The rise of sports betting in Massachusetts has created excitement when betting on traditional teams like the New England Patriots or Red Sox, but another industry could get some of the action – esports and video games.
A new sports betting law passed in August offers many of the country’s top gamblers the potential to compete for one of the state’s seven unbound digital betting licenses. But it also opens the door to placing bets on a multi-billion dollar video game industry that has grown by leaps and bounds since the start of the 21st century.
And with this new way of gambling comes a unique set of difficulties that are more complex and novel than those stemming from traditional sports, where years of wagering provide context for the burgeoning industry in this state.
Michael J. Wall, a corporate attorney at Foley & Lardner LLP, who is part of the firm’s sports and entertainment team, said regulators in Massachusetts aren’t the only ones grappling with how eSports betting in fit the larger sports betting landscape.
“I imagine it’s an unknown phenomenon to many regulators,” he said in an interview. “There will be an educational process that will be involved. I just think it’s going to take a lot longer for them to develop regulations for esports betting than it will for traditional sports, so I think it’s going to be really lagging behind.”
The sports betting law that Governor Charlie Baker signed into law on Aug. 10 and that the Massachusetts Gaming Commission is now working through allows wagering on competitive video games. But the commission is still deciding how to deal with the issue.
Exactly how eSports betting will take shape here is still unclear – although one company has told the commission it is interested in setting up a sportsbook for competitive video games.
In a non-binding memorandum of understanding filed in late August, G3 Esports said they will “go for sports betting for esports and video game competitions.”
Working on a new platform
Anthony Gaud, CEO of G3 Esports, said his company is working on a video gaming and esports platform that he plans to bring to Massachusetts — and other states — via one of the seven digital sports betting licenses.
While most of the details are still under wraps, Gaud said his company will be “making an announcement pretty soon”. The company, he said, has been working with a number of partners on the project for about three and a half years, although he declined to go into details until an official announcement was made.
When asked if he was confident in his offer for one of the state’s digital licenses, Gaud said, “It’s a betting deal.”
“I think the argument we have is that we could expand the market in a new direction,” he said in an interview. “We are something completely, completely different. And something that should prove bigger than iGaming five years from now, or should start showing the promise of what will be bigger than iGaming. In ten years, this will be the leading way to play games.”
Wall said that argument could come in handy as G3 Esports puts regulators on their platform.
“I think that was pretty clever of them because only seven online betting licenses are granted that are not linked to a traditional licensee,” he said. “The Gambling Commission may want to grant this license simply because they are so committed to the sport… I was pretty smart of them to submit their application there.”
Gaud said Massachusetts has a “good demographic” for its forthcoming betting platform. He also said that G3 Esports plans to announce a “major media partnership with a well-known sports media company to essentially launch the first mass-market esports media site” within the next 30 days.
“I’ve actually lived in Boston twice. My wife and I love Boston. It’s a good demographic, it’s a younger demographic because of the college space,” he said. “We think the demographics really fit this type of product offering because it’s for a younger demographic.”
But before betting on esports takes place in Massachusetts, regulators must address a seemingly endless list of questions, and the weight of the task appeared to be evident during a Gambling Commission meeting last week.
What would the governing body for esports be?
During a discussion on what criteria should be included in a sports betting license application, the topic of eSports sparked some laughs and mild frustration from the commissioners. The new law is broad, and both employees and officers must cover hundreds of other sub-topics related to sports betting.
After discussing possible questions for the motion, commission chair Cathy Judd-Stein brought esports to the attention of her peers as a topic they had not yet spoken about. It was the fifth hour of a nearly seven-hour meeting.
After a brief pause, during which some angry laughter was heard from Executive Director Karen Wells, Judd-Stein said, “I know.” Commissioner Eileen O’Brien jokingly chimed in, “I just want to see your head explode today,” an indication of the grueling nature of the seven-hour meeting that was underway.
“I don’t really know what we’re going to do with the sport. Can we put it in the parking lot and remember it?” said Judd-Stein. “I just don’t know if that’s a separate application process or not, is it? I’ve heard all sorts of reactions, and many of them match what you’re saying right now.”
The Massachusetts Sports Betting Act mentions electronic sports a few times and defines them as single or multi-player video games played competitively for spectators. Sporting events fall within the bill’s definition of “sporting event” or “sporting event,” and there is also a section devoted to a governing body for sport.
“The Commission shall make regulations for the determination of the governing body for electronic sports for the purposes of this chapter,” the law reads.
However, this determination can turn out to be more complicated than it seems at first glance.
Where American football has the National Football League or ice hockey, the National Hockey League, the sport largely lacks a definitive national governing body. The official data, information and tournament rules often come from publishers – in the case of League of Legends this would be Riot Games or Counter-Strike: Global Offensive, Valve.
Wall said deciding what the esports governing body is could “take a long time” for the Gambling Commission.
“I mean, you and I, sitting here today, can’t necessarily say what the governing body for the sport is. Should it be the publisher?” he said. “Is it this US Esports Federation that declares itself the official governing body for esports in the United States? But I don’t know if that will be accepted.”
Match-fixing and other threats
And there’s another potential black hole of issues that could become apparent with esports betting – the integrity of events, which most regulators may not be familiar with.
Cody Luongo, who writes Sharpr, a weekly newsletter focused on esports and betting, said many of the major events like the Counter-Strike Majors or the League of Legends World Championships are safe. But as you dive into the second, third, or fourth division leagues, match-fixing and other integrity threats surface more frequently.
“You have to think about how much more complex and different the esports environment is compared to traditional esports,” he told MassLive. “There are all these potential dangers and trip wires that are very incredibly nuanced and very complex. And for those who aren’t exactly familiar with the space, I think it’s rightfully daunting and kind of difficult to understand.”
Jeremey Meisinger, an attorney at law firm Foley Hoag, agrees that gaming regulators often lack a nuanced understanding of esports and the associated betting landscape. And in Massachusetts, regulators want to do “a little extra homework” on the subject.
“You have way too much homework to do right now. And they will achieve it, they will have reasons why they want to achieve it,” he said. “But I wouldn’t be surprised if it took a little more time.”
When the Massachusetts House debated its version of what would later become the Sports Betting Act in July 2021, Rep. Andy Vargas said esports is one of the fastest growing sports industries in the United States.
Competitive video games, he said, often draw large viewerships that rival the National Football League. And after growing up playing video games like NBA 2k and Call of Duty, he said he never thought he’d be talking about them around the house.
“I know the esports industry will continue to grow exponentially,” he said. “To accommodate this high-potential market, our bill authorizes sports betting on esports and gives the Gambling Commission the power to develop a regulatory structure for this burgeoning industry.”
College EsportsX CEO and Emerson College professor Kevin Mitchell said the esports industry is huge and has the potential to expand beyond its already billion-dollar status.
Esports betting, he said, saw flashes of growth in the dark days of the pandemic, when professional sports were shut down.
“That’s when you really started to see people take it and say, ‘Wow, that could be.’ I mean, they were betting on pigeon races back then, right? There was nothing to bet,” he said in an interview. “There you saw flashes of it.”