A lot of people like to watch esports. Gambling on them might be the next big thing.
At least, that’s what Rahul Sood is betting on. Sood, who created Voodoo Computers in 1991 (which was acquired by Hewlett-Packard in 2006), now runs Unikrn, a gaming company that allows esports viewers to bet on matches.
Esports have really blown up in the past several years, largely thanks to popular PC games like League of Legends and Dota 2, both of which focus on competitive, team-based matches that require a lot of skill. Just like with baseball or football, they can be just as much fun to watch as they are to play.
Still, creating a site that lets people bet on these matches is a tricky endeavor, especially with all of the legal issues involved. Esports is an international sensation, but countries have different laws regarding sports betting. Rood talked to GamesBeat about some of these difficulties, how his site works, and the emergence of esports.
GamesBeat: Who do you guys compete with? Is it gambling sites or streaming sites like Twitch?
Rahul Sood: We don’t really compete with anyone. We use Twitch. We use YouTube. Basically, you come to our site and you watch a stream from one of them that comes from a sanctioned tournament. The other thing is, we’re not really competing with gambling sites, either. Traditional gambling sites, you’re betting on football or hockey, all those things. I wouldn’t call them competitors as much as, people, especially in this space — there were 205 million people watching esports last year. Most people haven’t heard of it. It’s crazy to think this thing is as big as the NHL, yet the mainstream hasn’t heard of it yet. It’s just started to break out. So there isn’t a lot of overlap. There is some. Many of our customers are both super fans of football and big fans of the LCS (League of Legends Championship Series) and different esports. But the majority of them just watch esports and could care less about hockey or football.
GamesBeat: Is it a complicated or dangerous prospect trying to figure out the betting odds on an esport, where you don’t have as much data to track as in baseball or football?
Sood: No, we have a ton of data to track. Our secret sauce is our oddsmaking. We put a lot of effort into it. Our people know the games really well. We look at player history, game history. We look at data that you can electronically get — gold farming, average kills. We look at a whole bunch of things. We built an algorithm based on the Moneyball algorithm to come up with our odds. We come up with the opening odds, and then we built an API (application program interface) connected to Tabcorp. When we open the odds up the betting starts and Tabcorp takes over from there. Like any betting market, as bets come in the odds fluctuate. That’s how it works. Like any other oddsmaking thing, whether it’s in football or any other sport, the odds fluctuate as bets come in.
GamesBeat: What games are people betting on?
Sood: They’re betting on League of Legends. They’re betting on Counter-Strike. Those are the two that we’ve launched so far. We plan to launch more. For the moment those are the two. We just opened this thing up. We launched in Australia, and then we just got our license for the U.K. We’re opening in the U.K. this week.
GamesBeat: Are you eventually hoping to get a U.S. license?
Sood: Yeah. We’re obviously looking to expand beyond just the regions we’re in. Our goal is to open up a new region every month. The U.S. is a little complicated. It’s strange. It has a lot to do with lobbying and protectionism, but skill-based betting is allowed. When you’re watching a sport and you bet, though, that’s not considered a skill unless you bring in a fantasy element to it. It’s just weird that they do that. So, eventually, I’m confident that betting on sports will be legal in the U.S. It’s a massive missed opportunity. We’re a big proponent of responsible betting. We also want to make sure it’s safe and legal. The amount of revenue the U.S. government misses out on, and the fact that people are going to bet regardless — it’s pretty high. We think it’s going to happen. Even Adam Silver from the NBA was quoted as saying he’s a big supporter of it and it’s going to happen. A number of people support this. It’ll happen sooner than later.
GamesBeat: So you said you have Counter-Strike and League of Legends now. Are there any other games that are on the near horizon?
Sood: We’re looking at Dota 2 and Heroes of the Storm. Heroes of the Storm is relatively new, but Blizzard’s doing a lot to make it into an eSport. They had it on ESPN recently.
GamesBeat: [Multiplayer online battle arena games] are the hot thing in esports, then?
Sood: Yeah, but even Hearthstone is hot. It’s really strange, but it is. You’re right, though. MOBA is what made esports explode. But there are other games as well. Halo is big. Call of Duty is a big one, people playing in tournaments. I’m certain that Microsoft wants to get in on this space as well, bigger than they already are. Microsoft has a huge investment in these franchises. There’s a lot of console gamers that have gone professional and play for a living.