Nevada, gaming industry paving the way for entrance into eSports

While the gaming industry wrestles with creative ways to attract a younger and trendier clientele, the Doritos-munching, Surge-chugging millennials, who came of age in this century, have emerged from their parents’ basements to fill Street Fighter V and Super Smash Brothers tournaments around the country.

This may seem odd or even comical to Baby Boomers and Generation X-ers. But it makes sense that a generation that grew up playing Mario Kart and Halo in lieu of outdoor physical activity would embrace competitive video gaming – also known as eSports – in adulthood as a preferred form of entertainment.

Given the perpetual search for a broader array of entertainment options for those in their 20s and 30s, and Las Vegas’ track record as a hub for emergent “sports” like UFC and the World Series of Poker, a convergence between eSports, Nevada, and the casino gaming industry can be seen as inevitable. Just what would that actually look like? As far as Vegas is concerned, the eSports universe can be broken down into two parallel tracks: hosting fanatically popular eSports tournaments and conventions, and offering actual sportsbook betting lines on eSports events.

The first track is already beginning to blossom, led in part by MGM’s Mandalay Bay. In April it hosted the North America championship for League of Legends. That’s a maddeningly popular multiplayer battle game which claimed more than 27 million daily players globally in 2014. Then, last weekend, the property welcomed EVO (Evolution Championship Series) and 15,000 players to compete in fighting games like Street Fighter V, Mortal Kombat X, and Tekken 7: Fated Retribution.

Those aren’t anomalies. There is talk of building an exclusive arena in a casino on the Las Vegas Strip for hosting eSports battle royales. It would be fitted with hundreds of Xboxes, Playstation 4s, and PCs.

The second track for eSports is coming along more slowly, for both supply and demand reasons, though Nevada is well in the lead compared to other U.S. jurisdictions. The state’s Gaming Policy Committee, led by Governor Brian Sandoval, met in May to discuss a regulatory framework for eSports betting. Overall, the committee took a bullish stance toward eSports, embracing them as a good thing for casinos and for Nevada more broadly. The committee will convene in the fall to tackle the issue again and address lingering questions, such as whether eSports should be defined as a “sport” for wagering purposes or as something else.

Because eSports matches remain fundamentally niche events (among other things, they require specialized knowledge of the specific game being played), there are questions as to how much interest such offerings will generate initially among the betting public. But in the same way that television coverage drives betting on traditional sports, heightened interest in eSports from ESPN and other networks (ESPN2 televised the Street Fighter V World Championship at EVO last weekend) will breed familiarity and likely stimulate sufficient betting demand for these games.

Newzoo, a market research firm, estimates the global eSports market will reach $463 million in revenues for 2016 and $1 billion by 2019, putting the total handle in the billions, if not tens of billions, of dollars. By comparison, Nevada sportsbooks took in $4.2 billion in handle in 2015.

Another indication that the eSports iron is hot comes this Tuesday, when the American Gaming Association, in conjunction with the Innovation Group, will host a first-ever webinar about the eSports industry. The webinar will feature Seth Schorr of Las Vegas’s Downtown Grand, which has proactively sought to host eSports events and offer eSports betting, and Hai Ng of Neomancer, a technology group that helped bring daily fantasy sports into the mainstream and has shifted its focus to eSports.

The free webinar will present a high level view of the eSports industry, including growth trends, dynamics of the popular games and players, and the eye-popping attendance figures of recent tournaments. AGA spokesman Chris Moyer explained that the webinar is part of the trade group’s broader strategy of educating and informing the industry of emergent trends in the gaming universe. He said that demand has been steadily growing within member ranks to better understand how casinos can stake a claim in this nascent sector, and noted that eSports will be a popular topic at G2E in September.

Though not on the official agenda, a likely topic to be addressed during the webinar and thereafter will be the recent crackdown by Valve Corporation, a video game developer and digital distribution company, on so-called “skins betting” websites that facilitate unlicensed wagering on eSports events. This development not only plays into the AGA’s campaign to target illegal gambling operators, it also highlights the need for a regulated eSports betting framework that provides protections against scams and underage play, while ensuring the integrity of eSports matches.

Computer nerds and video gamers have never been a core constituency for Vegas. But with eSports, the opportunity is ripe for Nevada to take on a leadership role with something of intense interest to a large number of millennials, a generation that has shown much less interest in traditional gaming.