by Chris Dyer
September 17, 2018
With the recent federal decision to allow sports betting, states are leaping at the opportunity to seize their share of the legal take. eSports – the competitive play of video games – is set to be the next sports gambling opportunity. Are states and those in the gambling industry ready?
Legalizing sports betting has created the opportunity for companies such as FanDuel and DraftKings to position themselves to have first-mover advantage. Having a sports betting bookmaker in the palm of your hand is a far cry from the days of illicit sports gambling. FanDuel began its first sports bookmaking operation at The Meadowlands in July, and by the beginning of September, the firm had opened its online sports betting operation.
The recent federal legalization of sports betting has created an opportunity for eSports to be more than a hobby. As a spectator sport, eSports competitions draw large crowds, both in person and online. Currently, those wishing to place bets on eSports generally do so online using cryptocurrencies. By bringing these gamblers into the fold of legal sports bookmaking, state gaming commissions can secure a significant portion of those revenues to remain in the state.
While cheating and other issues exist across all sports and various forms of gambling, eSports and online eSports betting inherently carry cybersecurity risks – a variation on cheating not generally not seen outside of bank fraud. Breaches of any type can risk the integrity of the sport, opening the possibility of match-fixing and other forms of cheating. Further, eSports are less regulated than other sports. One serious issue to consider is the use of performance enhancing drugs among competitors.
With cybersecurity risks and doping issues, eSports may still be far off from its potential as a source of sports betting revenue. Many states, including Pennsylvania, are considering how to solve these issues.
Don’t worry, we have you covered! For additional information and analysis of US industry trends, see Gambling: United States, a report published by the Freedonia Focus Reports division of The Freedonia Group. This report forecasts to 2022 US personal consumption expenditures (PCE) on gambling in both nominal and real (inflation-adjusted) US dollars. Total spending in nominal and real terms is segmented by gambling type in terms of:
This report also forecasts US revenues for gambling establishments in US dollars to 2022. Total revenues are segmented by establishment type as follows:
To illustrate historical trends, total PCE, total revenues, and the various segments are provided in annual series from 2007 to 2017.
The scope of this report encompasses firms that derive a significant share of their revenues from gambling services, including private firms that provide lottery services in contract with public entities. Licensed internet gambling operations are also included. Firms that focus on operating, servicing, or supplying coin-operated, non-gambling amusement devices are excluded from the scope of this report.
This report includes the results of a proprietary national online consumer survey of US adults (age 18+). This Freedonia Focus Reports National Survey has a sample size of approximately 2,000, screened for response quality, and representative of the US population on the demographic measures of age, gender, geographic region, race/ethnicity, household income, and the presence/absence of children in the household.
Check out some of our related reports, which include:
Chris Dyer is a Market Research Analyst for Freedonia Focus Reports. He holds a Master of Arts in Security Studies, and his experience as an analyst covers multiple industries.
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