Illegal Bets, Match-Fixing, Doping: The Dark Side of Esports

(Bloomberg) -- Last August, police in Australia’s Victoria province arrested six young men competing in the popular online video game “Counter-Strike: Global Offensive.” The authorities, who had tracked the suspects for six months, said they had deliberately lost at least five tournament matches after illegally betting on their own defeats, in Australia’s first police investigation into esports match-fixing. If convicted, the men face up to 10 years in prison. 

With most sports on hold because of the coronavirus pandemic, watching the world’s most talented gamers do battle online has never been more popular. The average number of viewers on Amazon’s Twitch platform has roughly doubled in April from a year ago. Fans use Twitch and rival services such as Google’s YouTube and Microsoft’s Mixer to watch professional gamers clash in anything from Electronic Arts’ best-selling FIFA soccer franchise to Activision Blizzard’s violent “Call of Duty” shooter. 

As money pours into the nascent industry, the temptation for players to break the rules is growing. Corruption is rife, with gamers caught cheating and illegal betting syndicates trying to fix matches. Because much of the action takes in a virtual world that spans multiple jurisdictions, it can be harder to stamp out than graft in regular sporting competitions. 

“It won’t be possible to fully eliminate illegal betting and match-fixing,” said Stephen Hanna, an Australia-based director at the Esports Integrity Commission, or ESIC, which was set up by the industry to fight corruption in its midst. “It’s about limiting its position in the market to the greatest extent possible.” 

Esports has developed from a narrow community of enthusiasts doing battle via PCs in suburban bedrooms into a global business. Major sponsors including Coca Cola, Louis Vuitton and BMW are piling in, drawn by the opportunity to reach the kind of young audiences who have been turning away from traditional media. The ethnic diversity at the top of esport leagues and their truly global audience add to the appeal for big brands.  

Tournaments such as The International and Fortnite World Cup are usually live-streamed from big arenas, and the winners can earn several million dollars. Most of the money, however, is made from betting: Wagers on esports are expected to surge to $13 billion this year from $5.5 billion in 2016, according to a report by research firm Eilers & Krejcik Gaming and advisers Narus. That makes it one of the biggest sources of growth in a sports betting market that Zion Market Research estimates is worth about $135 billion. 

Betting firms including Betway, Hillside Sports ENC and Tipico are already active in esports, one of the few things that are still open for bets — if you’re not into Belarussian soccer. While most stadium tournaments are off the cards for now, you can still place money on dozens of competitions that are streamed live, with players competing remotely. 

Just as in traditional sports, there are many ways to game the system. Players have been bribed or pressured into losing matches on purpose by illegal betting syndicates. Nikhil Kumawat, an Indian gamer known as “Forsaken,” used software to cheat and improve his winning chances. Lee “Life” Seung-hyun, one of South Korea’s best gamers, was banned for life in 2016 and sent to prison for 18 months after throwing two professional matches. 

Governments have been trying to stamp it out. Sweden last year introduced a regulation to fine betting firms that offer odds on matches in which the majority of players are younger than 18, to protect the integrity of the sport and reduce the incentive to fix matches. Similar measures are in effect in Spain and the U.S. (Many successful competitive gamers are teenagers -- last year’s Fortnite World Cup winner, for example, was 16 years old.) 

ESIC’s Hanna said more needs to be done to fight corruption, but the industry is taking the right attitude. ESIC has been teaming up with betting firms and authorities to provide the kind of data that helped Australian police arrest the six suspects back in August. It is educating players about cheating and illegal betting, and has set up drug testing at major tournaments to detect doping. This often involves the use of substances that cut down reaction time or improve concentration, such as Adderall, a drug originally developed to treat attention deficit hyperactivity disorder. 

The industry is under pressure to become more professional and transparent as media companies deepen their involvement. 

Sweden’s Modern Times Group acquired a majority stake in ESL, the world’s biggest esports company, in 2015 for $87 million -- considered a bargain by today’s standards. It has since spun off its TV businesses to focus exclusively on gaming. Germany’s ProSiebenSat.1 Media in October bought control of the esports.com website that disseminates industry news and is broadcasting curated esports content via its TV channels to drive growth as the traditional TV business stagnates. To achieve that, it’s key for the industry to clamp down on corruption, said Stefan Zant, who heads ProSieben's sports business unit, 7Sports.

“We want to help develop esports into a popular sport for the masses,” Zant said in an interview. “To do that, we can’t afford to see lots of scandals.”

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