There is a billion-dollar market for online eSports games like Call of Duty and League of Legends. Such contests are filling stadiums around the world and attracting millions of viewers online. ESPN is investing heavily in eSports coverage.
But for the gambling world, eSports has been the looming quiet giant while daily fantasy sports and Internet gaming have grabbed the attention. Unlike daily fantasy sports and traditional Internet gaming, eSports games are thriving without a gambling component. Now, developments in Nevada and New Jersey suggest that those states are forming the foundation for eSports gambling and cash contests to become a billion-dollar industry.
• Nevada. Nevada has live eSports contests for cash at one of its casinos, the Downtown Grand. Games structured as contests are introduced more quickly than gambling games because the regulatory approval process is much easier. Nevada hosts major eSports tournaments, attracting tens of thousands of new tourists. The state has regulations for approving eSports games and is testing live games in which players can compete and bet against one another. But Nevada laws for online gaming currently allow only poker. There are no provisions to offer eSports gambling games online. And some questions remain as to whether Nevada’s sports books can take bets on eSports games.
Nevada’s Gaming Policy Committee recently met on eSports and interactive gaming. Those who spoke at the meeting made it clear there is a strong desire to economically encourage eSports games developers to come to Nevada.
• New Jersey. New Jersey’s regulatory process allows eSports developers to introduce their products more quickly to casino floors than Nevada. New Jersey passed regulations for the approval of eSports and now eSports gambling games are currently being tested for introduction to its casino floors. And New Jersey’s online gaming laws allow all games, not just poker.
• Other States. A number of states are creating the regulatory framework to bring games of skill, including eSports games, to their casino floors. Like Nevada, eSports games structured as contests for cash can be conducted legally in some states. And there may not be many obstacles to states legalizing eSports gambling games. While the Professional and Amateur Sports Protection Act of 1992 (“PASPA”) prohibits sports betting throughout most of the country, an argument can be made that eSports aren’t true sports under PASPA, so it doesn’t prohibit betting on eSports events. The number of states that have quickly moved to enact laws to legitimize online daily fantasy sports strongly suggests that there would be an appetite for online or live eSports gambling alternatives. And those states have Nevada and New Jersey to look to for guidance.
Dennis Gutwald is of counsel at Brownstein Hyatt Farber Schreck.