Customer Experience

Pandemic, demographic change drive sports betting, e-sports

Appealing to younger audiences, sports betting exchanges and e-sports are also driving the growth of cryptocurrency and other digital assets.

Image provided by iStock.

October 27, 2021 by Elliot Maras — Editor, Kiosk Marketplace & Vending Times

Two of the fastest growing gaming industries — sports betting and e-sports — will soon become "mainstream," according to industry observers. These sectors, particularly popular with tech savvy younger consumers, gained momentum during the coronavirus pandemic as consumers sought new forms of entertainment.

Attendees at the recent Global Gaming Expo in Las Vegas got a glimpse of the innovation in these sectors on the trade show floor, including numerous sports betting kiosks, as reported two weeks ago.

Gaming and technology attorney Marius Adomnica and Sporttrade's Alex Kane share their enthusiasm for sports betting and e-sports during the Global Gaming Expo.

Showgoers also gleaned insight on factors driving the growth in these sectors during an education session, "North America's New Frontier; Betting on Exchanges and E-sports." Brett Abarbanel, Ph.D., director of research at the International Gaming Institute at the University of Nevada, Las Vegas, moderated the session.

Much of the session focused on the demographic changes driving the two industries, which Abarbanel noted are evolving in tandem.

Younger consumers bring new entertainment habits

"It's the future," said panelist Marius Adomnica, an attorney specializing in video game and technology law at Segev LLP in Vancouver. Younger people today do not watch sports on television, Adomnica said.

Panelist Alex Kane, CEO and founder of Sporttrade Inc., a sports betting exchange, agreed there is a generational divide between gamers who patronize e-sports and those who use more traditional forms of betting; people in their twenties are more active in e-sports.

Kane believes Sporttrade, which operates like a day trading exchange, will find a receptive audience due to the popularity of online trading. Sportstrade, which announced a $36 million funding round in June, will launch in New Jersey soon and will be among the nation's first regulated sports betting exchanges.

Betting exchanges foster opportunities

One benefit of a sports betting exchange is that it allows a fast way to market a unit of value, Kane said, similar to the way a stock exchange allows a company to go public.

"One of the things that's really cool about a betting exchange is once you create the right structure, once you create the rule by which every buyer and seller has to follow, then listing a new outcome is much less of a reach than it is for a sports book," Kane said. "Sports betting and gamified financial trading are really one and the same."

Another reason for optimism is that the traditional gaming industry has embraced e-sports betting, Adomnica said.

A bigger role for crypto

By appealing to younger audiences, sports betting exchanges and e-sports are also driving the growth of cryptocurrency and other digital assets, the panelists noted.

Drilling down further into demographic trends, Kane said new investors in 2021 are twice as likely to have cryptocurrency in their investment portfolios than new investors in 2019, according to a recent news report.

"Literally in the last two years, the risk appetite of investors has increased," Kane said. "The desire to have shorter term returns and being comfortable with volatility is exponentially increasing.

"Crypto has now surpassed ETFs (exchange traded funds) and mutual funds as more popular holdings for first time investors in 2021, and this is the first time that that's happened," Kane said. He said there is now an entertainment component to how people are trading, which offers an opportunity for sports betting.

Digital assets on the rise

Digital assets besides crypto, another growing market, will also play a role in sports betting and e-sports, the panelists agreed.

As an example, Kane pointed to DraftKings Inc., a sports betting operator that offers non-fungible tokens, known as NFTs — units of data stored on a digital ledger that can represent items of value.

"Is DraftKings doing this because they want a bunch of money to leave their system, or are they doing it because buying NFTs is another form of gambling?" Kane asked. "You're doing it (wagering these assets) because you want your value to go up."

Where some people call NFTs an alternative asset class, Kane said he sees it as another form of gamification for investing and trading.

"It's a collector's item that is completely 100% digital," Kane said. "People are creating marketplaces for digital items…People just like to own things…They like to say, I'm the one guy who has this video or this jpeg."

Growth brings challenges

Asked what challenges Sporttrade will face, Kane said the sports betting market is highly fragmented since it is regulated by the states.

There is also an education challenge since the sports betting model is new, both for regulators and customers. Kane offered Robinhood, a service that trades commission-free stocks, exchange traded funds and cryptocurrencies via a mobile app, as an example for Sporttrade that people can understand,

"What if you could trade on the probability of an event to occur?" Kane asked. "You can trade based on what the market thinks the probability is. You could do it every play, you could do it every quarter, you can just buy and hold just like a traditional investor."

Adomnica said a big challenge for e-sports is deciding what events to take bets on.

"It's not like traditional sports where you have leagues around for a hundred years," he said. "There are really no consistent rules across the (e-sports) industry... It's not as simple as plugging in to the traditional sports model and just changing the events from the NFL Game of the Week to e-sports."

Kane said many sports betting products to date have done a poor job of attracting and addressing the female audience.

"It's not a very inclusive way to approach customers," he said, noting that females are an equal part of the sports betting audience.

Adomnica concurred, adding that marketers need to be aware that while the e-sports market attracts a younger clientele, people of all ages are involved.

"There is a lot of regulatory stuff that has to be worked out," Kane added.

Kane acknowledged that player loyalty will also be a big challenge for online sports betting exchanges once they become established.

"How much free money can you give away?" he asked, noting that casinos continuously have to raise the bar to attract and keep customers.

Kane credited the pandemic for accelerating the development of online sports betting.

"It accelerated consumer behavior," he said.

For an update on how the coronavirus pandemic is affecting the kiosk industry, click here.

Customer Experience