, according to Johnson:
“We’re probably going to rebrand that to be consistent with the rest of our company brands.”
On that front, LaPorte warns of past flops and ongoing failures.
“It’s all about consistency. That’s one of the pitfalls of esports.”
The cautionary tales he has in mind include things like: the Overwatch League collapse, the Vindex play for an eSports arena in Houston, and others. Despite his reservations about Vie.gg, however, he says it keeps the conversation going.
“We just need the conversation to continue. But these things aren’t gonna happen with a snap of the finger.”
Another Case of Overpromise/Underdeliver?
LaPorte then brings up EEG’s Atlantic City event, which will combine the March launch of their LANDuel platform and the first sanctioned skill-based wagering event in the U.S.
EEG hyped the event as a 256-player Madden NFL ’22 tournament, but in reality it drew a field of closer to 40. LaPorte describes it as “yet another instance of eSports overpromising and underdelivering.”
Johnson disagrees, and feels that the event was a success.
“We were very pleased how it was accepted by the players and fans,” he says. “Maybe for us more important were the casino operators who came. We had eight different land-based operators represented there. We gave them a presentation on what the player-versus-player product looks like and how it can work for them. I can say without exception, all the operators are very excited because for the first time one actually said, I’ve been watching these presentations for years now. And that’s the first time it’s made sense to me.”
It’s partly why Johnson expects to see profitability by the end of the year. Or very close.
“Which I don’t think too many online operators to make that statement.”
Esports Has Yet to Prove Its Legitimacy
“Esports is still just trying to validate itself here. As a legitimate, you know, opportunity in North American culture.”
Johnson remains confident as ever that this will happen.
“Vie.gg is not the end of the game. But what it does for the eSports market, it tells people there’s interested in the sector, both among investors and participants. And that we can hang with the big boys. Our software has passed muster with what is probably recognized as the gold standard in the online gaming industry.”