Will New Jersey Become eSports Betting’s Prime Location?

The gaming industry is intrigued by — and wary of — eSports wagering
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For the past two to three years, eSports has been a staple topic at nearly every gaming industry event — formerly on location, and now on Zoom screens.

But there is another staple of these events: discussion that further reveals that eSports betting isn’t taking off as quickly as general sports betting did once the U.S. Supreme Court opened that door in 2018.

Still, New Jersey Division of Gaming Enforcement Director David Rebuck told an EGR North America East Coast Briefing virtual audience Wednesday that his agency remains interested.

“The governor [Phil Murphy] says he wants us to be a hub for eSports,” said Rebuck, who was nominated for his current post 10 years and one month ago by Gov. Chris Christie. “He wants us to get that done, and he wants to see New Jersey as the base and hub.”

In fact, earlier this month the state’s Economic Development Authority approved $200,000 in funding to establish an eSports Innovation Center at Stockton University’s Atlantic City campus.

“Atlantic City has always been a top destination for entertainment in New Jersey, so establishing the city as an epicenter of the growing eSports industry is a logical and exciting step forward,” said Lt. Gov. Sheila Oliver.

Looking for a cat to be copied

But so far, New Jersey has only approved a handful of eSports tournaments, nearly three years after the first sports wager was taken.

“With eSports, there are challenges,” Rebuck added. “But to get it going, it just takes one or two companies doing it — this is a copycat industry.

“So far there are more questions than answers, but we have had great dialogue with some of the larger operators who see the opportunity for eSports, or video game wagering, that is out there. There has been quite a bit of interest recently by U.S.-based operators.”

Rebuck said he initially didn’t want to classify eSports like a traditional sport, but says he was “shut down” by a top player who told him, “We’re professional athletes, and we want to get treated as professional athletes.”

One of the key challenges, Rebuck noted, is that so many of the leading eSports competitors, as well as a large sector of its fan base, are under the legal gambling age of 21.

Another challenge is how to best “monetize” the sport. Also, he said some eSports executives have concerns about having to go through what they see as onerous background checks by state regulators to get involved with eSports gambling.

Slow build for eSports

Nevada is similar to New Jersey in terms of sporadic approval of eSports wagering. It is also legal in Colorado, Tennessee, Washington, Virginia, and West Virginia, but the number of events and even the marketing of such options has been spotty.

James Brightman, senior strategist at Interpret, said recently that in 2020, the eSports viewing audience in the U.S. grew from 12% of the population at the start of the year to 19% by year’s end.

The upside led Colorado’s Sky Ute casino to announce six months ago it would launch an eSports-only mobile sportsbook — another sign that while progress may be slow, it is happening.

Jonathan Doubilet, the U.S. managing director for Playtech, said on another EGR North America panel, “We do see eSports as having a definite future within the gambling ecosystem.” Still, Doubilet said he is aware that “eSports will be heavily scrutinized.”

And like Rebuck, Doubilet mentioned video game gambling as well — in his case, to reference Playtech’s announcement in March that it became an investor in GameCo.

Fellow panelist Cathryn Lai, senior vice president and general manager U.S. for Scientific Games Digital, said that eSports “is the Generation Z demographic, and those are players we need to bring in to the gambling ecosystem.

“It’s definitely an area to watch, and most suppliers like myself are investigating how to integrate it,” Lai added.

Growth for online poker?

Moderator Chris Grove, a partner at Eilers & Krejcik Gaming, asked Rebuck about online poker — a key subject during New Jersey’s successful process of launching of online casino gaming in late 2013.

But so far, only Delaware and Nevada — two sparsely populated states — have joined New Jersey in a multi-state compact.

“In the next three years, you will see the expansion of liquidity in the U.S. — absolutely,” Rebuck replied.

As for the dream of links between foreign poker players and American ones, Rebuck said, “It’s up to the industry to find us something that works.

“We’re definitely open to it. It was tried once before, but it didn’t flow. The U.S. market is different from foreign markets, and it’s apples-to-oranges sometimes. Trying to link operations and be jointly regulated, it’s not easy.”

Quick hits on the gaming industry

Nuggets from another EGR North America panel:

John Pappas, founder of Corridor Consulting, said that potential companies for the New York mobile sports betting bidding should see draft regulations “in a couple of weeks.” FanDuel executive Andrew Winchell added that formal requests for proposals are expected to be released by July 1.

Pappas also recommended the New York State Gaming Commission’s 10-page “FAQ” that was released last month. He described Massachusetts lawmakers, meanwhile, as “deliberate.”

“They study studies three times before they make a decision,” quipped Pappas, who said that neighboring Connecticut’s breakthrough on sports betting may prod Bay State lawmakers into more aggressive action.

Shifting his attention to the south, Pappas added that North Carolina seems to have pulled ahead of Georgia in terms of legislative will to expand gambling.

Photo by Roman Kosolapov / Shutterstock

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