The Supreme Court of the United States today overruled a 1992 federal law that prohibited states from authorizing betting on sporting events. Today’s 6-3 decision will enable each state to decide if it wants to permit sports-related gambling, which is something that a number of states are considering as part of an effort to raise tax revenue. This ruling applies to esports betting — although states could still decide to regulate the likes of League of Legends, Dota 2, and Fortnite separately from traditional leagues such as the NFL, MLB, and NCAA.
“Today’s decision opens the door for regulated esports betting in the U.S., but the question remains of how each state will treat esports,” Eilers & Krejcik game industry analyst Chris Grove explained in a note to GamesBeat. “In Nevada, for example, esports aren’t handled like traditional sports for the purposes of sports betting. Each state will have to make their own decision about whether to lump esports in with traditional sports or to treat it separately.”
But the law that previously outlawed sports and esports betting in the U.S. across the board is done. States will want to get regulation into place, but daily fantasy sports website Draftkings says it already has products ready to go live to enable traditional gambling on the outcome of matches.
“This is going to be a huge industry,” DraftKings CEO Jason Robins told CNBC. “There will be a lot of competition, which is great for consumers.”
In esports, established pro gaming fantasy sites are also raring to rush into the betting space.
“It’s no different than sports betting,” Unikrn cofounder and CEO Rahul Sood told GamesBeat. “This is massive news that we have been expecting for some time. In the last 3 years, Unikrn has built a technical moat that has put us light-years ahead of the competition in our space and we are ready to launch across the US through various casino partners.”
Gamblers put $4.9 billion on legal sports bets in Nevada in 2017, and an estimated $3 billion was illegally wagered outside of United States through offshore bookmakers. Esports will have a much smaller market than that for now, but sites like Unikrn could lay a foundation for future generations of fans that age out of wide-eyed esports fanatic and into a jaded fan who needs to bet on his favorite team just to feel.
And again, that’s if esports betting will get the same attention from state legislators and regulators.<
“I suspect that many states will decide to handle it separately simply because of the perception among policymakers that esports largely is the domain of minors,” said Grove. “Policymakers may also have concerns about game integrity that could lead to esports being placed in a separate box. It’s entirely possible that game developers will lobby for esports to not be swept in with other sports for the purposes of sports betting, as many have a concern about the impact widespread betting might have on the development of their games and associated leagues.”
I’ve reached out to Valve, Riot Games, the Overwatch League, and other publishers and esports organizations about the future of esports betting in the U.S. I’ll update this story with any new information.
When it comes to traditional sports, NCAA, NFL, and NBA all lobbied in favor of the federal prohibition on sports gambling, and that’s a position you can expect many game companies to echo.