How to Profit from Gambling’s New Multi-Billion-Dollar Frontier
Esports, competitive video gaming at a professional level, have been around for decades.
From humble beginnings in the 1980s, competitive video gaming has exploded in recent years.
Today, players participate in professional leagues with team franchises and high-dollar media deals. They display their skills in sold-out arenas as millions of fans watch online.
What was once a niche world of small online communities is now a billion-dollar global industry and growing.
To put the surging popularity in perspective for those new to this market, last year’s League of Legends world championship, where players competed for millions of dollars in prize money, was held at the famous Birds Nest in Beijing, the national stadium originally built for the 2008 Olympic games. And it was packed.
Overall, an estimated 385 million people from around the world tune in to watch teams of video gamers compete.
Adidas, Under Armour, Nike and other major brands sponsor players, teams, and events.
Media rights for events, which hit $50 million in 2016, are expected to surge seven-fold by 2020, reaching nearly $340 million.
ESPN struck a deal with EA last year to broadcast FIFA tournaments on ESPN, ESPN2, ESPN Deportes, and ESPN3.
Europe’s elite soccer clubs have been signing esports players at an increasing pace in recent years, even signing players outside of soccer, as they vie for a share of the multi-billion dollar market.
The Philadelphia 76ers became the first U.S. sports team to acquire a competitive gaming team, purchasing team dignitas in 2017 in a deal sources place at as much as $15 million.
While the trend is clear, the average investor has lacked a way to profit from this growth, until now.
Betting on a Winner
Esports Entertainment Group (OTCQB: GMBL) is a pure-play opportunity in the esports market with a business model that can scale while generating big profits.
And it’s still trading under the radar of bigger Wall Street investors. At least for now.
“We’re the first bet exchange in the esports sector,” stated Grant Johnson, Chairman and CEO.
As the popularity of esports has soared, so has interest in wagering on the competition.
GMBL has developed a next generation online platform to facilitate as much of the wagering demand as possible.
It’s estimated that esports wagering will top $20 billion over the next few years. In 2016, total bets in the space were reported at $1 billion.
And these numbers are from before May 2018’s landmark U.S. Supreme Court decision that paves the way for states to legalize sports gambling.
According to the casino-backed American Gaming Association, Americans place $150 billion a year in illegal sports bets. As the race to legalization unfolds, this could add billions to esports wagering in the coming years.
Unlike a traditional sports book, where players bet against the house, this company has developed a technology platform that connects gamblers directly.
“Because of that arrangement [bet exchange], we’ve been very successful in attracting esports personalities, team owners, streamers to sign up as our affiliates [marketing partners],” commented Johnson.
It doesn’t matter who wins or loses, GMBL generates fees from simply matching the bettors.
GMBL began building its affiliate network in earnest at Gamescom 2017, where it signed more than 60 affiliate marketing agreements. Fast-forward a year and GMBL left Gamescom 2018 with another 190 affiliates, a 190% increase over the prior year signings.
"Our entire reason for being at the event was to attract new affiliates," explains Johnson. "We wanted the streamers, the bloggers, and the influencers of the Esport sector. We were the only company in our industry speaking to the Esport community, which might tell you a little something about our competition."
Affiliate partnerships are a key marketing tool for GMBL to ensure its platform is well-known and trusted among its target demographic.
"Our affiliates are critical to us going forward, they have a voice with the fans. By them feeling comfortable with our service they are effectively marketing us to their fanbase,” Johnson added.
Professional Team Support Expected to Accelerate GMBL’s Growth Potential
Since its successful beta test and launch in March 2018, GMBL has made strong inroads within the esports team community.
In addition to the partnerships with streamers, GMBL also signed Affiliate Marketing Agreements with dozens of Esports teams. A milestone that no other Esports betting platform has ever accomplished.
"As of now, we have 174 professional teams that play in cash tournaments," said Johnson. Together with its other affiliates, "They will help reach their fan bases and viewers.”
Robust and Scalable Platform
The company’s VIE platform offers bet exchange style wagering on esports events in a licensed, regulated and secured platform to the global esports audience, excluding jurisdictions such as the USA that prohibit online gambling.
The bet exchange model provides for player versus player betting (PVP) with the house taking a small percentage of each wager, as opposed to a sports book model that pits the player versus the house, meaning a VIE player always wins and the Company removes all risk, creating a win-win for players and the Company.
The launch of VIE follows months of extensive, final financial compliance with applicable regulators, financial institutions and payment processors, as well as beta testing that provided the Company with valuable feedback from esports enthusiasts around the world.
The VIE platform features wagering on the top games in esports, including Counter-Strike: Global Offensive, Dota 2, Call of Duty, Hearthstone, and StarCraft II.
“The esports fan base is forecasted to surpass $590 million in the next two years,” added Johnson. “It’s increasing tens of millions of people per quarter, which is a huge opportunity and shows no signs of going down.”
Low Stock Price Provides Substantial Upside
GMBL’s stock was as high as $3 last year. Today it trades for just under $1 per share.
If it only recovers to last year’s high, you could see a more than 200% return. With the platform now live, in a red-hot sector, with top notch management, and an army of affiliate marketers we think it could ultimately trade much higher.
“We expect to reach breakeven within 18 to 24 months of launch [March 2018],” commented Johnson. “We’re the only esports company that’s publicly traded, providing SEC oversight, and showing transparency,” which has boosted GMBL’s ability to sign its affiliates, providing a compelling competitive advantage.