Join gaming leaders, alongside GamesBeat and Facebook Gaming, for their 2nd Annual GamesBeat & Facebook Gaming Summit | GamesBeat: Into the Metaverse 2 this upcoming January 25-27, 2022. Learn more about the event.
Rahul Sood made his name as an enthusiast gamer and the cofounder of VoodooPC, a maker of custom gaming PCs that he started in 1991. He sold that business to HP in 2006, and he headed HP’s efforts in gaming computers through 2010.
He moved to Microsoft and started Microsoft Ventures in 2013. In 2014, he left to start Unikrn with cofounder Karl Flores. Unikrn enabled betting on esports events. Esports has become a hot industry, with market researcher Newzoo estimating it could hit $1.5 billion to $2.5 billion in revenues by 2020. While Sood has moved on from gaming hardware into gambling, he feels he is still focused on enthusiasts.
Last fall, Mark Cuban purchased coins in Unikrn’s $30 million initial coin offering for UnikoinGold, a cryptocurrency token that enables players around the world to bet on esports events. U.S. citizens can’t bet with real money in some jurisdictions because of gambling restrictions, but they can wager using the virtual currency UnikoinSilver, which can’t be cashed out.
Now Unikrn is spreading into various related businesses — like a web TV show that covers the esports industry. It’s all in the name of creating an esports brand for enthusiasts. Unikrn has struck deals to get its coin used with partners like Gunner Optiks and Maingear. The latter has begun making cryptocurrency mining PCs. Last week, Unikrn hired gambling industry veteran Andrew Vouris as chief operating officer. We reached out to Sood to get his opinion on the whole crypto and blockchain craze.
The 2nd Annual GamesBeat and Facebook Gaming Summit and GamesBeat: Into the Metaverse 2
January 25 – 27, 2022
Here’s an edited transcript of our interview.
GamesBeat: How far back did you get interested in cryptocurrency?
Rahul Sood: We created the Unikoin about two years ago. We had users and usage and growth. That’s when we decided to turn it into a crypto token.
GamesBeat: Before the crypto days, when you guys were evaluating what kind of business to start — I think the idea of betting on esports was the main idea?
Sood: The main idea, really, is to become — if you think about what Unikrn is, we’re sort of the Disneyland of esports. Everything we do is about heightening the experience of watching or participating in esports. Part of that has to do with betting. But we create odds around all the major esport matches around the world. We have the most comprehensive esports book anywhere.
We run both physical tournaments and virtual tournaments. We have a tournament platform where we can do that. We have team ownerships. We own part of one of the hottest [Counter-Strike: Global Offensive] teams in the world, BIG. They’re based in Berlin. And on top of that, we create content. We have some very good written content and video content around esports. We have a studio in Berlin and a studio in Las Vegas.
And the last thing would be the Unikoin, which is at the center of everything we do. It’s a token people can earn on the platform for free. They can earn it by connecting their gaming accounts to our platform, their Riot or Steam account, and playing games. They can use Unikoins in jackpots for virtual goods like skins, and they can also trade in skins for Unikoins. There are plenty of ways to acquire Unikoins, and now, people in more than 113 countries are using it. It’s quite popular.
GamesBeat: What was the thing that got traction for you guys in the first place?
Sood: The biggest thing was our sports book, the fact that we analyze all of the data on esports and turn it into odds. We license those odds to markets where we’re licensed and regulated to do so. So, that was the first thing. Then, our content started gaining traction and then, our tournament platform. We just signed a deal with the MGM Grand. We’ll be running tournaments in their casino in Las Vegas, starting in a couple of weeks. We continue to build our brand in esports. We’re trying new things that go back to what our mission is. It’s about heightening the experience of watching and engaging in esports.
GamesBeat: Since you crossed that line from a gaming company to the gambling side, how early on did you have to start paying attention to regulation?
Sood: Before we even started the company. I left Microsoft Ventures to start this company. I’ve been in gaming before with Voodoo and HP. I’m very much about doing things by the book. I saw a trend in esports where gamers were getting older. I’m in my 40s, and I probably play two or three League of Legends games a day. I like to bet on sports. I see this as an emerging trend.
At the time, there was nobody doing it right, nobody working with regulators, thinking about licensing, any of that stuff. That was the approach we took. Eventually, this was going to be a real thing. There were betting operators doing this stuff, and they didn’t know what they were doing. We wanted to be the company that could help them to do that. That was how we started.
GamesBeat: I guess one of the insights was really that people are going to care about these esports stars — who they are and how they play.
Sood: Exactly. The other insight is that, like traditional sports — if you think about how traditional sports work, people bet on sports all the time. People create odds on this stuff, and they take bets. In our space, in video games, it was the Wild West. There was skin betting, which is highly illegal, not ethical at all….
GamesBeat: Can you explain that a bit? People were trying to figure out the results of matches and betting skins in Counter-Strike?
Sood: It wasn’t exactly that. People were building websites where you could connect your Steam account — that takes about 10 seconds — and you could deposit your skins and start playing games like roulette and craps on these unregulated sites. They didn’t care how old you were or where you came from. It became the underpinnings of the largest underage gambling ring in history. It was really bad.
We took a stance against that. We believe that regulation is needed in the space. Valve took a stance against it and started to go after some of these gambling sites. Things are getting better. But they’re still not where they need to be. That’s why we continue to do what we do.
GamesBeat: There’s been some crackdown there. Has that helped raise awareness, that people need to figure out where the lines are?
Sood: Yeah, it has. It’s helped raise awareness. It’s helped get regulators more involved in this, helped them understand what’s going on. It’s definitely been a good thing. There was some crackdown or at least Valve sending cease-and-desist warnings and stuff like that. It’s also attracted the attention of some of the best betting operators to say, “How can we look at this market and build something legitimate?” That’s where we come in. That’s part of what we do.
With our Unikoins, it’s not just about betting. We have so many non-betting applications on our platform — where people can earn Unikoins. They can do stuff with jackpots for free where they can win skins, things like that. They can also use Unikoins to buy items. We just did a partnership with Gunner where you can actually buy Gunner Optiks using Unikoins, and we have more partnerships coming. We’re the second-largest shareholder in Maingear gaming PCs, next to the CEO. There’s a lot of stuff we’re doing with those guys. You’ll see other opportunities where people will accept Unikoins for purchases.
GamesBeat: There’s this parallel trend of crypto and blockchain. I wonder, where did this get on your radar as the way to execute on this company?
Sood: About two years ago, Mark Cuban, who’s one of our investors, he suggested that we start looking at blockchain because of the type of business we’re in. We’re in a highly regulated industry. Blockchain, if applied properly — you have things like transparency and trust. You can put things on the blockchain that are traceable and accountable. The cool thing about it is that for transparency, there’s really no better technology out there.
We started to think about how we could build our entire commerce platform on blockchain, where everything is transparent and open. At the same time, things like AML, anti-money laundering, and KYC, know your customer, can be put on the blockchain. That’s what we did. We said, “If we were a bank, what would we need to build on the blockchain to have proper systems in place?” We built our entire platform on blockchain — our entire token-selling platform was built from the ground up by Unikrn. It has global KYC. It has individual verification. It has AML systems built-in. It’s the only fully regulated global token-selling platform in the world, and we built it ourselves.
On top of that, we built a wallet, Unikrn Wallet, which allows people to accept Unikoins just like Paypal would. It’s on a private blockchain. That way, we can support tens of thousands of transactions without any sort of traffic or other issues. If the blockchain is backed up, transactions tend to take a long time. With our platform, they happen instantly with no transaction fees.
We’ve turned Unikoin into two tokens. One of them is Unikoin Silver, which continues to be our free token that can’t be transferred or sold, but can be used with everything we do, and then the other is Unikoin Gold, which is a crypto token which can be purchased on major exchanges and also used on our platform.
GamesBeat: Are you seeing much fluctuation in the currency? What’s happened with it?
Sood: [Laughs] It’s definitely volatile. It tends to follow the market. But, as we anticipated, it’s starting to see stability over time.
GamesBeat: What was your own interpretation of all of that, Bitcoin hitting $20,000 and then going back down? Why did it all happen?
Sood: The crypto market, I look at it as just a correction. I’ve been following Bitcoin for years now. Usually, when you see it go up, straight up like that, you see a correction. I’m looking at this as a correction. I also look at this as, Wall Street is now getting involved, doing option trading on Bitcoin, and so, there’s probably a lot of — a combination of corrections along with some market manipulation happening. But I’m a long-term believer in Bitcoin. It’s going to be a global standard for transactions. It’s the ideal currency to do major transactions, real estate and cars and things like that.
What we’ll see is, a lot of these ICO tokens will disappear or consolidate. People are getting smarter. Only the good ones will end up at the top. When we built Unikoin, we really built it for our users, not as a speculative thing.
GamesBeat: We’ve seen a lot of these scams come and go. Are we getting past that stage yet, or do you still worry that some of this is going to stay around and maybe hurt the market?
Sood: Last year, there was a lot of exuberance around tokens and ICOs. People were just buying anything and everything. This year, we’re seeing that it’s harder to do an ICO. It’s harder to get listed. All the good exchanges are taking the time to do a full review, a legal review, that sort of thing, on the token itself. For example, Bittrex, one of the largest exchanges, they won’t list just any token. They go through a review of the company and the token now. People are getting smarter. Those factors are making it better now. I think over time, you’ll see that the market will get smarter and less of these scams will get listed.
GamesBeat: Brian Fargo, when he announced his token, he said they were only going to take accredited investor money in their ICO. They were not going to invite general consumer money.
Sood: Right, right. We actually did accredited investors for our pre-sale, and then, in our crowd sale, we opened up the platform to anyone who wanted to purchase it. We’ve had the coin as a product for about two years since we first created our token. We have users and usage. We have a real product on the platform that’s usable today. I think if you look at some of the ICOs out there, very few of them have actual usage. They’ve used it to raise money, but they don’t have a working platform yet. That’s a problem.
GamesBeat: We’ve gotten to another interesting stage where Bitcoin went through its rapid rise and correction. What kind of fallout do you see in the aftermath?
Sood: I think what ends up happening is there’s more institutional money coming in to Bitcoin. The market tends to follow Bitcoin. It’s the leader, along with Ethereum. I still believe, long term, in Bitcoin. But with that said, I don’t pay attention to the day-to-day fluctuations of it. I’m more interested in building a great platform for our users. By doing that, we get more usage of our token and more users wanting to play on our platform. For me, that’s all that matters.