Loopholes in European esports gambling

The gambling industry adapts to the cross-border European digital sports market

Confusion rests at the heart of projected revenue figures for esports gambling in 2017. Forecasters for the gambling industry project a worldwide revenue between the distant figures of $57 million and $40 billion USD.

This discrepancy is due to only a relatively small portion of the earnings falling within the margins of regulation, which varies in every country and most states.

The inherent issue is that the growth of the young esports market still is not clearly defined internationally in either economic or legal terms.

The sport itself, which is simply made up of competitive video game tournaments with professional players, potentially occupies two realms (digital and land-based) of gambling depending on the state.

In 2017, as much as 90% of international esports gambling revenues are alleged to be illegal.

 

Flickr / Sam Churchill

With online gambling being so hard to police across borders, it becomes easier for the rate of illegal gambling to increase.

Ease of digital access and ability to place bets without proof of identity allow for creative loopholes by the gambling industry. Some of these are undesirable by the industry, instead of

exploited by consumers.

Children under the age of 18 can easily exchange real currency for either pretend currencies or digital vanity items which can be used to place bets on live esports matches, fantasy leagues, or games of chance.

A caveat with many of these specific cases is that the winnings from these bets cannot be cashed out, but instead are used to bet further or buy more vanity items for use on forum displays and video games.

These items might be novelty graphic design for a gun in the popular shooter Counter Strike: Global Offensive, which is obtained through real currency and then has monetary value with which that item can be used to gamble through some betting sites.

For esports gambling to be considered strictly legal in some states, it must meet the criteria of both online and land-based gambling, as its digital live-sports nature has ensured it can occupy both spaces. Regulation is tight throughout much of Europe for both types of gambling, meaning that some revenue cannot be officially declared and Europe stands to lose billions in tax annually.

Adrian Saelen, writer for the Esports Betting Report, says that Denmark is perhaps the strongest example of a European member-state integrating esports revenue into its economy. Online casinos operating in Denmark must apply for a gambling license which then enforces a flat-rate tax for its operators within the state. This standardised regulation is also attractive for multinational operators too.

There are no measures by EU law to address the loopholes presented by the cross-border nature of esports in the online gambling sphere.

Recognition of esports is inferred, but if any complaints are made regarding multinational gambling agencies, they will be dealt with through discussion with the Commission and member states on a per case basis.

Market intelligence company, Newzoo, published a media report on esport revenue streams for 2017, showing a strong indication that its market growth will be eclipsed in all forms by esports betting within the decade.

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