eSports match-fixing scandals show need for regulation

Recent match-fixing scandals that have rocked the world of eSports have highlighted the need for regulation if the industry is to continue to thrive, according to market participants.

In the latest scandal South Korean investigators recently made 12 arrests over five rigged StarCraft II matches. Three of those arrested for their involvement in the fix, which is said to have netted tens of thousands of dollars from illegal betting, were two eSports players and a coach. The Korean eSports Association (KeSPA) said it plans to hand down lifetime bans to the trio. It seems that where there’s competition and betting, fixers are never far away. Even video gaming is now in their crosshairs.

These days, eSports is big business, especially in the Far East. According to SuperData, it’s now a global industry worth $747.5 million, with Asia accounting for $321 million of that revenue, and is set to rise to $1.9 billion by 2018. The most popular games for competitive eSports matches include League of Legends, StarCraft II, Dota 2 and Counter-Strike: Global Offensive (GSGO). In South Korea – the epicentre of eSports – pro gamers representing the elite teams earn six-figure salaries and are worshipped like rock stars by their armies of adoring fans. Showpiece matches are screened on Korean TV, while dedicated online gaming channels like Twitch have brought eSports to the masses, turning it into a 24-7 form of entertainment.

Betting was a natural byproduct of eSports’ surge in popularity. In fact, Eilers Research predicts that eSports wagering will exceed a whopping $23 billion by 2020. So with betting soaring, is match fixing for betting purposes an easier proposition than trying to rig the outcome of a football or tennis match? “Possibly,” says Mark McGuinness, an online gambling industry veteran and co-founder of betting portal eSportsbet.com. “Its easier to influence eSports players who perhaps aren’t earning as decent money as a professional gamer. In fact, only 1 percent really earn serious money on the pro circuit, so the opportunity for a 21-year-old to earn a lot of money by not performing in a tournament could appear very attractive.”

‘Lounge’ sites (CSGOLounge and Dota2Lounge) partly fuelled today’s growth in eSports gambling. Users, who aren’t subject to any know your client checks, wager skins (in-game items that have real-world monetary value and are traded in online marketplaces) on the results of online matches. Luke Cotton, a former semi-professional gamer who in the past has supplied leading European bookmakers with eSports data to price up matches, says: “If you were looking to bet on a fixed CSGO or Dota match, you would do it on a lounge site as you could bet as much as you want without affecting the odds too significantly.”

Not wishing to miss out the next big thing among Millennials, a number of western sportsbooks have jumped on the eSports bandwagon by pricing up top matches. Pinnacle Sports accepted its one-millionth eSports bet last year. It’s the bookmaker’s seventh-largest market. “We are yet to witness five- or six-figure bets on eSports,” says McGuinness, “but that will change as the market becomes mature and bookies enter a price war to attract players’ betting wallets.”

There are also dedicated eSports betting sites, including Seattle-based Unikrn, which allows players to wager with real money or virtual currency known as Unikoins. “Gambling can make eSports even bigger and better,” says Bryce Blum, Unikrn’s director of eSports and in-house counsel.

Yet he’s all too aware that maintaining the integrity of matches and tournaments is an absolute must. “Match fixing scandals are devastating for the entire industry. As eSports reach a tipping point of mainstream emersion, the legitimacy of match results is more paramount than ever. Advertisers, investors and fans depend on it.” He continues: “If we truly want to safeguard competitive integrity, the worst thing we can do is ignore the rise of eSports wagering and allow an unregulated market to thrive. I’m not sure match fixing and other threats to competitive integrity can ever be completely eradicated, but cheating flourishes in unregulated environments.”

In a bid to combat cheating and match fixing, UniKrn recently announced a new Competitive Integrity Certification Program. Tournament host FaceIt became the first partner in the scheme, which aims to establish best practices to address concerns around the integrity of matches. Meanwhile, sport data supplier Sportradar, which monitors five billion odds movements a day to spot suspicious betting patterns, has inked a deal with the world’s largest eSports company, ESL. It means that Sportradar’s Fraud Detection System now extends to eSports betting.  

With incidents of match fixing and even drug abuse scandals, which has led to random drug testing of eSports competitors, it appears that this soaring sector isn’t immune to the problems that plague many traditional sports. “More needs to happen [to protect eSports’ integrity],” says McGuinness, “but, fundamentally, new regulation around digital betting that includes eSports needs to be considered if the burgeoning industry is to flourish both for consumers and operators.” One thing is for sure: the latest StarCraft II betting scandal in South Korea wasn’t the first case of match fixing in eSports, and it won’t be the last. “The reality is the proclivity for gambling already exists for eSports and will continue to exist alongside the potential for betting scandals,” McGuinness warns.