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Esports Betting Is Booming Business For DraftKings

James Murphy
by in Gaming Industry on
  • Esports has seen huge international growth with worldwide revenues projected to exceed $1 billion in 2020.
  • The esports ecosystem remains strong despite the economic devastation caused by the COVID-19 pandemic.
  • The popularity of esports betting has boomed with most other sports on shutdown due to the pandemic.

Esports–competitive professional video game competitions–have been experiencing meteoric growth in recent years. The industry has moved well beyond a niche event with ‘cult appeal’ and is projected to exceed $1 billion in worldwide revenue for the first time in 2020. Amid the economic turmoil caused by the COVID-19 pandemic the esports business has demonstrated continued strength and this has begun to produce economic upsides in other industries as well. Esports stocks remain strong, more advertising is flowing in with other sports on hiatus and most impressively betting on events has experienced massive growth over the past few months.

One of the clear advantages of esports in a world governed by ‘social distancing’ is the ability to conduct competitive events remotely. There is a significant spectator component to esports and when the pandemic first hit it suffered a similar impact as did more traditional sports with leagues shut down and events canceled. Esports quickly shifted competition to remote platforms and quickly got back up and running. Several sports leagues have tried to leverage the remote esports model to keep their viewership engaged during shutdown with NASCAR having considerable success with their ‘virtual racing’ competition.

Now industry analysts expect to see more advertising dollars flowing into the esports industry–a function of increased interest and the tenuous status of other sports. The esports demographic–young and affluent–is a very attractive market for advertisers and its worldwide appeal allows international reach. Investors have also taken note of the growth in esports. An investment fund composed of video game development and esports stocks recently reported growth of more than 12% year to date during a time when the world financial markets have been pummeled. Fund management emphasizes that the esports phenomenon is ‘a longer term trend’ that has plenty of growth still to come.


What might be the most remarkable part of the 2020 esports story is the expansion of its presence in the sports betting marketplace. When all of the various sports leagues began to shut down there was clearly a chance for esports to penetrate the mainstream. Early on, there were plenty of anecdotal reports that this was happening. Esports betting has remained strong worldwide but the most impressive upswing in popularity has been in the US marketplace. An increasing number of esports events have been approved for betting in Nevada and elsewhere and now there is some hard data to suggest that bettors are responding.

DraftKings has become one of the big players in the United States online and retail sports betting in the post PASPA era and the company went public on April 24. CEO Jason Robins reports that until recently, esports wasn’t a significant part of their revenue but has exploded in popularity during the past two months:

“Esports was really small for us until, you know, about 2 months ago. Really, it was the only thing for a little while that people were still playing.”

Robins shares the view of many other gaming industry experts that esports will remain a strong part of the sportsbook revenue mix even as other ‘traditional’ events come back online:

“Esports has stuck. It’s been a huge growth area over the last couple months for us and [it’s] hard to say what it will look like once the traditional sports are back, but I think a lot of people are finding it fun.”

On the recent DraftKings earning call Robins suggested that the ‘intersection’ of digital sports entertainment and gaming has a projected market of at least $30 billion in the US. This includes esports betting, fantasy sports and iGaming. He’s also enthusiastic that the popularity of smaller events is indicative of pent up demand for sports:

“I think what it shows you is there’s a lot of pent-up demand for sports. People are hungry for sports to come back.”

Getting bettors to try new events has been a positive externality of the COVID-19 pandemic for sportsbooks. Robins echoes what many bookmakers in the industry have confirmed–that Korean baseball and table tennis have been strong revenue generators over the past couple of months. DraftKing shares are up more than 42% since going public.

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