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Apr 29, 2016

Why Esports Betting will never Boom like Online Poker

By RTR Dennis

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It’s safe to say that the online poker boom has past and it’s a stabilized industry now. So many wonder what will be the next form of online gaming to boom. For a time, it looked like daily fantasy sports might fill this role, considering that its commercials were blaring on major sports networks every five minutes. However, numerous legal challenges in America have stagnated the growth of DFS.

Up next: Esports, which are rapidly gaining in popularity and even drawing in famed poker pros like Bertrand ‘ElkY’ Grospellier and Daniel Negreanu.

Esports are growing so rapidly that Eilers, a respected market research firm, predicts that online bettors will wager $23.5 billion on tournaments by 2020. It seems that Esports betting could be the next booming form of iGaming, but will it grow as big as online poker did in the mid and late-2000s?

Not a chance! And you can read the 3 reasons why below.

1. Esports has Too Much of a Niche Audience

A good portion of the online poker boom was built on the backs of university students, who had the free time and lack of obligations to play poker all day. But what also helped poker’s cause was the fact that its relatively slow pace and heavy thinking gives middle-aged/older adults a chance to compete as well.

Esports, on the other hand, is far more of a niche activity that mostly appeals to younger people. If you don’t have the free time to play video games most of the day, chances are that you won’t be the slightest bit competitive in tournaments. So Esports have a very limited age group to target, even when it comes to those who are betting on the tourneys.

"The key issue with broadening Esports appeal is that the very things that make it exciting to current audiences may very well be off-putting for many other audiences," Steve Bailey, senior games analyst for IHS Technology, wrote to CNBC. "The tournament-like pitch of excitement is driven by combative, reflex-dependent showdowns."

2. Online Gaming is more regulated than ever before

Another factor that aided the rise of online poker was the lack of iGaming regulation throughout the world. Internet had only been available to consumers for about a decade when the poker boom began, so most governments weren’t too concerned with regulating its activities right away. Even when the US enacted the Unlawful Internet Gambling Enforcement Act in 2006, poker sites used simple means of deception to get around these stricter banking laws.

Unfortunately for Esports, iGaming is becoming more and more regulated with each passing year. It’s no longer just one giant grey area that allows sites to take customers from any country with no red tape involved.

So the online sportsbooks that offer Esports need to obtain licensing and adhere to the regulations for every new country/state they enter. And while this can still be profitable for sportsbooks, it takes time and more money to accomplish.

3. Esports is taking a lot of Heat for Underage Gambling

Online poker has certainly not been without its underage gambling problems. In fact, some of the most-famous pros like Annette Obrestad and Dan Colman began building their bankrolls while still teenagers in high school. Even still, real money online poker isn’t something that has widespread appeal to numerous young teens and children.

Esports is a little different case because many kids begin playing video games heavily when they’re in elementary/junior school. So it seems that betting on Esports is more likely to interest younger kids/teens than online poker ever did.

“Underage gambling is a huge problem,” Justin Carlson, lead developer at SkinXchange, told Bloomberg, adding that he’s called “countless” parents whose children have taken their credit cards without their knowledge. Carlson said that these kids have “racked up hundreds or thousands of dollars in skins on SkinXchange just to lose them all on some betting or jackpot site.”

It seems that this negative perception of underage gambling, combined with heavy regulation and Esports’ niche audience, could eventually limit the online betting side. Furthermore, we don’t ever see Esports quite reaching the status that online poker did before Black Friday hit in 2011. But for the time being, Esports betting is growing rapidly and will be an iGaming force to be reckoned with.