Competitive video gaming—or esports—has clearly exploded into the mainstream during the Covid pandemic. Increased attention has also seen a growing focus on esports gambling, with some reports citing a 40% growth in esports betting on some prominent titles FIFA and NBA 2K during periods in 2020. 

No surprise then that global competition from traditional gambling firms and new entrants is now fierce. To discuss their approach, I met with Steven Salz, Cofounder and CEO of esports betting platform, Rivalry which recently raised $20 million to support its growth.

Before starting Rivalry, Steven was a long-time gaming fans, addicted to games like World of Warcraft and playing for a semi-professional team before undertaking a career in capital markets. Eventually the lure of esports soon called him back after noting the growth in virtual goods marketplaces in two of the biggest esports titles Counterstrike and Dota. 

Steven Salz: “None of us are huge gamblers—we are esports fans and tech entrepreneurs that went into betting. The commentary in some articles that have covered us, and  some perceptions in the industry I think, is that we have a chip on our shoulder—which is fair. We understand our community—they need a modern user experience, and a higher level of gamification and entertainment. They also want playfulness injected into the product that doesn't exist in traditional sports betting. We are very confident we can service that better, and also want to change the stigma of betting.”

Total esports viewership is projected to grow at a 9% compound annual growth rate (CAGR) from 454 million in 2019 to 646 million by 2023 according to Insider Intelligence estimates. Rivalry has seen its own growth explode commensurately during the lockdown of 2020. 

“Esports ended up being well positioned for something like a pandemic. In the first 90 days when all the other sports shut down, esports was essentially the only competitive thing you could watch. Discretionary spend was going down because people were not going out and they were looking for some excitement, like sports betting—Covid gave esports two to three years of growth within a six-month period by our estimate, and it certainly led to outsized growth in our business.” 

Rivalry’s average customer are typically between 18 and 25 years old and very much digital natives with a global perspective. 

“Our consumer profile is someone who practically grew up plugged into the internet with a direct feed. The best thing about gaming is that - like the internet - it is a common language globally. You can go online and play with somebody halfway across the world. They can be older than you, younger than your, shorter than you, taller than you—but that doesn't matter. It is about the skill and it is a completely even playing field—that is the beauty of gaming, and why it is so culturally relevant now.”

Gambling of course is a difficult subject in itself and one that has attracted a great deal of negative coverage and understandable concern. Steven sees the next generation of bettor as more interested in the entertainment, content and clout of sports betting rather than just a way to win some money. 

“We saw there was an interest coming from this younger demographic, but also that there was a stigma about betting—gambling seemed dirty to them. We found that they were interested in putting like five or ten bucks on a game or their favorite team. It is as much entertainment based as “I'd like to win some money here.” For example we have people placing bets on huge underdogs—totally mathematically improbable that they're going to win, but we see them taking a picture, posting on social like ‘I'm behind you guys, I’m betting on the team!”

Rivalry’s intention was to create a product for young people interested in sports betting but not keen on the kind of experience some of the established sportsbooks were giving them. 

“It is very difficult to get a twenty-two-year-old with fyou52 as their username on Xbox onto a traditional betting platform. It has a KYC process that feels like you're filling out a medical form. Give me your full name, your address, send me your picture, your passport. The deposit methods are bank and they're like wait - I only use Venmo, and I’d never give out my real name. I’m an anonymous player. Why would I ever do this? For us it is about crafting an experience for that person that is very different.” 

Although it operates in both traditional sports and esports, Rivalry aims to serve up a very different experience to its end user and rebuilding a category with a focus on understanding its community. 

“We're trying to build an amazingly engaging content and entertainment product that happens to have betting as a core component of it. Many people are fans of the brand and engage with us regularly, but do not actually bet on the site—that is equally as exciting to us. As a brand Rivalry does more engagement on social than the aggregate of our esports focused competitors. We don't push people to bet through our social content. Everything we do is very community focused—supporting smaller creators, supporting bespoke events and competitions to help give underprivileged players access to better PC setups for home and the chance to make it to a professional team, and so on.”

Salz notes that their next biggest investment area will in a team to significantly enhance the production value of their content, as well as developing new features for the platform. Rivalry’s global expansion also continues at pace; its bigger markets now include Latin America, Southeast Asia, and Eastern Europe—and the brand has every intension of expanding further in 2021 and beyond with new market licences.

“We believe that this is a global generational opportunity. There are no prerequisites to be a gamer, and that's also what the internet has democratized. Anyone can participate and build anything on the internet - it doesn't matter where you are. Esports is the sport of the internet generation. The benefit that we've built this business on is that this generation has often never even heard of all these major sportsbooks that are dominating traditional sports. And many are hung up about the U.S. legalizing—and for us every country is an opportunity with this entirely new generation coming into the fold.” 

As a disruptive young brand with founders from an esports background that is appealing to Generation-Z, Rivalry has clearly figured out you need to do some something different to gain new players and an audience. Designing their business to be at the intersection of media and esports betting it is taking a different approach and focused on reinvention of the category itself. As with many areas of esports it is clear that its often consumers have a different mindset to the normal sports fan—with many seeking entertainment and sense of community over monetary gain.