SCCG Weekly Newsletter Volume 38

Volume 38 | April 29, 2021

WEEKLY EDITION
April 29, 2021

Esports Betting and Millennials/Gen-Z

by Kyle Neverett, Guest Feature Contributor

Betfred USA Sports - Customer Service

Why should we care about esports?

The biggest thing that stands out to me when comparing eSports to traditional sports is the virtual component of it. The Age of the Internet has brought about a borderless environment, or “field” in which a person can play with anybody on the face of the Earth, so long as they both have an internet connection. This unbridled accessibility is beneficial for those who play video games, as well as those who don’t play, and just want to watch high-level, competitive gaming.

Video games have become so unfathomably popular worldwide, it will be impossible to ignore its impact on our day-to-day lives moving forward. Over $50 billion was spent in 2020 on video games in the United States alone, according to a study done by the NPD group, a popular market research firm. Furthermore, from the second quarter of 2018 to the fourth quarter of 2020, it was found that popular streaming service Twitch had an average of 2.5 million viewers at any given time.

These trends alone tell us that video games will only continue to become more commonplace in our daily lives, especially with the accelerated development of technologies such as VR. There will always be new games to play, and from this vast field will come new games that have a competitive atmosphere.

How will Millennials/Gen-Z bet on esports?

Currently, options are extremely limited in the United States if you are looking to legally place a bet on an esports event. Nevada is the only state that currently allows esports betting, and only approved events can be offered. Esports betting will almost entirely take place in an offshore setting until there is a stricter set of regulatory measures put into place. There are a couple of additional legal hurdles I could see with offering esports lines, including match-fixing & underage contestants. While bookmakers would like to have more offerings in eSports, there are still restrictions on esports betting in each state that has legalized sports betting. The biggest challenge seems to be getting regulators on board, but eventually I see the US as one of the primary beneficiaries of a legalized esports betting environment. Whether it is through one of the Big Players such as BetMGM or Draftkings, or through an esports betting platform such as EBet, which recently filed their NASDAQ IPO, there are plenty of companies chomping at the bit to capitalize on the esports craze.

What will they bet on?

Currently, there are only a handful of titles that are recognizable enough worldwide to be heralded as an esport. The most popular titles fall into a few genres: FPS (first-person shooters), MOBA (multiplayer online battle arena), and then traditional sports games, such as FIFA or NBA2K.

These games stand out from the rest of the field because of their dedicated and passionate followings. These games also contain fast-paced action, and are somewhat short in length, which keeps audiences interested. Much like traditional sports betting, the games that have the largest followings will be the ones that are wagered on the most. The way these titles gain exposure is through large events such as tournaments, which are huge opportunities for sponsorship as well.

What does the future hold for esports & betting?

For those who are used to the MLB, NFL, NBA or EPL, there are historic teams that have been playing in these leagues for decades. The sports that these teams play have been around much longer than any of those teams or leagues as well. This is probably the biggest advantage that sports have on esports and esports betting. They have simply been around longer, and the way things are done have been essentially the same for just as long.

As for the future of esports betting, I believe that as more esports establish themselves in the ways that traditional sports have, they will have a better chance of growing. One such example is League of Legends, a game that has been around for over a decade, and it does not seem to be slowing down anytime soon.

Compared to sports betting, esports has a ways to go before it can be as popular, but I can certainly envision a future where esports catches up to sports betting in terms of market share.

Client Partners related to Today's Feature Article

SCCG Management works with our clients to bring best in class solutions to the entire gaming vertical, including client partners such as:

Oddin - Esports data provider.

LSports - Realtime sports data API solution.

Triggy - Live score messaging provider.

Gamer Wager - Licensed peer to peer esports wagering solution.

Picklebet - Dedicated esports betting platform.

Check out these and our other related client partners below!

Related Client Partners

Liked the article? Check out our Client Partners below.

WELCOME TO YOUR ROUNDUP OF EUROPEAN IGAMING NEWS

Our European weekly iGaming feature article summarizes the thoughts of Jake Pollard, an experienced journalist and editor who has covered the online gaming and betting industry for many years. He has written for the leading media outlets as well as operators and suppliers in the igaming space. His areas of focus are wide-ranging and include regulatory developments in the US, emerging markets in South America and how European countries are adapting to a decade of igaming regulation.

It’s results season and many of the listed European firms showed encouraging signs that business volumes were gradually returning to some kind of normality. However, all of them also remained cautious and insisted there were still many uncertainties and factors at play.

Flutter Entertainment

Revenues were up across the board for Flutter, parent company of Fan Duel, Paddy Power, FOX Bet and PokerStars. The UK and Ireland were up 35%, Australia was up 59% and the U.S. was up 135% with the group in number 1 position. International revenues, meaning most of Europe, were up 7%. However, regulatory changes in Germany, which is a key market and is introducing its Gambling Treaty this Summer, would cost £20m in EBITDA going forward, the group said.

Evolution

Evolution is the market leader in live dealer casino. Revenues rose 105% annually and 33% quarterly to €235.8m/$284.7m. EBITDA was up 150% to €160m/$193.8m and live casino, which made 77% of revenues, accounted for most of the revenue growth, was up 60% year on year. The margins the group generated through live casino were significant: they were up a whopping 1220 basis points to 67.9% thanks to “continued high demand.” Evolution acquired Net Ent at the end of last year, but by comparison it contributed 22.1% of revenues but growth of just 6%. It’s worth noting that despite being a single product specialist, Evolution’s growth has placed it in second just behind Las Vegas Sands when it comes to market capitalization for listed gambling firms at $43bn.

Betsson

Swedish group Betsson’s revenues were up 12% to $190m in Q1. The group received a sports betting license for Germany and closed some of the sites it operated in the market ahead of the country coming onstream in the Summer. Betsson has targeted Colorado as its U.S. entry point via a deal with Dostal Alley Casino (negotiated by SCCG Management) and is preparing a B2B product for the market via the $6.5m/35% stake it has acquired in TG Lab’s Strive player account management platform.

888

Revenues for 888 were ahead of expectations for the first quarter and rose 66% YoY to $272.5m. Consumer revenues rose 67% to $262.8m and B2B revenues were up 27% to $9.7m. Casino revenues drove most of the growth at $195.2m, up 80% YoY, despite the impact of regulatory changes in Germany during the period. The key product development was its migration away from the Kambi sportsbook technology to its in-house Spectate platform. Its 888Sport brand saw stakes increase 38% and betting net win rose to 8% from 6.8% in Q1 2020, thanks to favourable sporting results and “a structural improvement in win margin due to the enhanced product and promotional capabilities of our in-house platform.”

SCCG Management: New and Upcoming Events

STEPHEN CRYSTAL TRAVELING TO CENTRAL CALIFORNIA, MARYLAND, OHIO AND KENTUCKY

Stephen Crystal is in the process of planning and scheduling travel to Central California, Maryland, Ohio and Kentucky, where he will be meeting with clients and partners in May.

If you are interested in reaching out to Stephen Crystal regarding these trips, please contact him directly at stephen.crystal@sccgmanagement.com.

SAVE THE DATE!

Stephen Crystal to participate in BWG Strategy’s Live Casino & Sports Betting Outlook Q&A on Thursday, May 5, 2021 at 1:30 PM ET!

Discussion will center on the outlook for the growth of live casino and sports betting, the leading sports betting companies, the current regulatory environment, perspectives on the leading iGaming companies, and the panelists views on other industry risks, wildcards and opportunities to monitor.

BWG sessions are independent group discussions to share candid feedback. They are invite only and there is no cost to join. Absolutely NO sales pitches or presentations. There's no affiliation with any vendors. BWG conference calls are not sponsored.