Video Games

E-sports betting to become a boon for gambling industry

Betting on computer game competitions, or e-sports, is set to generate significant revenues for gambling operators, according to industry experts.

E-sports itself is already a huge industry. The sector generated global revenue of $325 million in 2015 from media rights, merchandising, ticket sales and advertising, according to market researchers Newzoo.

And as the sport continues to grow in popularity, attention is turning towards betting on the outcomes of competitions.

The big business of Esports

Fans are projected to bet around $23.5 billion on e-sports by 2020, according to market research by Eilers. From this betting pool, operators would generate $1.8 billion in revenue.

Online betting company Bwin has already noticed the increasing popularity of e-sports betting.

In March, the company reported, that based on the pace of turnover for e-sports betting, it is expected more bets would be made on an upcoming tournament for the video game "League of Legends" than on who would win this year's European football Champions League.

"E-sports has matured over the past few years to the point that it is now on par with some of the leading major sports in terms of viewership, following and interest," said Alex Igelman, managing director of Gaming Research Partners, in a report.

"Many of the world's leading bookmakers regularly take bets on numerous eSports matches and although in its infancy, the betting volume already exceeds that of golf, tennis and rugby and is rapidly growing," he added."

However, there are several obstacles before operators can capitalise on this new area of gaming and gambling.

"At present, some of the key markets for e-sports are Asia and North America (U.S.) – two regions that have prohibitive regulation on betting and from which many firms will not take bets/customers," explained Lorien Pilling, research director of Global Betting and Gaming Consultants, to CNBC via email.

Pilling was also skeptical of horseracing and sports bettors would convert to betting on e-sports, meaning operators would have to advertise to a completely different audience.

"Sportsbooks will need to engender a betting interest in e-sports' core audience, which is perhaps not immediately identifiable as a sports betting one," he explained. "But attracting a new audience is no bad thing for a sportsbook."

eSports is coming to primetime

More importantly, e-sports may struggle to expand beyond its core audience of video game fans.

"The key issue with broadening e-Sports appeal is that the very things that make it exciting to current audiences may very well be off-putting for many other audiences," Steve Bailey, senior games analyst for IHS Technology, told CNBC via email.

"The tournament-like pitch of excitement is driven by combative, reflex-dependent showdowns. Ditto the culture of controversy and stardom that surrounds it all."

Despite these obstacles, experts remained optimistic about esports potential as a betting vertical.

"There is no reason why e-sports should not become a meaningful and profitable part of a sportsbook's portfolio," said Pilling. "E-sports tournaments are competitive, exciting, fast-paced events, with a live crowd creating atmosphere, just as at a 'traditional' sports event like a football match."

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