We sit down with representatives from esports betting providers – PandaScore Head of Sales Oliver Niner, Abios CEO Oskar Fröberg, Bayes Esports CEO Martin Dachselt and Beter CEO Gal Ehrlich – and ask each firm the same pressing questions. What next for the evolution of the esports betting industry and how does this tie in with operators?
Oliver Niner, PandaScore Head of Sales
“When assessing who’s best for the job, operators need to consider the range of odds and markets the provider offers, but just as important is the reliability”
What does the process of finding a partner to offer esports betting solutions involve? What signs and attributes does an operator look for in a potential partnership with a supplier?
A growing number of operators now understand just how big esports, and esports betting, is and will be. These brands are looking to launch a dedicated e-sportsbook, and to do that many need to partner with an esports data and odds provider.
When assessing who’s best for the job, operators need to consider the range of odds and markets the provider offers, but just as important is the reliability and performance of their feeds and betting products. Just like with traditional sports betting, operators also need to look at the provider’s product offering and roadmap to determine whether they are able to provide an esports betting experience that not only meets but exceeds player expectations.
Operators should also look to partner with suppliers that are genuinely passionate about esports, and have a deep understanding of the industry and a love for all things competitive. Esports has a unique culture that must be respected and built into any betting product launched to esports fans.
What is the value of sourcing third-party solutions over in-house solutions and vice versa?
There are obvious upsides, such as speed to market and benefits from the cost efficiencies that come with using a third-party provider. But perhaps the greatest value-add comes in being able to tap into the passion and knowledge that exists within specialist esports providers; leveraging this to deploy a product that will hit the mark with esports fans. It must be remembered that they are often very different to traditional sports bettors and have their own ideas of what they expect from a betting product and wagering experience. Another benefit is being able to launch esports-specific betting products to players before they really know they need them, allowing operators to engage players and show they know how to deliver a thrilling experience.
Third-party providers can also work with operators to create bespoke products and features, which can really help brands to differentiate, even at this early stage in the evolution of esports betting.
What must third-party suppliers do to keep operators on board with them?
Simply put, we must deliver an unrivalled standard of performance and service to our operator partners, as this ultimately allows them to attract esports bettors at scale and drive higher revenues. As esports and esports betting specialists, it’s our responsibility to ensure our operator partners are maximising the opportunity on the table, not only to bring in new customers but to also cross-sell esports betting to existing punters. Innovation is also a must; operators want to be ahead of the curve and make the most of the first-mover advantage in what is an emerging vertical; and this requires a superior esports betting product that is as stable as it is powerful.
How can you see esports, and by extension esports betting, evolving in the coming years?
The esports betting vertical is just getting started and will undoubtedly experience exponential growth over the coming years. The growth we saw during the Covid-19 pandemic has been sustained and shows no signs of slowing down. We can see this in the volume of wagers we processed over the past 12 months; our total turnover in 2022 had surpassed the total turnover in 2021 by the beginning of Q3. This is also evident with the growing number of tier-one operators that are now launching dedicated e-sportsbooks. For some operators, esports is already one of the top-five performing sports within their book. I can easily see it jumping into the top three, as more brands offer it to their players and it moves further into mainstream culture.
When do you think esports betting will be big enough for more operators to buy different esports suppliers on a wide scale?
Esports is already big with more and more tier one operators now offering esports betting to their players. The vertical continues to mature in European markets and is expanding its reach globally. Any thriving sector attracts M&A activity and esports, and esports betting, will absolutely be no different.
Oskar Frцberg, Abios CEO
"Even with the esports betting market growing, it is still in its early stages. With several suppliers’ upcoming improvements on the product side, we believe sportsbooks are yet to see the full potential of esports"
What does the process of finding a partner to offer esports betting solutions involve? What signs and attributes does an operator look for in a potential partnership with a supplier?
The process for an operator to find an esports odds provider is similar to the process of finding, evaluating and deciding on any other kind of enterprise solution. It is important to make the distinction here between quick decisions, instant sign-up, developer-first solutions and longer-term sticky enterprise solutions. Finding and selecting an odds supplier definitely belongs in the second category. The operator will usually conduct some initial research and create a shortlist of which seemingly reliable esports odds suppliers exist, and then contact them to gain a deeper understanding of what differentiates the offerings. The operator will then test or have the specific solutions made available in a demo environment followed by narrowing down the selection to conduct further due diligence.
To name a few items, this due diligence includes assessing the current and future quality and features offered, ensuring that the supplier runs its product on the fastest official data sources; along with assessing the regulatory environment and if the supplier has all the necessary licences to deliver its products in relevant jurisdictions.
The esports tournament ecosystem is filled with matches from all tiers of play. Due to the international nature of esports, there are always ongoing matches in different time zones. As such, esports presents a way for operators to reach a new audience while diversifying their portfolio of highly seasonal sports. This, of course, is only possible when partnering with suppliers that offer wide coverage for the most popular esports titles. Aside from coverage, our understanding is that operators look for the same attributes among partners in esports as for regular sports. High uptime and live markets are essential components of a strong offering.
What is the value of third-party sourcing solutions over in-house solutions and vice versa?
The strongest incentive to outsource products or services is to access better products at a lower cost than what could feasibly be created in-house. It allows the purchaser to specialise in its core areas instead of competing in new areas of product development. On the other hand, the case for hosting services in-house may be strong because it employs a higher level of control and could enable further differentiation of the business. The problem occurs when experts in sports try to navigate esports, which is still a niche product among many sportsbooks.
For any company looking to venture into the realm of League of Legends, CS:GO and Dota 2, we believe it is paramount to employ people with domain expertise in the field. The esports ecosystem, culture and consumer behaviour differ vastly from sports, which means that a product from sports might fall flat in an esports setting.
The expertise and resources necessary to create a competitive esports offering might be hard to obtain in-house. As such, it is more feasible for sportsbooks to use dedicated esports suppliers that can perfect bet offers, coverage and uptime to the level necessary for esports betting to be enticing to fans.
What must third-party suppliers do to keep operators on board with them?
Our belief is that it is important to have an ear to the ground and listen to what customers want, all while having the structures in place to be able to innovate and create products that adhere to that. Additionally, being a provider of highly technical products, we believe it is vital to have a strong customer support infrastructure and well-established communication channels in place. This ensures customers have access to help when needed and enables them to make the most out of a product offering. Predicting the customer's needs and always putting the customer first is key to success in any business.
How can you see esports, and by extension esports betting, evolving in the coming years?
The esports ecosystem is clearly maturing. The high-quality productions we see today for the largest tournaments are light years ahead of the small-scale events we saw ten years ago.
Larger game publishers and tournament organisers have created professional esports scenes where an ever-increasing fan base can cheer on their favourite teams in a convenient setting. While the ecosystem is subject to rapid change, we believe the largest esports have a secure footing and will be around for many years to come.
Even with the esports betting market growing, it is still in its early stages. With several suppliers’ upcoming improvements on the product side, we believe sportsbooks are yet to see the full potential of esports.
When do you think esports betting will be big enough for more operators to buy different esports suppliers on a wide scale?
It already is. While there might not be a large crossover between traditional sports fans and esports enthusiasts, many sportsbooks have identified esports as an avenue to reach a new, digitally native audience. The hard part is to create a compelling offering that makes esports fans interested in betting.
Martin Dachselt, Bayes Esports CEO, & Gal Ehrlich, Beter CEO
”I think operators also understand that you don’t need to just provide esports data, but a tailor-made experience for customers”
What does the process of finding a partner to offer esports betting solutions involve? What signs and attributes does an operator look for in a potential partnership with a supplier?
MD: This is an interesting question. I think the key word here is evolution, as there are a lot of parties in the market that make false promises about things such as the source of their data. The problem is that many operators don’t understand the differences between traditional sports and esports. That’s what we at Bayes Esports and our partners are working on, to educate operators so they can make an informed decision. For us it’s important that we’re in the right market, we license official data for our partners and turn that data into odds. The difference here between esports and traditional sports is that traditional sports have fewer data points and actions to bet on. In esports, there can several events per second, which makes it so much more important for services to be based on an official and reliable source.
Operators looking to engage in a partnership with a supplier need to ask a range of questions: What’s the product? Which markets do you offer? How fast is the resolution time and what’s the uptime of the markets? Market uptime is especially important in esports, because if you pause the market 10 seconds before each team fight, it will be very difficult for a pundit to place a bet, resulting in a worse customer experience. However, if you work with unofficial data, you need to close your markets regularly, because being unofficial, the data you work with is slow and unreliable. The second aspect operators need to be aware of is the integrity and reliability of their betting services. Matches in esports do not need to be broadcasted live, but instead can also be pre-recorded off-stream. In such cases, licensed providers can inform operators not to take bets on the match because, with it being pre-recorded, the threat of insider betting increases. These benefits and signs of legitimacy are what an operator should look out for in a supplier.
What is the value of sourcing third-party solutions over in-house solutions and vice versa?
GE: I think there are a variety of reasons why clients are choosing to have external partners rather than do everything in-house. First of all, trading and managing the whole lifestyle of esports events is completely different, but many operators still have a very conservative approach to esports betting. This is because the business model is all around sports betting, in which operators do excellent work. With esports, even the acquisition and retention process is completely different. I’ve had operating clients ask me the best way to convert a football bettor into a CS:GO bettor. But this is never going to work. If you try to convert sports bettors into esports bettors, you’re wasting your money. The whole esports ecosystem, from player acquisition to sponsoring the right events, that’s one step an operator can take. And when it comes to choosing a partner, it’s about finding a partner who can collect, manage and trade data effectively. As suppliers, we need strong optimisation and AI tools to manipulate all of this data. As Martin said, risk management is also completely different, which is a common area of discussion we have with operators – how to set betting limits and how to market combination bets.
I think operators also understand that you don’t need to just provide esports data, but a tailor-made experience for customers. Traditional sports betting sites are very similar, and a different world to what traditional esports fans are looking for when betting. What we and a number of partners are providing is an iFrame, which is a turnkey solution for esports betting. The focus of it is to provide esports bettors with a holistic view of the betting experience they would most want, something more aligned to their experience of watching esports. So an operator can start from scratch: spend time and money building their esports offering up, or get tailor-made solutions from suppliers, which is what many choose to do.
What must third-party suppliers do to keep operators on board with them?
MD: Esports is very dynamic. Even for established game titles like CS:GO and League of Legends, there are frequent game patches. Major rule changes happen very infrequently in traditional sports, but esports titles have at minimum 3-4 patches a year, which may change the dynamic of the game and therefore the betting. Prediction models and the approach of trades need constant changing, so it’s an ever-evolving segment. There are also new titles emerging alongside the big names, which adds further variation to the esports landscape.
These titles could disappear in the future, but could also turn out to be the next League of Legends. It's important to have systems in place that work with niche game titles and emerging game areas and markets, so you can be first to jump on the newest trends. We can even develop markets for a game based on its popularity and how long we believe it will last.
How can you see esports, and by extension esports betting, evolving in the coming years?
GE: Of course, in terms of the evolution of games there are things that everyone expects, such as stronger consoles and PCs, better graphics and a greater drive towards VR. I hear Apple is rumoured to be introducing a new VR headset, so that market is only growing.
Regarding the betting side of esports, evolution will come through innovation. This will involve better analysis of data, and greater AI and machine learning. There also need to be new methods of adjusting analysis and data game-to-game, growing more niche and specific markets. The amount of data received from servers, even nowadays, means there is a lot to play with in terms of future markets.
Risk management will also become ever more automated, meaning machines will take smarter and faster decisions in real-time, vastly improving risk management. The market will surely grow when it can accept bets faster, as the nature of any game can change in an instant. This will also help mitigate against any player getting an unfair advantage. Lastly, there will surely be innovations to the user experience, which will grow more and more intuitive as time goes by.
MD: There is only a very small section of sports bettors that are also interested in esports, so the mission is to grow that percentage, by making esports betting more approachable and allowing operators to promote esports effectively. The majority of those interested in esports are, of course, from a young audience – which equates to hundreds of millions of people, but they will grow older and have disposable income to bet in the near future. Furthermore, this generation will have different betting demands to the current wave of traditional bettors. Traditional sports betting is not exciting or entertaining enough for younger esports fans, so operators need to be faster and more agile in the future if they want to stay on top of the betting market. The market needs innovation; and companies need to come up with ways to modernise the esports betting experience as the years go by.
When do you think esports betting will be big enough for more operators to buy different esports suppliers on a wide scale?
MD: Of course, there have been a few acquisitions in this area already, and the title “esports supplier” covers a large area. For example, Bayes Esports is a data supplier, which means we sit between the rights holders and tournament organisers on one side, and the demand from the betting industry and media on the other side. While betting on esports is the largest revenue stream from the data we provide, the rightsholder side is very careful and protective regarding their brand and sharing their match data. We have to make sure the data is only used for legalised sports betting.
While a minority ownership of an esports data company like ours would probably be fine, it could be a problem if it was fully owned by a betting operator. If this were the case, it could be that rightsholders would grow hesitant to give operators complete access to their data, especially if it's a proprietary deal as that could lead to serious legal issues. So I think the acquisitions that happen in the esports data industry depend on the kind of esports supplier in question. I do think it’s possible that larger operators will try to develop their own in-house capabilities.
GE: M&A has gradually been happening over the last few years, and I expect this to continue and grow. There are two points here: I think you’ll start to see more M&A in times of economic hardship and recession, which is the nature of many industries. If profits are falling, acquisitions are great for driving synergies. This is why I think we see more M&A happening today.
The second point I’d like to refer to is USP. Operators are realising that, to achieve further growth, esports is one of the most promising areas to achieve this. We’re already seeing that esports is generating up to 20% of the revenue for some of our customers. So, if you have an operator who decided that esports is its future growth engine, buying a supplier over doing everything in-house, that’s a very key question moving forward. I will say that I do think many operators will look to acquire before building everything themselves in-house.
