weather icon Clear

Esports poses additional challenge to states entering legalized sports betting

PROFESSIONAL wrestler Eddie Guerrero is credited with coining the phrase, “If you’re not cheating, you’re not trying.”

That philosophy apparently has found its way into esports, the popular new world of competitive video gaming.

A recent study by Brett Abarbanel, director of research for UNLV’s International Gaming Institute, and Mark R. Johnson, a Killam postdoctoral fellow in the Department of Political Science at the University of Alberta, found that many fans of video game competitions aren’t concerned about whether players deliberately set out to lose.

That, of course, is a big integrity problem if there are bettors wagering on the outcome of a competition.

It’s one more roadblock in the bid to popularize esports within the gaming industry and another reason why sports wagering isn’t the panacea many states thought it would be for struggling government budgets.

Both topics were front and center in last week’s International Conference on Gambling and Risk Taking, a once-every-three-years event that brings academia to the industry that made Las Vegas famous.

With casinos accessible in most U.S. states, Las Vegas has been working to market offerings that other casino destinations don’t have. One of those is esports venues, an attempt to lure millennials — people roughly between ages 23 and 38 — into the casino with an attraction that appeals to them.

The Abarbanel-Johnson research illuminates a problem related to betting on esports, especially if players and the fan base have no problem with participants throwing matches. It means they probably wouldn’t bet on it.

Match-throwing is no different from athletes who underperform to shave points for profit, a phenomenon that has occurred occasionally in college basketball. The integrity of the game is what many sports leagues and the NCAA harp on most when it comes to sports wagering.

The jury is still out on how sports integrity will be monitored as sports betting spreads across the U.S. like a spring snowstorm.

An illuminating presentation at last week’s conference featured Jennifer Roberts, another member of UNLV’s International Gaming Institute team.

Roberts said that some states are a little disillusioned that sports wagering revenue isn’t turning out to be as great as they thought it would be.

Policymakers apparently didn’t understand that handle — the amount of money wagered on games — isn’t the same as taxable revenue. When states saw that Las Vegas annually takes $4 billion in sports bets and that it was estimated that anywhere from $80 billion to $380 billion was wagered illegally worldwide, the policymakers immediately saw an opportunity to build roads, fund education and provide new government services.

Las Vegas sportsbook directors explained over and over that while billions come in, billions also go out to pay winning bets.

Roberts explained the low margins that sportsbooks deal with on a regular basis when they take action on games. She shared how a sportsbook director’s job is to set lines that attract bettors on both sides of a game or proposition. She defined “vigorish,” the amount of money the book takes for itself on bets, and explained how money bet by the losers is used to pay off the winners.

There are other expenses paid by the revenue generated: employees salaries, rent, line information services, software and technology providers, corporate income taxes, gaming revenue taxes and, if leagues get their way, official data and integrity fees.

Roberts used Rhode Island’s experience as an example of what it thought was going to happen and what actually happened. The state’s sports wagering revenue projection was $11.5 million; so far, it has made $150,000 since betting began Oct. 1, even with a 51 percent tax rate. Incidentally, the state got crushed in the Super Bowl, paying off a high number of bets on the New England Patriots to win.

Those who see esports as a possible new sportsbook revenue source can look to Nevada for how well that’s going. So far, only four books have sought regulatory permission for wagering for esports events.

If books were to get into that action, they’d need to hire some experts who know esports well enough to produce good lines.

And now, per Abarbanel and Johnson, there could be an integrity problem too, because if you’re not cheating, you’re not trying.

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter.

Don't miss the big stories. Like us on Facebook.
Business Videos
Southern Nevada could set a new resale-price record in coming months.
The median sales price of previously owned single-family homes – the bulk of the market – was $310,000 in September. Before the economy crashed last decade, prices peaked in June 2006 at $315,000, according to the Greater Las Vegas Association of Realtors.(Bizuayehu Tesfaye/Las Vegas Review-Journal) @bizutesfaye
Walmart container park in Henderson - VIDEO
Henderson could be home to a container park associated with a Walmart Inc. initiative. (Las Vegas Review-Journal)
Recession lessons could help Las Vegas face next slump - VIDEO
While the last economic downturn had a dramatic impact on local casinos, most experts expect the industry will be better able to weather the storm during the next recession. (Mat Luschek / Las Vegas Review-Journal)
MGM and victims of Oct. 1 reach settlement agreement - VIDEO
MGM Resorts International and lawyers representing potentially thousands of victims of the Oct. 1, 2017, mass shooting on the Las Vegas Strip have reached a tentative settlement of between $735 million and $800 million. (Mat Luschek /Las Vegas Review-Journal)
Live music and EDM dominate the night on day 2 of A’Le’Innstock
After sunset bands rocked the crowds at A’Le’Innstock in Rachel, Nevada on the second night of the event.
iPhone 11 Release
Local Las Vegas long time Apple product consumer shares her excitement for the new iPhone 11 release Downtown Summerlin. (Elizabeth Page Brumley/Las Vegas Review-Journal)
Lihi Levin talks about a mobil app Dropit - VIDEO
Lihi Levin, regional manager at Dropit Shopping, talks about a mobil app Dropit. The app lets customers leave their shopping bags at a store then have them delivered the same day to their home or hotel so they can shop without carrying multiple bags all day. (Bizuayehu Tesfaye Las Vegas Review-Journal) @bizutesfaye
North Las Vegas company prepares for Mars - VIDEO
Robert Bigelow and his Bigelow Aerospace manufacturing facility played host to eight NASA astronauts and 60 engineers this week getting to know the company’s B330 autonomous, expandable space station. (Elizabeth Brumley/Las Vegas Review-Journal)
Las Vegas developer talks about a new apartment complex called “the yoU”
Frank Marretti lll, founder of G2 Capital Development, talks about his new apartment complex called “the yoU” near UNLV. (Bizuayehu Tesfaye/Las Vegas Review-Journal) @bizutesfaye
Steel cables will hoist roof at Allegiant Stadium - VIDEO
Stainless steel cables are being put into place at Allegiant Stadium to begin the process of putting the roof on the 65,000-seat stadium in Las Vegas. Stadium Chief Operating Officer Don Webb explains how the cables will be used to get the roof put on the future home of the Raiders and UNLV football. (Heidi Fang/Las Vegas Review-Journal)
The last remaining Sigma Derby game in Las Vegas
Derek Stevens, owner of the D Las Vegas, talks about the last remaining Sigma Derby horse racing game in Las Vegas inside his casino floor. (Erik Verduzco/Las Vegas Review-Journal)
Popeyes Spicy Chicken Sandwich Review
Janine Blake of Las Vegas gives her review of the new Popeyes Spicy Chicken Sandwich at the restaurant’s location on west Bonanza Road on Thursday, Aug. 22, 2019,
SuperZoo 2019 takes over Mandalay Bay in Las Vegas
SuperZoo 2019 show for pet retailers brought pet products of all description to the Mandalay Bay Convention Center in Las Vegas. (Heidi Knapp Rinella/Las Vegas Review-Journal)
MSG Sphere at The Venetian to cost $1.2B plus
Scheduled to open in 2021, it is expected to be busier than Madison Square Garden in New York. (Michael Quine/Las Vegas Review-Journal)
Favorite products from SuperZoo 2019
Some of the fun and interesting pet products on display at the SuperZoo in Las Vegas at the Mandalay Bay Convention Center. (L.E. Baskow/Las Vegas Review-Journal)
MAGIC Convention Day 3
The fashion trade show MAGIC, held Monday through Wednesday at the Las Vegas Convention Center. (Elizabeth Brumley/Las Vegas Review-Journal)
MAGIC Las Vegas - Day One
The biannual MAGIC convention show opened Monday at the Las Vegas Convention Center. (Elizabeth Brumley/Las Vegas Review-Journal)
Allegiant celebrates naming deal with tailgate party
Allegiant Air employees celebrate with a tailgate party after the company’s naming deal with the Raiders for the new Las Vegas stadium.
Nevada's sportsbook operators welcome competition
Sportsbook operators from near and far are looking to get into in the established Nevada market, experts say. (Las Vegas Review-Journal)
Get a first look of MSG Sphere construction in Las Vegas
Representatives of The Madison Square Garden Company give the first glimpse of progress Tuesday of the under-construction MSG Sphere — a first-of-its-kind performance venue with high-tech audio and visual capabilities.
There's a new place to play board games in Las Vegas
Matt Smiciklas, co-owner of Boarding School Games, talks about the new Las Vegas business that he co-owns with Emily Labejof. Dedicated tabletop gamers can choose from more than 500 games to play for free in-store. The doors open to the public Saturday, July 20, 2019. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Renovations at the STRAT
Analysts say the $140 million renovation project at The STRAT, formerly the known as the Stratosphere, could help the hotel-casino compete with the evolving north side of the Las Vegas Strip. (Bailey Schulz/Las Vegas Review-Journal)