eSports can trace its roots back to groups of friends hosting LAN parties and playing video games into the late hours of the night. But today, it has become a full-fledged industry, an official network of professional gaming tournaments and leagues.
The eSports market is currently valued at approximately $900 million, and that number will only grow in the coming years. With every passing tournament, the prizes get richer and the views increase.
And when there's money to be made, bettors will follow.
The industry is growing so quickly and so much money is pouring in from players, viewers, and sponsors that eSports betting and eSports gambling are becoming viable markets in their own right.
Betting on eSports began in earnest with the game Counter-Strike: Global Offensive through a process called "skin betting" or "skin gambling." In August 2013, an update to the PC version of CS:GO introduced cosmetic items called "skins" that changed the appearance of players' weapons.
But it soon became clear that these simple changes would create an underground economy.
Skin Betting in CSGO & DOTA 2
Skins can be earned through gameplay in CS:GO, but players can also use real money to purchase them. Players can also trade and sell their skins, which creates a market in which rarer skins demand higher prices.
This spawned numerous websites where players can gamble with their skins for the opportunity to win more valuable ones.
But players who win skins on these sites could sell them for real-world money, which has drawn criticism from those who say this qualifies as unlicensed gambling. In 2016, sites such as CSGO Lotto, CSGO Lounge, and CSGO Diamonds dealt with a lawsuit filed by a player against the owners of the gambling sites and Valve Corporation, which produced and developed CS:GO. The suit claimed that Valve was "complicit in creating, sustaining and facilitating [a] market" that permitted players (including underage players) to skin bet in the game.
Valve responded in mid-2016 by issuing cease-and-desists to numerous gambling websites that used Steam and by making clear that the company has no affiliation with such sites.
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And CS:GO isn't the only game to feature skin betting. Valve's wildly popular multiplayer online battle arena game Dota 2 uses skins in much the same way, and players can bet and trade on the same sites as for CS:GO.
eSports Going Mainstream
As the popularity of games such as CS:GO and Dota 2 grew, more money poured into the industry, which created more opportunities for betting and gambling to rise. This is unsurprising considering the amount of money on the line in the top eSports tournaments.
The latest prize pool for the League of Legends 2017 Season World Championship was $4,596,591. For the 2018 Call of Duty World League Championships, the prize will be $1.5 million. The International 2017 for Dota 2 broke the record for the largest prize pool in eSports history at $24,787,916. In fact, every International since 2014 has accomplished that feat.
And as with any popular sport, the mainstream exposure has caused the money to follow. Bettors and gamblers are setting up shop to try to reap the rewards of this new economy.
eSports Betting & Gambling on the Rise
Anyone who has any experience with the betting and gambling side of American football knows two of the biggest activities surrounding the sport are fantasy football and betting on the outcomes of the games. And eSports has now grown to the point that these forms of gambling are infiltrating the video game sector.
Numerous betting sites have popped up that allow spectators to bet on eSports events and tournaments in the same way they would a football, basketball, baseball, or hockey game. Gamblers can view odds and place bets through bookies on CS:GO, Dota 2, League of Legends, and other matches.
Beyond that, fantasy eSports is becoming more prominent. Participants form leagues, draft teams of eSports players, and earn points based on how those players perform during games, similar to fantasy football.
More to Learn
eSports betting and gambling is lucrative, and brings in a whole new class of investors into eSports. But this is just one aspect of this booming industry. That's why Insider Intelligence, Business Insider's premium research service, has put together a comprehensive guide on the future of professional gaming called The eSports Ecosystem.
Click here to purchase the full report
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