Play2Live provides blockchain solutions for eSports gambling
Betting and gambling are controversial. Equally, betting and gambling on sports and eSports are controversial.
Play2Live is a blockchain-driven platform for gaming and eSports. It has many unique features. One of them is a component for betting and gambling. So it is caught up in this controversy.
Play2Live is faced with a dilemma. It is trying to operate an open and transparent streaming business, which includes the facility for gambling, in an environment where gambling may be prohibited or frowned-upon, or where legislation is being blatantly ignored by gamblers.
However, because the platform is blockchain-driven, Play2Live believes that it can solve or prevent many of the problems related to gambling in gaming and eSports.
Overview of the eSports gambling industry
Gambling, both legal and illegal, and including gambling on sports, is said to be a $2 trillion industry.
Asia accounts for a large portion of it, with China, Singapore and India in the top 10 gambling countries, according to Slotegrator experts. The leading position is held by Great Britain, where 65% of all adults are said to gamble regularly. Next is Australia, although this is likely to change as gambling has been banned since 2017. Italy has only 2% of the world’s population but apparently accounts for over 20% of global gambling. The USA is in 6th position, but it has the highest value of betting in the world, contributing about $150 billion per year.
Gaming and eSports are part of this gambling phenomenon. Online or remote gambling is becoming the preferred method. According to Statista, bets on eSports are likely to grow from $315 million in 2015 to $23.5 billion in 2020.
An Eilers & Krejcik Gaming report in 2016 predicted a somewhat lower amount of $12,9 billion by 2020. This is based on a gambling community of 6.5 million, wagering ~$2,000 per year. The lower projection followed the crackdown in 2016 by Valve on third parties using its platform for skins gambling.
The Eilers and Krejcik report was aimed at “analyzing the intersection of the gambling and eSports industries”. It showed how awareness and a broader base of eSports fans have grown. This follows increasing integration with mainstream media and entertainment channels like Turner and ESPN, the growing interest from companies such as Amazon and Alibaba, and the explosion in the number of eSports events. It also showed how the demand for eSports and gambling appeared to be growing in tandem. Research shows a strong propensity for gambling among eSports fans.
ESports betting is increasingly being added to traditional sportsbooks, on sites such as Pinnacle, Bet365, Betway and other regulated market brands, while new companies such as Unikrn focus only on eSports.
Four games receive 92% of all current bets in cash gambling. League of Legends (38%), Counter-Strike: Global Offensive (29%), Dota 2 (18%) and Starcraft 2 (7%). Rocket League, World of Warcraft, Call of Duty and others make up the balance of 8%.
An interesting development has been the growing crossover between eSports and land-based casinos. The Downtown Grand in Las Vegas was one of the first casinos to provide an eSports lounge at its venue. The Tropicana and the Palms in Las Vegas have partnered with the eSports company UMG to bring both betting and live events to their casinos. Other venues are adding eSports events to their sportsbooks, hosting live events, and providing on-site eSports arenas or gaming stations.
Major concerns about gambling in eSports and possible blockchain solutions
Major concerns are about threats to competitive integrity, addiction and underage betting, as well as uncertainty about whether or not eSports betting is legal. We previously wrote about the impact of blockchain on eSports, as the use of blockchain technology has the potential to deal with many of the concerns.
Match integrity.
eSports are open to the same types of threats as traditional sports, such as match-fixing. But they also have unique threats such as DDoS attacks and platform hacks.
It’s easy to cheat in eSports. You can use technology to disrupt an opponent’s internet connection, take drugs to speed yourself up, or “throw” games. The Esports Integrity Coalition (ESIC) has been set up to address threats to the integrity of match results, including hacking, scripting, match-fixing, DDOS, or hardware manipulation.
Blockchain solutions are emerging to deal with this. For example, FirstBlood and Network Units are adding User Reputation Systems (URS) to encourage players to behave honestly (for example by giving them priority in future matches) and to punish players that don’t. Blockchain systems, such as that offered by Play2Live, allow for random selection of viewers to take part in judging or in reviewing games.
Because of all the betting, the game is susceptible to corruption. This is no different to traditional sports — one has only to look at the recent scandals around FIFA. To counter this, sports ruling bodies such as the International Olympic Committee and the NBA have linked with data-mining companies to monitor for suspicious betting activity.
Rahul Sood is the CEO of Unikrn, an online, blockchain-driven betting platform for eSports competitions. Sood believes that legitimate betting sites could help to stop corruption and match-fixing, as they can develop proper profiles of players and pick up suspicious patterns in betting.
Blockchain technology and especially smart contracts for tournaments can be very effective here. They reduce the chance of cheating and automatically distribute prize pools.
Gambling addiction
In many countries, concern about gambling addiction is given as the reason for strong regulation or prohibition. There has been concern that access to online gambling opportunities will exacerbate addiction.
An Australian study found that of the half a million adults who regularly placed bets on sports, 41% displayed gambling-related problems.
Interestingly, research undertaken by Harvard Medical School’s Division on Addiction shows that 95–99% of online gamblers were infrequent betters who gambled in moderation. They were also more likely to self-regulate their betting than those in casinos.
Similarly, according to a report from the National Council on Problem Gambling in Singapore, 52% of Singaporeans had participated in some form of gambling during 2017. Only about 1% of them were found to be problem gamblers.
This would obviously not hold true for children and there are serious concerns in countries like Thailand and South Korea about this. Children as young as 6 refuse to go to school and adolescents miss large chunks of school time.
Problem gambling is clinically recognized as an addiction and a mental disorder. According to the New York Council on Problem Gambling, children introduced to gambling before the age of 12 are four times as likely to develop into gambling addicts. Likewise, the National Council on Problem Gambling reports that 4–7% of teens display gambling problems. This is twice the rate of adults.
Research at California State University found that addictive video games changed the structure and functioning of children’s brains in much the same way that drugs and alcohol did. The main problem is that the frontal cortex of the brain develops only at the age of 23 to 25. Before this development, a young person may derive the pleasure and reward associated with competitive gaming but does not yet have the self-control to prevent the impulsive and risky behavior. Those addicted to video games also show an increased susceptibility to drug and alcohol addiction later.
Addiction of any sort is a complex problem, generally requiring medical intervention. However, there are some attempts to use blockchain technology to analyze the data of online casino users and easily see those with a potential gambling problem. Identity Mind Global is a company developing this type of intervention.
Skins gambling
Skins gambling is when online betting uses digital items rather than money. Skins are used as virtual currency to bet on the outcomes of games — and are even used in other games such as blackjack or roulette.
Skins are virtual items such as weapons that are used in games. They are often simply cosmetic — for example, a different color on a weapon — and don’t affect the outcome of the game itself. The value of the skin is completely consumer-driven — how much that person is prepared to spend on the item, depending on its rarity and demand.
Up to 2016, this was the most-used form of betting on eSports. In 2016, $550 million was bet in cash and $7.4 billion in skins. Nearly 45% of this was for Sportsbook Betting.
It is not clear whether skins betting would be regarded as illegal gambling according to US law. Some case law is emerging which seems to suggest that if there is no “real” money involved then there can be no illegal gambling.
However, during 2016, Valve, the publisher of CS: GO and Dota 2, was faced with a lawsuit alleging that they “Knowingly allowed, supported and/or sponsored illegal gambling”. This really was because they provided the API on their Steam distribution platform that allowed skin gambling websites to make the trades in skins. The core issue of the lawsuit was that these gambling websites were unregulated and did not have controls to prevent underage gambling. Steam issued “cease and desist” warnings to third-party sites, and the trade in skins dropped dramatically in 2017.
However, skin gambling just goes underground, and the issue is clearly ongoing. As recently as March 2018, Valve introduced new rules compelling buyers of skins to hold them for 7 days before trading or selling them. In June 2018, Dutch players were banned from trading in skins entirely to allow Valve to stay within Dutch law.
The potential for fraud is high and there is also no secure way to sell these digital assets to other players or across games and to convert skins to fiat.
Blockchain and tokenization are the obvious answer here. A company such as AugmentorsGame has a blockchain application that will provide proof of ownership and scarcity. It will also allow for trading outside of the games and inter-game operability.
Legislative uncertainty
The legal and regulatory status of gambling in eSports has been unclear, and it is also not clear what could be enforced in such a fragmented and global industry. There has also been pushback from some game developers against gambling on their games, and it is thought that they would have legal recourse if they wished to stop it.
Part of the difficulty is that even in countries where land-based casinos are legal, there is uncertainty or outright prohibition on online casinos or payments for bets via the internet.
USA
In the USA, betting on sports has been allowed in only 4 states — Delaware, Montana, Nevada and Oregon. Nevada also recently introduced an eSports Bill that makes pari-mutuel bets legal for eSports events.
There has been a dramatic change to the USA legal position following the May 2018 ruling by the US Supreme Court that the Professional and Amateur Sports Protection Act of 1992 is unconstitutional. This leaves the way open for individual states to make their own rulings on sports betting. New Jersey, which is the State that instituted the case to the Supreme Court, has immediately enacted legislation permitting sports betting, including online betting.
However, and to date inexplicably, “electronic sports and competitive video games” are listed as prohibited sports in the New Jersey legislation. On the other hand, “international sports events in which persons under age 18 make up the minority” are allowed. This might allow for betting on games such as Overwatch and League of Legends which have international teams and stipulate age limits for players.
It seems likely that at least 11 other States will pass bills to regulate sports betting during the course of 2018. This will probably focus on casinos or lotteries, but if such legislation is passed it is thought that this would quite quickly lead also to the legalization of online betting. This remains to be seen, especially as the Wire Act remains in place. This Act outlaws the use of telephone or other wired devices to transmit bets or wagers on sporting events.
At the moment, according to an EKG report, Americans place only about $3 billion in sports wagers (for all sports) locally, and $57 billion with offshore sites and bookies. Other estimates say that in 2017, $4.7 billion was wagered legally in the Nevada sportsbooks, while an estimated $150 billion was gambled illegally by Americans.
Several traditional sports bodies, representing baseball, football, college sports and others, opposed the legalization of gambling. Many of them have reacted to the Supreme Court ruling by calling for ways to ensure integrity in their sports, including imposing an “integrity fee” on all gambling.
There is a growing call for the legalization of sports betting. The strongest argument for this is that it happens anyway, so it would be better to regulate and tax it.
The following comment from Chris Eaton, executive director of sports integrity at the International Centre for Sport Security (ICSS), was about sports in general. It probably applies also to eSports and other gaming:
“Sport betting must be legalized, or at least recognised by all governments, and then strongly regulated and controlled at the national and international levels … governments must join up to ruthlessly detect and dismantle illegal and invisible black operators.”
This viewpoint was echoed by Rahul Sood, the CEO of Unikrn.
“Without regulation, illegal skin betting and online gambling will continue to plague the space and steal revenue from the United States. Worst of all, bad operators will continue to prey on people who should not be allowed to gamble in the first place — not to mention these people operate sites that are clearly ripping off consumers without any consequences.”
As an interim solution, Unikrn plans to partner with licensed, land-based casinos in the USA, and make use of their security systems and geo-based technology to make sure that only gamblers in licensed states are allowed to bet. They also have a deal with MGM Resorts to run e-Sports tournaments at the MGM Grand Hotel and Casino in Las Vegas, Nevada.
Asia
Gambling in Asia is widespread. Some say that this is because of cultural beliefs in luck, fate and fortune. It is also quite complicated and is illegal or highly restricted in many countries. Where it is legal, this is mostly in land-based casinos, many of them in so-called integrated resorts.
However, gambling is very prevalent, with gamblers increasingly turning to online gambling and international websites. The challenge for such sites is to provide a local language interface and to provide an easy mechanism for placing money. The challenge for governments in the region seems to be to find a way to deal with cross-border online sports betting that they are unable to regulate or tax.
We have written a more in-depth article on the status of eSports gambling in 12 countries in Asia. You can read it here.
Europe
Play2Live has registered offices in both Malta and Cyprus.
Malta has become the center for regulated online gambling in the EU. Operators obtaining a Malta license can then operate in most EU countries. More than 500 such licenses have been granted. One of the categories of licenses allows companies to provide online gambling platforms. Betting in cryptocurrencies is also being allowed. This has been important for blockchain-driven platforms like Unikrn and Play2Live.
Cyprus allows online sports betting and land gambling, but other online casino gambling is not allowed. It seems that betting with virtual currencies also is not allowed. However, it seems, according to GamblingCompliance, that Cyprus wants to be the next Malta and to become a hub for online gambling.
Russia, CIS and Caucasus
As in Asia, there is no single approach to gaming and gambling in the Russia, CIS and Caucasus region. In general, they are heavily regulated and monitored by government authorities.
According to a Slotegrator analysis, both online and offline gambling is completely forbidden in many CIS countries. Where it is permitted, this was the picture
· Georgia, Armenia, Kazakhstan and Turkmenistan
o Land-based casinos are legal, although only in some zones
o Online casinos are allowed in Georgia and Armenia, with local licenses required
· Belarus and Tadzhikistan
o Online and offline gambling is legal, but gambling houses need to be licensed.
o Illegal online casinos are monitored and blocked
· Russia
o Land-based casinos are allowed in four zones only
o Legislation in 2015 was a move towards allowing online transactions linked to land-based casinos, but all other online gambling is prohibited
o Websites of online gambling providers have been blocked since 2012
o Legislation introduced at the end of 2017 blocked certain payment methods to fight illegal gambling
· Ukraine
o All casinos are forbidden
o Gamers using online resources are not prosecuted
o There have been attempts since 2009 to lift the ban on gambling, but draft laws have not yet been passed, despite a pledge by the country’s president in 2107 to legalize gambling by 2018
Blockchain as the answer
A solution to many of the problems listed is blockchain technology. It will also make the eSports industry more transparent and efficient.
· It provides transparency; it’s incorruptible; smart contracts ensure fairness, security and speedy implementation of payments and other agreement terms.
· The key is tokenization, where the value is held and distributed via peer-to-peer networks rather than centralized hubs. eSports is a perfect application for tokenization, and there are predictions that, in the future, game-purchase transactions will occur exclusively in cryptocurrency.
· Blockchain shifts power relationships — so, in eSports, this means putting some of the power currently in the hands of publishers and large tournament organizers into the hand of players and viewers.
· Platforms become facilitators of decentralization, rather than providers of centralized services.
· Financial and geographical restrictions become irrelevant — this is important to eSports, which, after soccer, is the first truly global sport.
The Play2Live approach
Play2Live believes that proper regulation and legitimate betting sites are an important part of stopping gambling problems. When these sites can also provide the security and transparency available only possible through blockchain, their potential as a solution is vastly increased.
How does the Play2Live system work?
Play2Live aims to use blockchain potential at full power. It creates a comprehensive ecosystem for streamers, gamers and eSports fans. It has created a streaming platform which integrates blockchain functionality and therefore has unique interactive features and monetizing tools.
Integrated betting and gambling on the platform allow viewers to place bets during tournaments (with no middleman required) or to place bets with outside bookmakers, without leaving the platform. All transactions on the platform are via its own token, the LUC. LUC can be bought using either fiat currencies of cryptocurrencies like bitcoin and Ethereum. Winnings and earnings can be re-converted into any of these currencies, or used on the platform to buy games from partner stores, to make donations directly to streamers, for bets on teams and competitions, for subscriptions and for fees to participate in tournaments.
Play2Live publishes the coefficients from different bookmakers, who provide their API for integration into the platform and agree to accept LUC as a means of payment for these bets. After bets have been approved by bookmakers via API, users will be redirected to their websites. Earnings are paid according to the model of revenue-sharing with bookmakers.
While the controversy around gambling in general, and gambling in eSports in particular, is unlikely to go away, blockchain-driven platforms like Play2Live can certainly provide some solutions.
Stay tuned!