Esports group pursues safe betting environment for gamblers

It’s a sure bet most of us never thought that gamblers could someday want to wager on how well we played video games like Pac-Man or Asteroids.

But as video games have become more sophisticated by introducing team play, the Nevada Gaming Control Board was directed by state lawmakers in Senate Bill 165 to take the next step of adding oversight and possible regulation to esports competitions that have grown into a multibillion-dollar global industry.

That’s the purpose of the eight-member Control Board-appointed Esports Technical Advisory Committee that met for the first time last week. Eliminating the prospect of cheating will be a high priority as the bid to take more bets moves forward.

Good start

Committee member Brett Abarbanel, director of research at UNLV’s International Gaming Institute, said esports are on a rapid growth trajectory, and noted viewpoints offered by panelists and four special presenters at the first meeting provide a great start to the process of managing and regulating wagering on games and tournaments. That, in time, should translate to an increase in gambling revenue for the state and greater tax revenue.

Esports experts believe the industry will draw 29.6 million gaming video content viewers in 2022 and 31.4 million in 2023.

Esports was a $1.084 billion industry in 2021 and is projected to reach $1.8 billion in 2022, according to Sam McMullen, a fifth-generation Nevadan who is founder and managing partner of Las Vegas-based FiveGen, a consultancy working to connect esports developers and vendors.

The highest levels of participation are from Asia, Europe and North America and competitions occur regularly online. In Las Vegas, the big centers of activity are at Luxor, home of the HyperX Esports Arena, and the Downtown Grand, operated by Fifth Street Gaming, whose CEO, Seth Schorr, has been a pioneer of the industry in Nevada and in 2016 co-founded the Nevada Esports Alliance. He’s also one of the committee members.

Schorr helped Nevada dip its toes in the waters of esports wagering when he received special permission from the Control Board to take bets on competitions in 2016.

Interest in esports betting was further spurred in the spring of 2020 when several conventional sports leagues were closed down by the COVID-19 pandemic. The Control Board approved betting on several events, including the 2020 DreamHack Masters Spring, the 2020 ESL One: Road to Rio and the 2020 Call of Duty League competitions.

Deputy Attorney General John Michela told committee members that esports originally was lumped into a category of “other events” that sportsbooks could take wagers on, but after former Gov. Brian Sandoval directed the Gaming Policy Committee to do a thorough analysis of esports in 2016 it led to the ability to take bets on competitions.

Pandemic spurred interest

McMullen said 92 percent of match-fixing is driven by betting fraud. From that perspective, oversight of esports is no different than monitoring cheating in traditional sports. One concern voiced by critics is that bets would be made on participants who are underaged.

One of the presenters, Ian Smith, a commissioner with the Esports Integrity Commission, discussed current integrity issues as well as esports integrity experiences of the past. He’s hopeful that Nevada will adopt some of the ESIC guidelines for detecting fraud.

But Jeff Cohen, vice president of strategy at Esports Entertainment Group, said that should be no different than bets on college sports.

“While it is true that professional (esports) teams will often have players under the age of 21, we do not see the distinction as to why esports would be dangerous when betting on March Madness or college football where almost all of the participants are underaged and do not receive the same scrutiny,” he said. “Additionally, while it is also true that the average age of an esports bettor skews about a decade younger than that of traditional sports bettors, our belief is that this makes it actually even more important to legalize and regulate it.”

That’s because much of the wagering on esports occurs offshore at illegal sportsbooks.

“Overall, we do not believe there is any greater level of integrity risks inherent in esports than are in more accepted sports, such as tennis, rugby, and soccer, all of which have had their fair share of controversy at various different levels of leagues,” Cohen said. “Additionally, as esports leagues have become more professionalized and player salaries and prestige have increased, we believe the incentives to throw matches has dramatically decreased.”

Match-fixing in esports

Discovering match-fixing in esports would be no different than uncovering point-shaving scandals.

Nevada sportsbooks often are credited with blowing the whistle on a point-shaving incident involving Arizona State University’s men’s basketball team in 1998. Books noticed an unusually high amount of money was being bet on underdog ASU opponents. Game-fixing gamblers and two ASU players were implicated and the gamblers were charged with crimes and imprisoned thanks to Nevada books alerting authorities.

Likewise, if large amounts of unexplainable money are bet on esports competitions, sportsbooks would be compelled to alert regulators.

Abarbanel is hoping to get even more perspectives on how to best regulate esports in future committee meetings.

That could include proposals for new regulations, possibly a registration system for all players, coaches, team owners and game officials and policies about punishment for players caught cheating.

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter.