For those who have never heard of eSports, it is the general term used for competitive video game playing. Players compete for days at large tournaments, and winners receive large cash prizes. From a player and participant standpoint, everything in eSports is accelerating in the right direction – more tournaments, more competitive teams and more investments than ever. This, in turn, is leading to more content for fans to consume, and they are hungry for it. The Intel Extreme Masters in Katowice, Poland is one of the longest running pro gaming circuits in the eSports world. The tournament hosted 173,000 fans in the flesh over the course of two weekends and global broadcasts reached over 46 million unique online viewers, up 35% from last year. It doesn’t stop there – social media reached 55 million fans through live streams, highlight clips and custom content. Clearly 2017 is off to another record smashing start, and we’re only three months into 2017. Playing video games competitively has become a massive movement. And where there’s competition, there’s gambling.
eSports betting is alive and well, led by the likes of Bet365, SkyBet, Betway, Pinnacle, Ladbrokes and Unikrn (specialized in eSports), with bearish estimates pegging proper grey market wagering at $555 million in 2016*. In five years, that figure is expected to grow 10 to 20-fold, driven by: event frequency and scale growth, product expansion with more types of bets across more events, and better data to facilitate it.
However, it is impossible to get an understanding about eSports betting without discussing the concept of ‘skin’ betting. This is where a lot of eSports bettors whet their appetite. A ‘skin’ is an in-game digital item that makes your in-game character/avatar look different. Below is a picture of 12 different skins that affect a player’s knife. As you can see, it simply creates an aesthetic difference in the character model, but players find it very valuable. At one point, the “Crimson Web” knife skin cost $1,800 to buy through a 3rd party. These skins have different rarity levels, some having a very small chance to be won, and can only be won in game through random chance. However, players can transfer these skins to one another, which creates an economy of buying and selling these skins online. They effectively become a currency, and ‘skin’ betting uses skins as casino chips for less-than-grey-market sites (white paper).
Counter Strike: Global Offensive knife skins. Crimson Web was valued at $1,800 dollars.
It is important to understand that the gambling products these websites offer to skin bettors go beyond match wagering. There are lottery-style jackpots, roulette, coin flips, raffles, rock-paper-scissors and blackjack and many other spinoffs. These games are facilitated through game publisher platforms like Valve and Steam. Skin betting has rapidly become part of the culture of the most popular games, and popularity for these games exploded because of ease, accessibility and seamless transactions. Anyone with skins can gamble, and there are few barriers to getting skins; you just need an account and credit card. Estimates suggest that this type of betting would far eclipse grey market wagering in 2016, with over $3.9 billion* in skin wager equivalents at the low-end. Of course the operating sites take a cut of the transactions, operate with no regulation and offer no transparency whatsoever.