With the sharp increase in betting on esports over the last 3 months, Operators have been able to enjoy a stable wave of players in an unstable time. It’s no surprise that the global gambling industry is taking this exciting and growing revenue stream very seriously.
But what type of framework is needed to ensure longevity for the vertical?
We caught up with Ian Smith, Commissioner, Esports Integrity Commission to discuss his perspective on the future of the market and some of the challenges that need addressing.
Can you tell us a little about your expertise and how ESIC came about?
“Sure. I’m a lawyer by training, but I left private practice in 2004 to go in-house at the Professional Cricketer’s Association. I was also doing legal sports consultancy with other various sports bodies. A massive part of my job was based on negotiating the terms and conditions on which players participated, in everything from County Championship to the World Cup.
In 2013 – 2015, I ran the Federation of International Cricketer’s Association. I was the main player lawyer and worked through a series of scandals going as far back as 99, including the first big match fixing scandal of the modern era. I had to learn a great deal around the practice of dealing with match fixing and developed a deep knowledge in integrity matters, but just by virtue of the job and by being in that position. It’s not something I set out to be as my background is employment law. The fact is by then, I had acquired a level of expertise in terms of understanding the relationship between sport and betting on sport. And so, I was commissioned in 2015 by the Modern Times Group in Sweden who had acquired ESL (Electronic Sports League) to do an integrity threat assessment of the esports industry and this led to the founding of ESIC.”
What were the biggest challenges of setting up?
“One of issues they were struggling to get their head around, was the lack of governance in esports and the lack of regulation. There was a lack of standards, a lack of any kind of central point that you could go to. Realising that there were all sorts of integrity problems with that, but not knowing exactly what they were and what to do about it.
In traditional sport, if you do an integrity assessment, there’s somewhere to go with the results. You look at what the threats are, you evaluate what the current response to those threats are, and you recommend what to do. But in esports there was nowhere to go with that advice and recommendations. And so, a couple of reasonably forward looking guys at MTG and ESL said, look, why don’t we create something? ESIC was born.”
What role will the publishers play when it comes to betting and minimising the risk of match fixing?
“Every game has its own community, its own structure and its own culture, and that is often driven by the nature of the publisher of that game. But when you’re talking about betting, you’ve got to bear in mind that there only three real betting products in esports, right? Broadly speaking, every operator makes its money from the markets offered on Counter-Strike Global Offensive, DOTA2 and League of Legends. Everything else is the rest. You’ve got 80 to 90% of your handle coming from three games and then the rest.
So when we talk about publishers, what we’re really talking about is those who own CS:GO and DOTA2 (Valve) and those who own League of Legends (Riot). Each of those companies have a very antipathetic attitude towards the existence of betting on their games, regardless of the radically different cultures they have.
Valve are barely engaged in their esports, and they are certainly not an esports company. Valve regard integrity as the responsibility of tournament organiser and betting operator. The regulation of conduct within DOTA2 and Counter-Strike is very, very much in the hands of those running the games in tournament form, and the betting operators. Whereas Riot (who run their e-sports in-house), exercise control.”
What impact does slow adoption of integrity have on the future of esports over the next few years?
“Esports doesn’t exist for betting, right? The betting operators, the data companies, they have to realise what they are dealing with here and be realistic. It’s not the esports industry’s job to cater to the esports betting industry. So, the extent to which they engage is going to be driven by commercial considerations, fan engagement, sponsorships, data, data fees – that’s where the engagement is.
It’s a commercial engagement, we’re not horse racing, we don’t exist for the betting industry. I don’t see esports being particularly affected by this. Except in as much as scandals will affect it, which impacts credibility and engagement.
The corollary is that good engagement with the betting industry does drive revenue. And this is what tournament organisers in esports really have to understand – the best way to guard against integrity threats is to engage with betting, because the betting exists, whether you like it or not. I believed this long ago back in traditional sport, if you want integrity you’ve got to engage with the betting industry.”
How can we create an infrastructure that ensures integrity?
“Create an official data feed, enter official data arrangements, and combine bet monitoring in that deal. Make it obligatory. For example, if I’m Sport Radar, I acquire the rights to a tournament in Counter-Strike. I market those rights to Bet365 and include a mandatory reporting obligation on suspicious and unusual activity that is tied directly into their integrity system. So when their algorithm detects betting that’s falling outside of parameters they’ve set, the alarm goes off and a trader or an analyst comes to looks at that alert.
Whether they decide whether there’s a rational reason for it, the flag goes down or stays up. The minute that escalation occurs within the operator, that same escalation should kick straight back to the integrity organisation (ESIC) or the fraud detection guys, because then you can react in real time.
In ESIC’s case, I could jump on the phone immediately and let them know we’ve got a problem with this game (that’s coming up or already in play), and we can work out how to gather the evidence. We can take real time measures, significantly more effective than if I find out about it 1-3 days later.
This is how an official relationship can be leveraged to everybody’s advantage.”
What’s standing in the way of this infrastructure?
“Some Tournament Organisers and Publishers have a resistance to an official data deal, as they’ve got some issues at a moral level and social level with the existence of gambling on their platform. My message to them is to grow up. It’s happening. Nobody cares what your attitude to it is. You have a responsibility to deal with the fact that it exists.
It’s definitely a win-win if it’s done properly. I just fear that the rush that’s occurred over the last three months will mean that there are slippages at the side and there’s going to be consequences to that. I do think that the surge in sports simulator betting is going to go off a cliff as soon as lockdown ends. If the esports industry retains 10% of the new betters, that would be a triumph.”