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By Colin A. Young
STATE HOUSE NEWS SERVICE
BOSTON — It generates about $275 million in revenue annually in North America, drew 134 million viewers in the United States in 2015, attracts illegal wagers from countless bettors and exists outside any concrete regulatory structure.
Calling it “really one of the biggest things coming” and suggesting it could be a future target of Massachusetts regulators, an attorney for the Massachusetts Gaming Commission on Tuesday detailed the world of eSports to the Special Commission on Online Gaming, Fantasy Sports Gaming and Daily Fantasy Sports, which is tasked with overseeing the evolving world of online gaming.
Fundamentally, eSports is competitive video game playing, Gaming Commission staff attorney Justin Stempeck said. Players compete individually or on a team in video games like Final Fantasy, World of Warcraft, League of Legends and Call of Duty.
The activity has grown recently, Stempeck said, with companies offering sponsorships for professional players, colleges offering scholarships for eSports competitors and the U.S. Department of State recognizing foreign eSports players as professional athletes for visa purposes.
In 2014, Stempeck said, 27 million people watched the eSports championship for the game League of Legends online, while the 2014 World Series averaged 15.8 million viewers and the 2014 NBA Finals averaged 15.5 million viewers.
And because eSports competitions are often streamed live online — Amazon-owned Twitch broadcasts 16 billion minutes of eSports coverage each month, Stempeck said — the competitions are conducive to illegal betting.
“This is not 20 guys in a basement playing these games. This is every teenager who has a video game system,” he said. “And it’s so popular, of course there’s money in it. So there’s the legit people playing as a competitor, they’re playing in a contest and playing for money, and then there’s people who are betting on those people … then there’s a whole gray and black market of people betting on people playing video games for money.”
Though it may not be familiar to people older than 30, eSports has already arrived as a form of online gaming and as an industry, Stempeck said. As the special commission considers how to regulate daily fantasy sports (DFS), he said, eSports needs to be part of the same conversation.
“This is here, this is happening,” Stempeck said. “It’s just nobody is really shining the lights on it yet. You want to talk about DFS and popularity, here is something else that is hugely popular with young people and hasn’t gotten nearly the level of scrutiny DFS has.”
DFS burst into the mainstream in fall 2015 when an advertising blitz targeting NFL fans drew the attention of lawmakers and attorneys general around the country. The Massachusetts Legislature deemed “fantasy contests” legal until July 31, 2018 in the economic development bill passed by lawmakers the last day of July. The commission, created under the same law, is tasked with charting a path forward and clearing up what had been something of a gray area around the games.
Stempeck and Paul Connelly, also a Gaming Commission attorney, suggested that the special commission would be wise to consider an omnibus approach to online gaming regulation rather than establishing a different set of regulations for each type of gaming.
“We do know one thing: technology will continue to change and it will change at a pace that you always can’t respond to,” Stempeck said. “But the issues are largely, and there’s always going to be new ones, identified. So if we take an omnibus approach that addresses those issues but is flexible enough to capture new and emerging technologies and offerings, we think that would be perhaps the best option.”
Sen. Eileen Donoghue, after hearing the eSports presentation, called it “a whole new landscape that we’re finding ourselves in” as the commission endeavors to regulate DFS, eSports and any other online gaming activity that could crop up in the future.
“Initially many people thought, including myself, that fantasy sports was kind of the big kid on the block … but we do have these other ongoing, growing areas,” said Donoghue, of Lowell. “I think the trick will be to come up with a framework that is appropriate and nimble enough to deal with innovation and technology that changes on the fly.”
The special commission is scheduled to meet next on Feb. 28, with an agenda that will likely include further discussion of eSports, an aide said.
Also Tuesday, Boston-based daily fantasy sports operator DraftKings pledged to work with regulators, vowing to be proactive in ensuring a level online playing field.
Former Attorney General Martha Coakley, who now represents DraftKings, framed the company as a “Massachusetts success story,” detailing its growth from the Watertown house of one of its founders to the addition of 100 jobs in the Bay State in 2016.
“DraftKings is evidence to the rest of the country that a consumer-facing tech company can grow and thrive right here in Massachusetts, and doesn’t have to move to Silicon Valley to do it,” Coakley said in testimony to the Special Commission on Online Gaming, Fantasy Sports Gaming and Daily Fantasy Sports.
DraftKings has more than 300 employees in Massachusetts, the company said, and their employees live in 79 different municipalities from Ashburnham to Westport.
Since starting to work for DraftKings in August 2015, Coakley said she has traveled the country to talk to attorneys general and legislators about regulating the burgeoning online gaming industry. The protections put in place last year by Attorney General Maura Healey are “the strongest, most comprehensive consumer protections in the country.”
Jeremy Kudon, an attorney who has worked for both DraftKings and FanDuel, said about eight million Americans played daily fantasy sports last year, including about 500,000 Massachusetts residents.