ESI Gambling Report: Integrity fees in esports

03 January 2019


The notion of an integrity fee is one that has risen alongside the proliferation of sports betting in the United States – the concept is not entirely new, however. Pro leagues in both France and Australia have adopted integrity fees the sees a percentage of wagers from betting handles turned over to organisers of the sport.

Though its integration has yet to be discussed within its digital counterpart, there’s basis to believe such a tax could be beneficial as the esports betting precinct continues to grow. We’ll take a look at the proposition and more in the week’s ESI Gambling Report, powered by BetOnBit.

Integrity fees

An integrity fee is essentially a tax on sports betting with intentions of safeguarding competitive integrity. As mentioned, the notion sprouted alongside the repeal of PASPA back in May, and was pitched by leagues such as the NBA and MLB to protect their sports from complications and risks brought along with gambling. An integrity fee would see a percentage of revenue generated from wagers by sportsbooks into the accounts of those sports governing bodies.

The entirety of what competitive integrity is and its importance in professional sports is possibly too exhaustive to get into for the purpose of this report – however, if you’re interested in learning more, feel free to explore this previous Gambling Report where we outlined its gravity more comprehensively.

As proposed, these taxes would collect a percentage of money from the betting handle to be passed on to leagues for operational management intended to preserve integrity. The tax was controversial at first, to say the least, and its integration was a cumbersome process that ultimately failed to be mixed into further sports betting bills in the US. Whether you perceive an integrity fee as a tax, royalty or even a blatant money-grab, there is basis to believe this structure could work positively within the esports ecosystem.

To get a better idea of the specifics of an integrity fee, have a look at this outline by Legal Sports Report.

Protecting esports

Cybersports present their own unique challenges when it comes to defending competitive integrity – in ways, its digital facilitation and comparative adolescence makes esports a challenging item to monitor in this regard. While checks and balances exist to oversee esport’s betting district, there are weaknesses in its foundation that desperately need supplemental support.

One instance would be the case around doping in professional gaming – using illicit substances to increase reaction times and awareness. Currently, ESL is the only tournament organiser to enforce anti-doping efforts such as drug testing at tournaments in partnership with the Esports Integrity Coalition (ESIC). Though a praiseworthy application, the sad reality is that these measures only cover a minuscule slice of the overarching esports atmosphere. ESIC confirmed laboratory grade testing at an event can cost anywhere between $5,000 and $10,000  – a lofty price tag for tournament organisers to front.

Data monitoring is an effective method used to flag suspicious behavior such as cases of match-fixing; additional funding towards policing line movement and other like information during the market’s upbringing could help facilitate a smooth year as well as the next generation of esports betting. Again, items like match-fixing have been a strenuous task to counter due to its digital makeup – any additional resources certainly couldn’t hurt in the war against it.

Nurturing the ecosystem

Competitive integrity is the backbone of professional sports, serving as a stamp of authenticity for viewers ensuring the contests we are watching are fair and real. There’s no doubting the significance of integrity in this arena – it’s solely about managing it properly in this emerging industry.

Despite integrity fees failing to see inclusion in sports betting bills due to loose outlining of where the proposed tax revenue would be allocated, it’s a concept that may fare better in esports. Being the progressive industry esports is, one would only speculate such taxes could be dispensed in areas that need fortifying at the intersection of gaming and integrity.

Though integrity fees have remained undiscussed in esports, its inclusion is one that should be considered in the ongoing professionalisation of the market and industry. As esport’s betting handle continues to flourish and presumably becoming only larger by the day, tightening any loose ends that could tarnish receipt sounds like a plausible conversation to open up.

Sportsbooks will likely be less receptive to the idea of taxation as they’ll be footing the bill – however, the best results have historically been yielded when oddsmakers and tournament organisers work together. It’s definitely a long-term investment, but a well structured proposition very well could reap benefits of a more established betting handle down the line.