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Nevada regulators are supportive of an effort by the gaming and video game industries to develop a viable esports wagering industry in the state, despite integrity risks to the sector, as interest in competitive video game competitions has increased over the last two years.
To assist in creating a sustainable industry, Nevada last year created the Esports Technical Advisory Committee. The eight-person committee is now considering how the state might regulate wagering on video game competitions.
Esports received more attention from Nevada regulators during the early months of the coronavirus pandemic two years ago when most professional sports leagues were shut down and bookmakers were seeking an alternative to traditional sports.
The Nevada Gaming Control Board, for example, granted approval in March 2020 for bookmakers to offer wagers on Counter-Strike – ESL Pro League Season 11: North America. The approved wager types were head-to-head, winner of each match and overall season winner.
However, Nevada has been debating how best to regulate esports betting since before COVID-19, with former Nevada Republican Governor Brian Sandoval urging the state’s Gaming Policy Committee to develop regulations in 2016.
Grant Johnson, CEO and chairman of Esports Entertainment Group (EEG), believes establishing the committee was a move in the right direction. Johnson testified before the committee last month and his company’s VIE.gg esports betting platform recently launched in New Jersey.
“It’s Nevada and New Jersey … that drive gambling legislation in the U.S.,” Johnson said. “Everyone else generally drafts from what they are doing.”
Johnson told VIXIO GamblingCompliance that the reality of esports is, “and this is something (regulators) have to understand, the audience is not 14, they are adults.”
“On average, an esports fan has higher disposable income than the average sports bettor … it’s $86,000 versus $66,000. So they have to start researching it more (than) watching their children play [video games].”
This proposal, Johnson said, is where they are going to run into the most resistance.
“They have to break away from the ‘skins’ model,” said Johnson, adding that he realized that no changes will be made until casinos are ready for it.
“That’s where it sets up right now is that you have to go in and give a million dollars to casino and in return you get nothing,” he said. “I know the casinos will disagree with me and the skins program was put in place for a fairly good reason.”
Johnson said the current system was established to keep the online sportsbook operators from coming in and operating as a direct competitor to a casino.
“A big casino in Las Vegas has spent a billion dollars in infrastructure, they’ve paid taxes and hired employees. They’ve invested heavily in the state and the state is beholden to them for doing that. So they don’t want an operator to come in with millions of dollars and start taking some of those clients away online.”
Johnson agreed that there should be some collaboration between sports betting firms and with gaming operators.
“I’m fine with that,” Johnson said. “For esports, show me what casino operator or sports operator anywhere in the United States has a reasonable investment in esports and I’m not talking about HyperX over at the Luxor because that’s not gambling.”
The 30,000-square-foot HyperX Esports Arena inside the Luxor resort in Las Vegas was the first dedicated esports arena to open on the Strip in 2018.
Johnson said the arena was “too far ahead of its time.” He said MGM Resorts International built the venue before there was any infrastructure to support the venue.
During a 40-minute interview with VIXIO, Johnson urged operators to include esports in their brick-and-mortar casinos or potentially be irrelevant to a generation that prefers video games to gaming, while also explaining his decision to not enter the highly competitive U.S. sports-betting market.
“If you don’t have something for them, where does that leave you? “You become a dinosaur. You become Blockbuster,” Johnson said, in advising casinos to offer wagering on esports.
He said there are opportunities for EEG to partner with casinos to offer esports betting, but the company made the decision shortly after the U.S. Supreme Court overturned the federal ban on sports betting to stayed away due to the high cost of entry.
“When the Gold Rush started in 2018 and the mega-companies were literally throwing around millions of dollars, we couldn’t compete in that Gold Rush,” Johnson said. “So we went where they weren’t.”
“A time will come when they have to shift their focus from sports to what’s next and we believe we hold some of the primary real estate.”
Johnson said there is a lot of hype with anything new.
“Initially it comes out that this is a trillion-dollar industry, and the reality starts to cook in,” he said. “But (esports) is substantial and it is going to grow.”
