The History of eSports Betting

There is no doubt that eSports is blowing up and has been for a while. It initially started to get popular in East Asia but quickly spread globally, and it is a worldwide phenomenon that is a massive industry in itself. According to the latest research, eSports revenues will reach $4.3 billion in 2024, showing a 6.69% compound annual growth rate, with the US market alone projected to pull in $1.07 billion. What is interesting about this sphere is that its betting section has a market volume of $2.5 billion. So, it is more than half of it.

The rise of eSports betting has unexpectedly changed modern gambling and gaming, so much so that some experts now believe that this landscape will surpass pulling in $20 billion in annual revenues by 2027. And it is crazy to think that this arena initially began as informal wagering during friendly video game matches. However, it has now morphed into a highly professionalized sector fueled by global tournaments, boasting an ever-expanding fanbase.

Competitive gaming, among younger generations now, has audience numbers that rival some traditional sports in viewership. And it is no contest when it comes to engagement. Here, we explore how betting on eSports matches came to be and where this pastime is potentially going.

The Birth of Video Game Competitions

Even though most people are deep into gaming, the super hardcores, if you will, shall say that competitive gaming first appeared in the arcade era, or the late 1970s and early 1980s, thanks to the emergence of highly popular titles like Space Invaders and Pong. Nonetheless, the truth is that the roots of this field go back a little further. Standford University is the location of what many consider the original video game competition, which occurred in October 1972 on a game called Spacewar. That was a space combat dogfighting game that was released in 1962 for the PDP-1, or the Programmed Data Processor-1 computer. There was no monetary prize for the winner, with the reward in this competition being a yearly subscription to Rollin Stone Magazine

Two years after this monumental event, SEGA, the famed Japanese video game and console developer, organized the All Japan TV Game Championships, an arcade-based contest, primarily as a promotional tool for its games. In 1980, competitor Atari ran the Space Invaders Championship, which attracted over 10,000 participants in the US, and this event often gets cited as the first large-scale gaming tournament.

During the 1990s, amidst the PC gaming boom, Doom, Quake, and StarCraft became competitive staples, with StarCraft tournaments in South Korea emerging as cultural phenomena. Televised matches on OGN (formerly known as Ongamenet), a TV channel, helped turn the best players in this game into celebrities and legitimize eSports as a form of entertainment. At this time, competitions like the Nintendo World Championships were already a thing and quite established among video game fans.

That said, many gamers believe that is only right to call South Korea the founding country of eSports in the form we know today because it was here that competitive gaming truly popped up as somewhat of a mainstream pastime, thanks to the prevalence of internet cafes in the late 1990s in South Korea, which found an eSports Associate within its Ministry of Culture in 2000.

The Beginnings of eSports Betting

In the early 2000s, PC competitive gaming was in full swing around the globe, and in some communities, wagering on outcomes of LAN parties started to gain traction, especially on Counter-Strike and StarCraft matches. These practices were also a thing on forums and IRC channels, which acted as the early hubs for discussing match odds and arranging wagers. However, these activities, during this period, did not have any regulation and, for the most part, lacked structure. They only existed as a subculture, a niche activity within the gaming community that some groups would partake in.

Platforms like Blizzard’s Battle.net and Valve’s Steam in the 2000s enabled global connectivity, and they laid the groundwork for organized tournaments. These contests had defined recurring formats and official rules, allowing the formation of structured betting markets. Naturally, this was unregulated wagering, but regulated betting on established platforms was starting to be available in the second part of the 2000s.

The Growth of Organized eSports and Betting Platforms

As noted above, the 2000s were really the turning point for eSports. It was in this decade that the eSports sector began attaining its modern form, assisted by the creation of organizations like Major League Gaming, the World Cyber Games, and the Electronic Sports League, which started to host professional tournaments. Games like Warcraft III, Counter-Strike, and Dota became staples of this domain, with Justin.tv, a video stream platform that popped up in 2007, from which Twitch got birthed, accelerating the growth of eSports by letting fans watch live matches from anywhere. In 2014, Justin.tv died, but its gaming section, Twitch, attained a life of its own, and it turned into a hotbed for eSports broadcasts, especially for events like The International and the League of Legends World Championship, which drew millions to it.

The 2010s were for eSports betting, and the 2000s were for eSports themselves. Now, the sphere had renowned competitions with rules and formats everyone knew months beforehand, and in these established competitions, participants vied for prizes in officially sponsored teams. Hence, everything was pretty well known, including the skill level of those competing, allowing for bookies to set reasonable odds for these events.

Based out of Miami, Florida, Unikrn, founded in 2014, pioneered eSports-specific betting, offering real money and token-based wagering. In 2021, it got bought out by UK gambling giant Entain.

By 2015, eSports betting had already gained significant traction, with many fiat and crypto gambling platforms providing options for things like match outcomes, in-game events, and tournament winners. Here, skins gambling came into the mix, and in 2016, some market research valued this market at around $5 billion. Yet, its unregulated nature led to significant issues, including accusations that it helped facilitate underage gambling. That led to regulatory pressure and caused publishers like Valve to take steps to help shut down unlicensed skin betting sites.

The Modern Era of eSports Betting

By the late 2010s, eSports wagering had become widely available offshore, especially on crypto gambling sites. There was already a dramatic audience for various high-profile events that brands like Betway invested in eSports. Today, platforms like Bet365 and DraftKings allow eSports, with the latter also including a fantasy eSports offering.

For many, the COVID-19 pandemic acted as an introduction to betting on competitive video gaming, as in the first half of 2020, many nations had stopped their national sporting leagues, and no international competitions got held. Thus, eSports were the only viable alternative for those craving betting fun, along with virtual sports. FIFA and NBA 2K contests saw a sizeable spike in interest at this time, in betting activity too, as with their viewership, jumping to record highs in 2020.

Despite all this success and growth, the global nature of eSports and various aspects of these competitions have created some regulatory complications, keeping eSports wagering from getting permitted in some parts of the globe and forcing residents of these to explore crypto gambling hubs.

Asia, Latin America, and Africa are the territories that are expected to drive the next wave of growth in eSports betting, with mobile games, such as Free Fire and Mobile Legends, enticing gamblers to gravitate to them, supplying new opportunities for market expansion.

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