Esports advocates press to allow betting in N.J. and Pa. on video game contests

Everybody seems to be betting on esports — except legal gamblers.

Investors have put millions behind competitive video gaming. Public officials have enacted policies to attract esports to their states. Schools from Stockton University to Harrisburg University are scrambling to incorporate esports into their curriculums.

Despite the growing adoption of sports betting across the nation, gamblers in most states are barred from wagering on video gaming competitions because they don’t qualify as sporting events.

That seems to be changing. The New Jersey Senate in June unanimously endorsed a bill that expands the state gaming law to allow betting on any skill-based attraction, including esports, awards competitions, and competitive eating contests.

“Esports is quickly emerging as an economic and cultural force on par with many other traditional sports, and it is important that New Jersey accommodate the many ways fans engage with their favorite teams and events,” David L. Rebuck, director of New Jersey’s Division of Gaming Enforcement, said last year, signaling Trenton’s all-out push to make New Jersey “more attractive to the innovative companies that drive this growing industry.”

Not to be outdone, Pennsylvania State Rep. Ed Neilson, a Democrat from Northeast Philadelphia, has introduced a bill to expand the definition of “sporting event” under state gaming law. The proposal would allow wagering on video competitions involving players who are 18 or older and where the outcome of the event is determined by the relative skill of the competitors.

“Now is the time to do this, because we see other states around us doing this,” Neilson said.

Esports are video game competitions, played by individuals or teams, that have become popular as live events or packaged for fast-paced broadcasts with multiple cameras toggling between the players and their chatter, the actual onscreen competition, and commentary from experts.

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Neilson said he was inspired by emerging esports businesses in Philadelphia. The Philadelphia 76ers operate a franchise in the NBA 2K League, in which teams compete in video basketball. The Philadelphia Eagles in December announced that the team will partner with Esports Entertainment Group as the first esports tournament provider for an NFL club.

Nerd Street Gamers, the Philadelphia-based developer of esports training and competition facilities, has also emerged as a dynamic new business in the video gaming space.

And then there’s Comcast Spectacor’s Philadelphia Fusion, one of 20 professional esports teams competing in the Overwatch League, the first video-game conference with local franchises aimed at building up a loyal fanbase. The video game Overwatch, developed by Activision Blizzard Inc., is a shooting competition involving futuristic teams that try to seize or defend ground.

Comcast Spectacor got a lot of publicity in 2019 when it formed a partnership with the Cordish Group and announced plans to build a 3,500-seat arena in South Philadelphia for the Fusion. A ceremonial groundbreaking was held (involving trucked-in soil and no actual disturbance of the building site). Comcast Spectacor put the $50 million project on hold last year after the Overwatch League suspended live competition during the pandemic.

The Overwatch League plans to resume a few live events in China this year. But until further notice, the Fusion, rather than competing out of South Philadelphia, are playing online from a base in South Korea (from where several of the team’s players hail).

Comcast Spectacor is evaluating plans to build a venue in the Stadium Complex to host concerts and esports, said Sean Coit, a spokesman.

“As we emerge from the pandemic, we’re eager to resume development of an innovative, state-of-the-art facility in the heart of Philadelphia’s sports and entertainment district,” Coit said in an email. “We hope to make announcements about the ongoing project in the coming months.”

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The unsettled path of the Philadelphia Fusion might serve as guidepost for Pennsylvania policymakers, whose approach to legalized esports betting has been noncommital.

Neilson’s bill to legalize esports betting, which attracted only Democrats as co-sponsors, is not scheduled for any hearings. Casinos and licensed sports-betting operators have also not indicated an immediate interest to state regulators to reopen the gaming law to include esports. “There’s no clamor from operators to look at this any differently,” said Doug Harbach, a spokesman for the Pennsylvania Gaming Control Board.

Gaming analysts say that legalizing wagers on esports won’t fundamentally reshape sports betting in New Jersey or Pennsylvania. It’s likely to attract only a small volume of bets at first. But it could grow the market and attract new, younger customers to gambling, as it has in Europe.

“Esports will become more important to legal U.S. sports betting in the long run,” said Chris Grove, a managing director of Las Vegas gaming consultant Eilers & Krejcik. “We’re already seeing this happen in Europe, where esports is evolving into a tier-two sport for major bookmakers.”

Promoters of esports have long crowed about the tremendous commercial possibilities for competitive video gaming, a multibillion-dollar business aimed at a younger generation raised on joysticks and game consoles.

Nearly 500 million people tune in to esports events, and revenues from the industry were expected to surpass $1 billion in 2020, according to the New Jersey Economic Development Authority. Despite the suspension of live events during the COVID-19 pandemic, the industry’s growth accelerated during the lockdown because competition could be conducted remotely, and fans follow the contests on YouTube and other internet channels.

But it’s unclear how much the popularity of esports depends on legalized betting. Legislation was introduced in Pennsylvania last year to authorize a report on esport opportunities, but the resolution fizzled after its sponsor, State Sen. Thomas Killion (R., Delaware), was ousted by voters in November. So much of the industry’s potential remains unknown.

“We thought this is going to be a great opportunity to evaluate the opportunity, to raise the profile of esports,” said Todd Kowalski, executive director of the Pennsylvania Esports Coalition.

Kowalski said that the debate over betting has also raised concerns about the impact of esports on young people, and how to regulate and monitor the integrity of a sport with such a brief history.

New Jersey, which has allowed limited esports betting on two previous occasions, addressed some of the issues in its legislation, which limits wagers on esports to $100 or to a potential win limit of $500.

The bet limits are waived if the New Jersey Division of Gaming Enforcement certifies that mechanisms are in place to monitor the integrity of the sporting event. Several professional conferences, including Activision Blizzard’s Overwatch and Call of Duty Leagues, have already adopted practices to monitor betting to spot unusual activity.

Kowalski expects that, in Pennsylvania, some lawmakers will also want mechanisms in place to protect esports competitors if betting is legalized. The esports industry will also want liability protections in place.

“I just have to think that the state’s going to say, `You have to make sure that your teams are looking out for the physical development and emotional and psychological and educational development of kids,’” he said. “You can’t just pay them $30,000 a year to live in a house and play video games for 60 hours a week.”