E-Sports and the Declining Player Base - Opportunity or Passing Fad?

State and provincial lotteries continue to see a decline in players as alternative betting and gaming platforms cannibalize the marketplace. Thousands of articles, presentations and conferences have attempted to rationalize this issue.

At the heart of the matter, the rise of the Internet and shifting player demographics are often blamed. What is all too often forgotten are the changing definitions of the words “gaming” and “sport.”

The rise of household video gaming consoles aligns with and conversely mirrors the decline in lottery participation. While this transition took place over the past three decades, older players continued to play traditional lottery games while the younger demographic increasingly spent their time (and money) in the virtual world of gaming.

Much of the industry attempted to design lottery games that were more appealing to this younger group, yet very few considered following the players into these new arenas of play.

The revenue from today’s video gaming industry surpasses that of the Hollywood movie industry and also attracts big name talent, all leading to record profits and the attention of lottery’s elusive younger players.

E-Sports has risen out of suburban basements where friends once competed head-to-head. Now, they fill stadiums around the world, where teams battle for fame and fortune.

Yes, you read that right: thousands of people pay to go and watch their virtual heroes battle against each other on large screens. There are even rumblings of E-Sports being considered as a future Olympic sport.

E-Sports Arena

So, is E-Sports a real opportunity or passing fad?

For the lottery industry to continue to grow, to not only attract the younger player but also maintain their attention, we’ll need to “fish where the fish are.” Opportunities to sponsor E-Sports tournaments, teams and athletes abound, and providing a new sports betting ecosystem should be considered.

Daily Fantasy Sports companies such as Draft Kings and Fan Duel offer players the ability to bet on E-Sports stars, teams, games and championships. Albeit this gaming segment is under constant scrutiny by legal authorities, the genie is out of the bottle and it has become a multi-billion-dollar industry that continues to grow in popularity.

More and more jurisdictions are passing laws to legalize and profit from Daily Fantasy Sports. So the door is finally open for lotteries to explore this opportunity further. The interest is certainly there, proven as one of the most prevalent topics at this year’s PGRI Smart-Tech Conference, La Fleur’s D.C. Symposium and La Fleur’s Global Forum.

Further, this year marks the true launch of Virtual Reality (VR), which holds massive potential for lotteries to create their own VR games to attract and hold on to new players. Gaming consoles are revealing their VR gear and we’ll see a run on this technology for the holiday season, bringing a new dimension to gaming to households. Lottery game developers and modernization leaders should also pay close attention to this space as we continue to push innovation forward.

The time is now for the lottery industry to join in on the action.