Bryce Blum, October 13, 2016

Betting And eSports: The Crossroads

Earlier today, Unikrn announced that it is one of the founding members of the Esports Integrity Coalition (ESIC), a not for profit association created to provide an overarching integrity function for esports. ESIC’s ultimate goal is to become the primary regulatory body responsible for safeguarding competitive integrity throughout the industry. This is a lofty goal, to be sure. And if I’m being honest, I can’t sit here today and guarantee ESIC will be successful. But the threats to competitive integrity are mounting, the stakes have never been higher, and it’s time for the industry to take a concrete first-step toward the type of self-regulation it desperately needs.

The most recent estimates from Narus Advisors project that $8 billion will be wagered surrounding major esports titles in 2016. That’s not a bad thing. Quite to the contrary. Betting can drive engagement around events, increasing viewership and a wide array of monetization opportunities. This is the vision on which Unikrn was built. Yet wagering undoubtedly comes with many potential pitfalls.

Underage betting and match fixing are real problems. They are also issues that the regulated gambling industry has decades of experience addressing. Licensing requirements around the world are why operators such as Unikrn implement thorough, vetted protocols in each of these areas.

Real-money bettors on Unikrn undergo rigorous account verification. While the privacy laws and third party databases available cause this process to vary by jurisdiction, every real-money user must affirmatively prove that they are of legal gambling age.

Meanwhile, our back end actively monitors wagering activity in order to flag suspicious betting. We have expectations, grounded in historical data, which helps us identify unusual betting behaviors. We track line movement, changes in account tendencies, IP addresses, and so much more, all so that we can prevent match fixing before it occurs. And when unusual activity does arise, we don’t sit back and ignore it—we work with competition organizers to investigate and address the issue.

The problem for esports is that sites like Unikrn are the exception, not the rule. More than 90% of the esports betting market comes in the form of skin-betting, where the operators are neither licensed nor regulated in any meaningful capacity. In this environment, underage gambling is allowed to thrive and match-fixing goes largely unchecked—not to mention the potential for fraud, rigged results, and other misconduct that has recently come to the fore in the controversies surrounding CSGOLotto and CSGODiamonds.

This is no longer a small problem. Esports have never been more popular and the recent scandals in CSGO have garnered mainstream media coverage around the world. The writing is already on the wall. The scandals will get bigger and they will cast the entire industry in the type of negative light that discourages investment and stagnates growth. Moreover, we’ll leave ourselves susceptible to outside regulation by bodies without a meaningful understanding of who we are or what we do.

This is the environment in which ESIC is launching.

ESIC represents a real opportunity to draw on the collective wisdom and resources of key stakeholders throughout the industry to tackle a problem that desperately needs a solution. Hopefully, in time, more parties will come to the table to join that conversation. This is one issue—maybe the only issue—on which the entire industry should be united.

Bryce Blum

Bryce Blum is Unikrn's Director of Esports and In-House Counsel