Strauss Zelnick: Sports Betting to Affect Video Game Sector

Thursday, May 24th, 2018 | Written by April Bergman
Strauss Zelnick: Sports Betting to Affect Video Game Sector

Take-Two Interactive CEO Strauss Zelnick applauded the US Supreme Court decision which allows states to legalize sports betting. In the same post-earnings investor call, Zelnick predicted that sports betting soon would intersect with the video games industry.

Referencing the burgeoning new eSports betting industry, the video game holding company’s chief executive said the gaming industry would become involved in sports gambling “in the relatively near future”. Strauss Zelnick said the convergence would be good for the gaming industry, financially speaking.

Zelnick said, “We certainly think it’s a good decision. We think there may indeed be a meaningfully positive influence on our business.”

Strauss Zelnick on eSports Betting

The Take-Two Interactive executive did not offer monetary predictions, but did say the impact has a vast potential impact. Zelnick said, “We don’t have any expectations right now. We’re simply observing that there are potential opportunities in the future and I’d be very surprised if sports gambling didn’t intersect with the industry at some point in the relatively near future.”

It is probably a good policy not to make predictions. Morgan Stanley once predicted online gambling would be include 20 states and involve $12 billion within 5 years. Each year, the number of states was whittled down, as state legislatures either squabbled or dithered on pro-online gambling legislation.

United States eSports Betting

In a way, though, eSports already has intersected with the sports betting industry. Las Vegas casino-sportsbooks allow legal eSports betting. After a tweak last year, Nevada sportsbooks even allow parlay bets on eSports events.

Outside the United States, online eSports betting is legal. The UK Gambling Commission allows sites like William Hill, Ladbrokes, 888, and Betway to offer eSports betting propositions. While many countries still ban betting on eSports, it is widespread in the international online and mobile sportsbook industry. For a long time, unregulated offshore bookmaker sites have allowed eSports betting.

Potential Impact in the USA

Strauss Zelnick is speaking about the United States, though. Because of the size of the US economy, if eSports betting was legalized in 20 US states, it would be the equivalent of half of the European Union legalizing electronic sports betting within a few months. The economic opportunities would be huge.

In the near term, states like New Jersey and Delaware could legalize eSports betting. New Jersey’s embrace would be significant. If Pennsylvania’s new online gambling industry legalized eSports betting, it would be even more significant.

Which US States Will Legalize Sportsbooks?

Beyond that, progress might be slow. While 20 US states signed an amicus brief supporting New Jerseys’ sports betting case before the US Supreme Court, that was either a state attorney general or a governor making a decision. Things get a lot more complicated when state lawmakers get involved.

A handful of states — Connecticut, New York, Michigan, Louisiana, and Mississippi — all could be early adopters when it comes to legalized sports betting. Many of those predicted 20 US states may take up to 5 years to get onboard.

For the time being, Strauss Zelnick is focusing on the video game industry itself. In particular, he discussed with shareholders Take-Two Interactive’s potential for entering the battle royale game design field. After the success of Fortnite, all game publishers are looking for the next big battle royale game.

Take-Two Interactive Profile

Take-Two Interactive (T2) is a holding company that owns video game publishers like Rockstar Games, Private Division, 2K Games, and Social Point. Take-Two Interactive also owns 50% of the eSports joint venture NBA 2K League. T2 is third only to Blizzard and Electronic Arts among publicly trade game companies. Among its most famous games are Grand Theft Auto, BioShock, Red Dead, Max Payne, NBA 2K, and Civilization.

Zelnick said his company does not plan to chase success. He said, “I don’t think what one takes away from this properly is that a particular approach, a particular mode, has suddenly redefined the business. I don’t believe that’s the case. I think if one changes one’s business to follow other people’s big hits, to constantly be playing catch up, and to say that you wouldn’t be in second place is an understatement. You might remain in last place. It’s our job to constantly innovate, and more often than not, that has led to success.”

These days, many video-on-demand streaming services are buying television series projects, hoping to find the next Game of Thrones. Netflix, Hulu, and countless others chase that next big breakout hit, but tv phenomena like Games of Thrones or The Walking Dead are rare for a reason — and almost impossible to predict.

The same can be said of the next big video game franchise. Fortnite seemed to come out of nowhere. It caught fire with a different approach to game design and a different approach to sales and marketing. The next Fortnite-level event in video games probably will not be a Fortnite clone.

How Will eSports Betting Affect Video Game Design?

Tech industries change all the time. Pop culture tastes change. A myriad of factors feed into an event — and legal sportsbooks and live/in-play betting apps could be new factors. When the next Fortnite hits, part of the pop culture frenzy involved could be sports betting on the video game. Game publishers like Take-Two Interactive must be positioned to take advantage.

Pictured Above: NBA Commissioner Adam Silver (left) and Artreyo Boyd, aka Dimez (right) of Mavs Gaming, the 1st pick in the 1st Annual NBA 2K League Draft.