An esports-focused provider of online sports betting in Ontario says punters are chiefly flocking to three competitively-played video games, but that a fourth is growing in popularity and that their usual clientele is dabbling more and more in traditional stick-and-ball sports.
Toronto-based Rivalry Corp. recently released its first end-of-year industry report that suggests the esports wagering market among online sports betting sites continues to be dominated by three games: League of Legends, Counter-Strike: Global Offensive, and Dota 2.
According to findings contained in the company's Rivalry Wrapped 2022 study, the “Big Three” accounted for 90% of the esports wagers handled by Rivalry this year in the niche betting sector favored by millennials and Gen Zers.
The report also revealed that the up-and-coming Valorant title saw a spectacular 264% increase in betting volume compared to a year earlier, which Rivalry believes could allow the game to break into the top three in 2023.
i feel like I'm the most played, but let's not get into that ???? #VALORANT pic.twitter.com/lmulWVoyBq
— Rivalry Canada (@rivalryca) December 22, 2022
Rivalry, an esports-focused betting and media company, is targeting customers in the 18-to-30 demographic. In October, the company reported that 82% of its active users fall into this age category and that 90% of its sportsbook handle during the third quarter of 2022 came from esports betting.
One of the key highlights of the Rivalry report was that its esports betting customers prefer in-play betting over pre-match wagering by a significant margin. For the year to date, in-play accounted for 62% of all esports wagers placed on Rivalry as compared to only 38% for pre-match.
Rivalry believes the increasing popularity of in-play esports betting reflects the parallel growth of live betting in the traditional sports wagering sector; the company expects this trend to continue in 2023 as well.
While esports remains Rivalry’s “north star,” another significant finding of the report is that over 50% of the company’s heavily esports-centric customers are also active bettors on professional sports. Basketball wagering leads the way, followed by soccer, with betting on NFL and CFL coming in a surprising third, followed by MLB and NHL.
"Traditional sports has already grown into a meaningful category for us and our users since adding the offering to Rivalry a few years ago," the report says.
Growth fueled by launches in Ontario and Australia
Steven Salz, co-Founder and CEO of Rivalry, said in the report that "2022 was an incredible year for Rivalry" and that the company has been "averaging 29% month-over-month growth from January to October while our esports betting customer base has similarly increased in size and betting volume" over the first three quarters of the year.
Salz also noted that his company has seen increasing crossover by its younger cohort towards traditional sports wagering. That, Rivalry hopes, will translate into increased revenue as its customers develop a greater affinity for this segment.
Currently, esports betting activity accounts for 90% of the company’s total sportsbook handle, a figure that should gradually shift in the direction of traditional sports wagering.
"Rivalry Wrapped not only speaks to the specific direction of the betting segment, but also where the trends are headed in esports generally," Salz said. "This includes correlations we see between betting activity and viewership growth, just as you would in traditional sports."
A profitable first
In October, Rivalry reported a record Q3 revenue of $7.1 million, an impressive 93% year-over-year gain from the same period in 2021. Handle for the quarter also set a new all-time high, rising by 203% YoY to $70.3m.
This mammoth increase was driven by the launch of the online sports betting site in Ontario's new iGaming market in April, as well as by the company's subsequent May rollout in Australia. Strong upward momentum in Rivalry's esports segment also contributed to revenue growth in the third quarter of 2022.
"The significant year-over-year and sequential growth we delivered is a testament to our market leadership in next-generation sports betting and casino," Salz said during Rivalry's mid-October Q3 earnings call.
"Our customer base demonstrates our ability to engage a highly sought-after audience of Gen Z and Millennials in global markets, and further validates our overarching player acquisition and brand strategy."
But the principal highlight of Rivalry's upbeat third-quarter earnings call was that the company revealed that it had generated a profit of $4.5 million for October alone, more than double that registered in the entire third quarter of 2022.
The results suggest that Rivalry is now seeing increasing returns to scale from its esports-focused demographic. The month of October saw many of its younger generation of esports bettors drawn into the traditional sports betting market when all major professional sports leagues were in operation.
"We’re a next-generation, internet-culture sports betting business," Salz said in April following Rivalry's launch in Ontario. "Our customers’ average age is 24 to 25. We like to compare ourselves to (online stock trading companies) Wealthsimple and Robinhood. We’ve been very good at acquiring and retaining a demographic that’s a decade younger."
Rivalry hopes that this trend will continue and help expand its level of customer engagement as more of its bettors become accustomed to wagering in both market segments.
"We are very well positioned for a strong finish to 2022 and continued momentum into next year," said Salz during the third quarter earnings call. "We expect to benefit from a number of near-term catalysts, including several major esports events, a growing presence in traditional sports betting, the launch of a mobile app, and the ongoing introduction of new casino games, media content, and influencer partnerships."
