Will New Jersey be the center of the Esports Universe? According to the Head of the NJ Division of Gaming Enforcement, that’s the goal

By: Nicole Kardell

The EGR’s East Coast Virtual Briefing 2021, took place May 26, 2021 with a packed agenda, including revealing the winner of the Ifrah Pitch Competition.  We wanted to provide some highlights on developments in esports as a gambling vertical.  Esports was the focus of a Q&A session hosted by Chris Grove, a partner at Eilers & Krejcik Gaming.  Grove interviewed the director of New Jersey Gaming Enforcement, David Rebuck on the future of esports and New Jersey’s efforts to become the hub for all things esports.

The conversation started off with an overview of New Jersey’s journey as a “vanguard” of online gambling regulation, the reasons for its success, and how this translates into what New Jersey will do to develop a successful esports market.

Rebuck said that New Jersey Governor Phil Murphy has made clear that he wants his state to become the established hub for esports and related gambling.  In that vein, Rebuck noted that the NJ DGE has been in talks with stakeholders across the esports industry about what esports gambling should look like.  He further invited stakeholders and entrepreneurs to engage the DGE in discussions as they assess and build an esports gambling model.  According to Rebuck, it is the entrepreneurs, as opposed to the esports publishers, who are most aggressively pushing to monetize esports in this fashion.

While esports is still “very much a niche industry,” as Rebuck noted, operators, publishers, and entrepreneurs have been presenting a host of ideas to the DGE on how to monetize the industry.  He was clear that esports professionals see esports as an athletic event and that esports are authorized as sporting events under New Jersey’s sports wagering law.

Some takeaways from Grove’s conversation with Rebuck:

1. The DGE views the separate esports games (e.g., Fortnight and League of Legends) as leagues and their respective players as athletes of each particular league. In other words, each game publisher would be akin to the NFL or MLB and players specialize in a particular game without crossing over to other games.
2. Developing a gambling model for esports is not as clear cut as traditional sports betting and entrepreneurs are across the map with ideas.
3. Nevada and New Jersey are the two states most focused on monetization of esports while both are still grappling with how to convert it into a legal gambling opportunity with all the protections in place for other gambling verticals.
4. Certain esports publishers have been reluctant to open themselves to esports gambling out of concerns over scrutiny faced in regulated gambling. The DGE has worked with others to educate the publishers that, like sports leagues, it is not the leagues, but the gambling operators who are subject to gaming licensing.
5. Rebuck anticipates that, once a successful model for esports gambling is developed others are likely to follow and join.

At the end of the session, Grove asked a question related to what’s near and dear to his heart: online poker.  He wanted to know Rebuck’s thoughts on whether there will be growing liquidity in poker through international compacts.  While Rebuck believes growth in the international poker pool is tricky (noting that regulatory schemes are apples to oranges between the U.S. and other jurisdictions), he is confident more U.S. states will join the Multistate Internet Gaming Agreement.