Malta about to ensure a reliable esports market within the fast growing industry
Article written by Edward Meli, Associate (DF Advocates)
Over the past few years, esports, which is best described as organised and competitive video game playing, has witnessed immense growth transforming it into a central form of entertainment all over the world, with the industry amassing one billion US Dollars in revenue for the first time in 2019. The growth of this industry boils down to numerous factors, including inter alia, the inauguration of various professional leagues, development of purpose-built arenas and facilities, increased sponsorship deals and partnerships, amplified global interest and the provision of high-quality content for gamers and betting enthusiasts alike.
The void left in live traditional sports as a result of the COVID-19 pandemic placed esports in a key position to offer a highly entertaining and viable alternative within the gaming industry further portraying the industry’s resilience and unprecedented growth. Major sporting events such as Formula 1, NASCAR, NFL and the NBA amongst others were suspended, postponed or cancelled and thus turned to virtual competitions in order to keep the multitude of fans across the globe engaged during the COVID-19 hiatus.
Until the return of Formula 1, the start of the Grand Prix was replaced by a Virtual Grand Prix Series which saw a number of current and past F1 drivers together with celebrities and special guests from the esports and gaming platforms compete on the F1 2019 game. Also, following the postponement of seven real-world competitions, NASCAR launched its eNascar iRacing Pro Invitational Series, a nationally televised esports competition. In addition, following the postponement of the NBA and NFL seasons, current players within the leagues signed with various esports teams to compete in tournaments whilst teams decided to play and broadcast their remaining games online in a bid to maintain their following.
It is evident that the esports industry has been growing at a rapid pace, with such growth being further accelerated by COVID-19 as its popularity and worldwide growing fanbase has been augmented by the cancellation of traditional sporting events. In line with the exponential growth of esports in recent years, the Maltese government has taken a proactive stance through the launch of its ‘Vision for Video Game Development and Esports’ in May 2019 with the intention of entering this budding market and turning Malta into a central European hub for esports and game development alike.
Esports has been touted as a central proponent to developing Malta’s digital economy. Malta, having already propelled itself to the forefront of the gaming industry, has recognised the importance of esports and game development and is envisaging that esports shall become a vital facet of this industry. This development has been made possible through the fully fledged governmental initiative and sectoral push, which shall afford operators the opportunity to cover all segments within the highly influential gaming industry on our islands.
Recently, we have also been highly successful in attracting various international esports tournaments, such as the Nova Series and the HotShot Series, which were held at local esports facilities, together with a number of expos such as Playcon which allowed stakeholders the opportunity to showcase what they can offer whilst engaging with esports enthusiasts and newcomers.
In order to sustain the local esports ecosystem and increase the organisation of local and international esports events, the Maltese government and ESL, a reputable esports company, have also entered into a memorandum of understanding through the GamingMalta Foundation to establish a multi-year programme to this effect.
Considering the Maltese government’s recent sectoral push coupled with the growth of esports and esports betting during COVID-19, the Malta Gaming Authority (MGA) has also taken a proactive approach and recognised that betting operators may look elsewhere from traditional sports, including betting on esports events with different risk profiles to those traditionally offered.
Thus, the newly established Sports Integrity Unit within the MGA, in order to safeguard the integrity of esports and provide timely guidance on the risks involved to operators and other stakeholders, took it upon itself to issue the following recommendations:
- Operators should consider that all esports events are now being run online, and therefore lacking the standard integrity checks done at events;
- Operators should ensure that matches are not pre-recorded, and risk teams should be aware that esports matches are not always broadcast in real time, and there is often a pre-set delay between the actual match, and the public broadcast;
- Operators should make sure that customers understand the distinction between esports, and virtual sports, whereby the outcome of the latter is determined by a random number generator;
- Operators should look into whether tournaments benefit from integrity controls, and whether participants are professional, or otherwise, when deciding on which betting markets to offer;
- Operators should seek information about the participants/officials involved in the esports events from communicative tournament organisers or from publicly available information;
- Operators should maintain their betting integrity and fraud checks including making sure that participants/officials involved in esports events are not placing bets;
- Tournament organisers, broadcasters and sports governing bodies (SGBs) should revise any policies regarding misuse of inside information so as to include also any participants or officials involved in their esports events
- Any suspicious betting activity should be reported to the gambling regulator; and
- Any other suspicious activity (not betting related) pertinent to an esports event should be reported to the corresponding SGB, and/or event organiser.
The MGA have noted that as a result of the formidable increased interest in esports, which has reverted back to its roots by the continuation of various esports events through an online framework, betting within the sector has also increased in registrants, activity and volume during these times. The MGA therefore has been active in this regard by issuing the above mentioned recommendations with the aim of sustaining integrity within esports, which is of vital importance following the accelerated rise in clientele during COVID-19.
During these challenging times, the MGA has taken the opportunity to garner the current and future risks posed and discuss ways in which such risks may be mitigated with various stakeholders within the esports industry including the Esports Integrity Commission (ESIC), other regulatory bodies and B2B and B2C licencees.
Operators within the esports betting industry have also taken the void created by this global pandemic as an opportunity to increase the markets offered to players and subsequently assist in the growth of esports and esports betting beyond COVID-19. In this regard, through the continued work between operators, national regulators such as the MGA, and the ESIC, the market has placed itself into a prime position to tackle the lingering integrity concerns whilst continuing to flourish as a major gaming market.
In addition, the MGA and the ESIC reached a collaborative agreement in 2019 to work together to tackle and prevent manipulation of esports events through information sharing. In lieu of the fact that to date there is no SGB within esports, the MGA, one of the most trusted regulators of sports betting, in collaboration with its locally licensed operators has been active in co-operating with the main integrity body of esports to provide a safer wagering environment.
This agreement shall assist the local and international esports industry immensely as the addition of the MGA’s experience and vital information shall certainly strengthen ESIC’s efforts of creating a more secure esports market for operators and players alike. This agreement with ESIC, coupled with the government’s agreement with ESL, have displayed Malta’s stance on not only growing our local esports base following an overhaul of the local gaming regulations in Malta but doing so whilst keeping abuse and crime out of esports betting.
Recognising the industry’s potentials and risks, the Maltese jurisdiction has created a healthy and sustainable platform to allow the esports and esports betting industry to thrive on our islands. Malta, through the various initiatives undertaken and incentives afforded to stakeholders and businesses within the innovative technological industry, is steadily developing into a jurisdiction of choice for esports operators and enthusiasts alike.
Whilst it is difficult to make long-term forecasts for the industry, the government’s willingness to substantiate its vision to grow this niche into a major economic sector with the ultimate aim of creating a vast esports ecosystem in Malta cannot be overlooked.
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