HomeBusinessGlobal

Growing pains | The battle to tackle corruption in esports

THE AMOUNT of prize money on offer in esports is increasing and the betting market surrounding it is expanding in more directions than the industry can keep up with. But along with this growth the scourges of match-fixing and doping have begun to rear their heads. Esports needs a plan and the Esports Integrity Coalition, which hopes to protect the industry from such scandals, believes it has just that.

The global esports market was thought to be worth about $750m by the end of 2015. By 2019 it’s projected to be worth $1.9bn – a conservative estimate given its growth in North America and Europe over the past two years. As broadcast rights are usually exploited for free via online platforms, the industry is heavily reliant on sponsorship and advertisement for income and as the IAAF and FIFA recently found out, there are few things that scare off big brands more than a public scandal.

While transgressions in esports have so far gone under the general public’s radar, that isn’t set to last for long. The typical esports fan is a loyal member of a rapidly-expanding young audience with disposable income – an advertiser’s paradise. As a result, esports is moving into the mainstream at pace, with brands and traditional broadcasters fighting to gain a piece of the pie.

That comes with pros and cons. More exposure means more money for a sponsorship-driven industry. But a 2015 match-fixing scandal involving some of the best StarCraft II players in the world will soon occupy more than just esports-specific websites. That’s why the Esports Integrity Coalition (ESIC), a not-forprofit members’ association with expertise in combatting corruption and doping, is trying to get ahead of the problem.

Its commissioner, Ian Smith, spent 10 years as legal director of the Professional Cricketers’ Association and has seen his fair share of doping and fixing scandals. In rather symbolic fashion, Smith launched ESIC at Lord’s Cricket Ground, the spiritual home of cricket, but also perhaps the sport’s most high-profile fixing scandal in recent memory.

During a Test match against England three Pakistan players were accused and eventually convicted of spot-fixing – rigging certain events within a game for financial gain – and it was Britain’s biggest tabloid that splashed the story on its front page. With his focus now on esports, Smith believes the industry will offer similarly fertile conditions for fixing and is in similar danger of its reputation being dragged through the mud.

“The main issue is the growth of the esports betting market,” he says. “It’s projected that by 2020 the legitimate betting market will reach about $23bn, meaning the illegitimate market will grow to about $200bn. That’s when esports becomes interesting to people who you don’t want interested in esports. That’s the point when organised crime know there’s a decent return on any corrupt investment they make.”

Integrity is paramount and we see it as our responsibility to ensure it will never be compromised

Esports also has to contend with virtual betting, or ‘skins’ betting, a form of gambling that enables users to bet in-game items with an equivalent dollar value. These betting exchanges are unregulated and enable players under the age of 18 to bet. It’s a problem unique to esports and one that requires genre-specific regulation.

It was Modern Times Group-owned ESL – esports’ largest company and its most prolific tournament organiser – that cried out for help before these problems began to hinder its growth, approaching Smith with a view to creating an independent body to combat integrity issues. ESL was the first esports company to carry out its own anti-doping measures, but came in for criticism due to the programme’s lack of independent oversight and transparency.

Heinrich Zetlmayer, managing director of ESL, says: “Integrity is paramount to all we do and we see it as our responsibility to ensure that it will never be compromised. But internally we weren’t equipped to deal with the topic in the broadest, comprehensive way.”

Smith says that, aside from its obvious moral qualms with corruption, ESL’s main reason for wanting an independent body to safeguard esports was its failure to attract major sponsors. While brands such as Coca-Cola, Nissan and AB InBev have dipped their toes in the water, non-endemic sponsorship and advertising at esports events is thought to make up 5% of the total income. Given that 75% of all income in the esports industry comes from sponsorship, Smith is tasked with helping to break the ceiling and make brands feel confident in investing their money.

Captive audience

“You have a captive audience of millions of young men aged 16-29 with disposable income. Awesome,” Smith says. “Within any traditional sports model that would have attracted 30-40% non-endemic sponsorship and at the major events you would have had the likes of VISA, Coca Cola, Pepsi and Emirates.”

Why not esports? “The fear created by the lack of governance and regulation in the industry,” he says. “This perception it was the Wild West: a series of unrelated, non-communicating businesses – which, of course, is correct.”

Companies like ESL aside, the esports sector is largely run by video-game publishers doubling up as tournament organisers and self-regulators. These publishers are often ill-equipped to deal with corruption and doping, and lack the expertise to tackle these issues proactively.

Punishments often come in the form of fines and life bans – sometimes dished out without concrete evidence. However, these actions haven’t proved enough to deter players from throwing games to earn many times the prize money on offer. ESIC will focus on educating players as to the dangers of illegal betting syndicates and prescription drug use.

Before ESIC can even think about tackling these issues, it requires money to do so. Members of ESIC will pay anything between $20,000 and $200,000 a year, depending on the services they require. Its current stock of eight members – just two of which are tournament organisers – will not provide the funding it needs.

Smith is adamant that ESIC will never run as a commercial operation, but its reliance on expanding membership to be effective is one that concerns Bjoern Franzen, a former esports consultant and marketer who two years ago blew the whistle on esports’ doping problems.

“ESIC wants to be the recognised guardian of the sporting integrity of esports,” Franzen says. “To have an impact and be accepted as that they have to unite a lot of the major esports stakeholders with varying interests. ESIC will have the herculean task to negotiate with companies that are competing without favouring its members.”

Negotiations

Franzen says that while ESIC’s membership is so heavily populated with companies owned by Modern Times Group – owners of the two tournament organisers involved in ESIC – other esports companies are sceptical of their ability to get a fair shake from the coalition. This problem isn’t lost on Smith, whose negotiations with some companies have been somewhat frosty.

“The resistance I’ve encountered is the mutual suspicion,” Smith said. “These companies are fine working with me, but don’t want to work with each other. I hope I can persuade them [to join ESIC] because the experience of all sports is that shortterm pain is a hell of a lot better than the massive scandals you face when you get found out.”

While match-fixing will be the primary concern of ESIC, it will also offer optional anti-doping services to tournaments and leagues that request it. The lack of testing in esports has produced predictably low amounts of positive results, but since Franzen’s explosive blog on players’ use of cognitive enhancers in 2014 it has been propelled into the public consciousness via mainstream media coverage and an ESPN documentary.

Along with corruption, doping is thought to be the other major issue which is keeping big brands on the periphery of esports. As a result, ESIC has enlisted the help of former anti-doping consultant Michele Verroken to oversee this aspect of its work.

Instead of signing up to the World Anti-Doping Agency’s code of ethics, ESIC will create its own specific banned list and test accordingly. There will be no blood or urine tests – only saliva. There will be no out-of-competition testing and recreational drugs and steroids will not be tested for.

These anti-doping measures will be an optional service to members as opposed to the mandatory nature of ESIC’s anti-corruption code and while these rules may sound less than stringent, they are the result of collaboration between members, players and Verroken herself. All parties were keen to ensure any testing regime had the backing of the players.

“That’s something which the anti-doping world in sport in general has miserably failed to do – get the athletes completely onside,” Verroken said. “We want players to want to talk to us about how they feel about creating at least a reasonably level playing field – as much as any playing field can be.”

The banned list will be relatively short as amphetamines and beta-blockers – the two most effective drugs to improve esports performance – will make up the majority of the list. Whether these anti-doping measures can inspire confidence in sponsors is yet to be seen, but Roger Pielke Jr., anti-doping expert and author of The Edge, believes this approach can be enough.

“There’s no iron wall that says anti-doping has to be without compromise,” Pielke Jr. said. “NFL is the richest sports property, but their test for Human Growth Hormone isn’t state of the art because of the players’ association refusing it.”

The NFL has so far been impervious to scandal due to its deep cultural roots in the US, but esports won’t get that benefit as a new up-andcomer. Doubts over performance-enhancing drug use in mixed martial arts forced the Ultimate Fighting Championship to enlist the help of the US Anti-Doping Agency to clean up the sport. Though many of its top stars are testing positive and damaging the company’s reputation, the UFC has done this with a long-term view to a sustainable future in the mainstream.

In addition, the UFC is directly funding USADA’s crusade against drug use in its organisation, supplying it with as much money as it needs. While it’s all well and good making verbal commitments to anti-doping, Pielke believes that any rhetoric or programme must be proportionate to the funding put towards it.

“We’ve learned from WADA if your rules and ambitions vastly exceed your budget, you will fail. If your budget is small, your ambition must be scaled accordingly,” he said.

The amount of money made available to ESIC by its members – and expanding that membership – will make or break the coalition, and Smith knows that with companies like Modern Times Group on board there should be no shortage of money.

Convincing those companies to part with their cash will be the challenge and a scandal-free future for esports may be riding on Smith’s success.

ESIC could prove to be a successful experiment in optional and cooperative governance. It could also spell the end of hopes for a unified esports governing body if deemed ineffective or unfair by members who will spend money on their own punishments.

“If ESIC fail to deliver on what they want to accomplish, there will be massive distrust in any such future initiative,” Franzen said. “That is what I’m more afraid of.”

Most recent

As the end of May approaches and the Premier League continues to work on ‘Project Restart’, Adam Nelson examines the legal issues facing English football’s operating bodies as they push for football’s return.

US Olympic national governing body has suffered declining revenues and membership numbers since the onset of the health crisis but large financial reserves coupled with a move to put competitions and coaching courses onto digital platforms have stemmed losses.

Tom King talks to Razlan Razali, team principal of Petronas Yamaha SRT MotoGP team, about the growth potential for motorcycle racing in Southeast Asia.

Mitchell Sports, chief executive of boutique sports advisory firm Tipping Point Sports LLC, examines the key elements of the industry's recovery from the pandemic