Back in 2011, Jonathan Belke was a professional gamer. He had modest success with strategy game StarCraft 2, culminating in a 1,000 euro prize at the ESL Pro Series in his native Germany. But while many of Belke's fellow pros struggled for cash, he found a lucrative side career: betting on matches. In February of 2014, he said on Reddit he made five figures in euros, exponentially more than his tournament winnings — though he didn't bet on his own matches.
After Belke retired from competing in 2013, he accepted a job at gambling website Pinnacle Sports. He works as a trader, a role where he determines betting odds for games like StarCraft 2 and the multiplayer battle arena games League of Legends and Dota 2. Although Pinnacle and other sports betting sites attract the most bets on events like the Super Bowl and World Cup, esports betting has eclipsed less popular sports like cricket and cycling on the site, says Belke. Pinnacle now has eight traders in its esports division, and over 100 gamblers bet in a typical Dota 2 match. Video game streaming sites like Twitch have helped esports gambling grow by allowing viewers to watch tournament games around the world.
"Even in the last 12 months, everything was way smaller. It's definitely the fastest growing sport," says Belke.
By risking real value, bettors are creating new careers and communities. The rise in esports betting is another indication that the industry is growing to mirror traditional sports, says Belke. And for the people at the forefront of the betting scene, it can be life-changing.
"The same rush was there"
When Stephen, who declined to give his last name, began betting on Dota 2 in 2013, he had no idea that it would lead him to create a 2,600-person community. Stephen, who uses is the alias rx25, is the founder of a Reddit forum dedicated to analyzing bets on Dota 2 Lounge, the most popular betting website for the game, which uses in-game cosmetic items as currency rather than real money.
Dota 2 is a five-versus-five battle arena game in which players try to destroy the opposing team's base. Cosmetic items personalize the appearance of characters without changing gameplay, and players have sold particularly rare items for thousands of dollars.
Stephen got into Dota 2 betting for many of the same reasons that previously attracted him to betting on mixed martial arts.
"When you have something on the line it becomes a lot more compelling to watch."
"It was a way to earn cosmetics as well as invest myself into the games and teams I was watching," he says. "The same rush was there; when you have something on the line it becomes a lot more compelling to watch."
Dozens of bettors post on the Reddit forum to discuss each day's professional matches and submit predictions with additional notes, attempting to quantify seemingly random results. The analysis sometimes resembles financial research.
Competitive matches begin with a character draft in which both teams take turns selecting five heroes to use in the game, in addition to banning five other heroes. A strong draft — along with other factors like latency, practice regimes and innovative strategies — means that any semiprofessional team has a chance to beat the world's best.
Much like traditional sports, the popular teams tend to be grouped geographically. The top Chinese teams are highly organized and have won the bulk of the game's prize money to date. Western teams tend to have less formal training regimes, and in areas like South Korea and Latin America, competitive Dota teams are just starting out.
Betting predictors in the forum approach matches with a mix of data and gut feeling. Users research unknown teams by gathering players' match results and performance statistics on Dotabuff.com.
"I'd say a good analyst knows how to notice trends in teams, knows any inside information such as stand-ins [substitute players], player issues, pings, how teams should match up against each other … and can call when it's a good time to bet on the underdog," says Stephen. "Being a successful bettor involves betting on the underdogs due to the huge return rates, but it's difficult to determine when it is a good opportunity to do so."
A team's style or history can influence betting decisions. Many bettors consider, for instance, perennial champion team Na'Vi to be inconsistent during less important matches, and often the team gets skewed odds thanks to its legion of fans. Given that, Na'Vi can be a good team to bet against.
Ultimately, users name their preference for one team and hope for the best. The process, like most of Reddit, is democratic and allows anyone to submit predictions and vote content up or down.
Sometimes, Stephen has to step in and clean up if he feels users are moving away from his ideals of providing a free, accessible community. In the past, some Reddit users have attempted to profit off the community by charging for their predictions through subscription services. They have clashed with Stephen and other moderators of the forum after advertising there, which Stephen says goes against the intention of making the community free and accessible.
Building the lounge
Dota 2 Lounge also began as a grassroots effort. Robert Borewik, a programmer and website designer, founded the site in July 2012 as a way for users to integrate their accounts on Steam, which hosts Dota 2, to easily trade cosmetic items. Traders previously advertised their wares with chat messages, creating a chaotic and unreliable marketplace for listings. Dota 2 Lounge's staff saw that as a problem when items could be worth thousands of dollars.
"Creating Dota 2 Lounge was initially focused on trading: creating a centralized community where everyone and anyone can find exactly what they want and very easily, very efficiently, trade," says Courtney Timpson, a Dota 2 Lounge admin who joined the site a month after it went live. The site has three admins and nine moderators who manage it by updating match results and communicating with users, making them one of the most influential — and criticized — groups in the betting scene. Borewik, who didn't respond to interview requests, ultimately makes all policy decisions.
Betting on the site was initially an afterthought. People bet items on a team winning a match based on an "honor system" with the expectation that they would surrender their items if their team lost. But there were no punishments for keeping items after losses, which led to dishonesty and unreliability. Dota 2 Lounge came up with an innovation about two months after the site launched: automated bots that would trade with users and hold items in escrow. If the person won, they would be able to retrieve their items along with their winnings. If they lost, the bots gave their items to winners.
"It wasn't until we introduced controlled betting (through bots), that we actually hit our boom," says Timpson. "So, once we had a stable betting system, it grew exponentially each day."
The site has swelled with users over the last few months — over 50,000 bets were placed on particularly high-profile matches. Users can bet up to four items on any particular match, and payouts are dictated by how many bettors favor each team when the match begins. If a heavy favorite wins, the payout will be a fraction of the value of the items that were bet. But if the underdog wins, winners will receive a flood of winnings and triple the value of their initial bet or more. The potential for upsets makes betting against the crowd a risky, but potentially profitable, enterprise.
Timpson declines to talk about how the bots were programmed but acknowledges that the site has trouble sometimes keeping up with demand. Bots must be created manually and can only hold a limited number of items. Users of the site have complained about technical difficulties when placing bets, long queues and missing items.
Timpson credits word of mouth for Dota 2 Lounge's growth. Much of the buzz happens in the viewer chats on sites like Twitch, which broadcast the Dota 2 matches. Somewhat immaturely, viewers will flood the chat with taunts toward opposing bettors like "EZ rares" and "Thanks for the rares, fanboys," whenever their team gets an advantage.
Interest in gambling has helped boost viewership of tournaments, and gambling sites have even become direct sponsors of events and broadcasters. Pinnacle, for example, sponsored a Dota 2 tournament in January with 16 teams and a 10,000 euro prize pool.
Beyond the Summit Studios, one of the major tournament broadcasters, also began mentioning Dota 2 Lounge during games and giving away items using codes on the Dota 2 Lounge site. Borewik has also launched a similar betting site for the shooter Counter-Strike: Global Offensive.
The perils of $322
Last June, Alexey "Solo" Berezin was flying high. He was captain of RoX.KIS, one of the best Russian Dota 2 squads, and was competing in the prestigious StarLadder tournament. They faced off against zRage, a lesser squad, in a match that didn't have an impact on standings because RoX.KIS had already qualified for the playoffs.
Nonetheless, RoX.KIS was the heavy favorite, but the team lost with a final score of 50 to 22 kills. The situation turned from embarrassing to scandalous when the tournament organizer, StarLadder, accused Berezin of betting against his own team and intentionally losing. Berezin later confessed to the offense and RoX.KIS management removed him from the team.
Ultimately, one bet may have doomed Berezin's career.
Berezin's winnings totaled $322, which has made "322" a catchphrase that spectators jokingly use when a team makes a bad play, suggesting that players are intentionally losing. Berezin was initially banned from StarLadder for life, but that ban was later reduced to less than a year. In February, Berezin had a chance for redemption and rejoined RoX.KIS after apologizing for the incident. But the team failed to qualify for the $10 million International 4 and RoX.KIS disbanded. Berezin moved on and joined Team Empire, but one bet completely changed his career — and damaged his reputation.
No other Dota 2 players have publicly confessed to match fixing, but there have been allegations. In January, gambling website Egamingbets closed a bet and accused Kazakhstani team Next.kz of intentionally losing a match in the small tournament, CIS Carnage. Egamingbets said there was "suspicious" activity and Next.kz left the tournament but denied it was trying to lose, attributing its performance on high latency and lack of practice. Pro players also recently told the Verge that they have received bribe offers in the past to intentionally lose matches.
Valve, the developer of Dota 2, didn't respond to requests for comment on betting. But according to the team manager of Alliance, one of the competitors at the International 4, Valve mentioned in July that any players caught betting at the tournament would be banned for life.
Dota 2 Lounge has had its own share of criticism for allowing alleged item scammers to list trade proposals on the site. In response, Dota 2 Lounge has linked accounts with SteamRep, a site that tracks and alerts users about scammers.
Another point of controversy is the common practice of teams using replacement players — stand-ins — for games. Unlike professional sports teams, which have multiple backup players for every position, Dota 2 teams are generally composed of a manager and five players who are expected to play in every game. If a player is unable to play because of illness or internet problems, the team will find a replacement for that individual match. That player can be a friend or, in contrast to traditional sports, it can be a player from another team. The issue is exacerbated because some of the weaker teams have unstable rosters and may sometimes even disband in the middle of a month-long league.
Dota 2 Lounge's rules state that a bet will not be closed in the case of stand-ins, which has been a source of complaints. Bettors argue, often after they've lost a bet, that results from a team that plays with three or more stand-ins shouldn't count at all. On the flip side, when a star from another team joins a weaker team, bettors complain that the stand-in is giving the team an unfair advantage.
Others argue that the use of stand-ins is just another variable in betting, similar to players having latency issues or a team being in a slump. Dota 2 Lounge rarely closes bets, but will do so if a team forfeits a match or is penalized with a game loss for being late.
Leaving money on the digital table
Although betting is all about making a profit, Dota 2 Lounge's staff is reluctant to talk about money, despite serving as the middleman for thousands of dollars in items bet each day. Timpson of Dota 2 Lounge declines to discuss financial matters, including whether the staff is paid, if the site takes a cut of the bets and if it has plans to expand into real money betting. Robert Borewik, the site's founder, said in June that the site kept a small percentage of items in order to have enough holdings to pay everyone in case of a mass withdrawal and as insurance against technical failings, but he denies that the site seeks to profit regularly.
Dota 2 Lounge does have a donation page that gives users who donate money benefits on the site like more prominent trade listings and personal bots to accept their betting items. Otherwise the site makes no mention of funding.
Traditional sports betting sites have grappled with government regulation, particularly in the U.S. following the Unlawful Internet Gambling Enforcement Act of 2006, which banned financial transactions with online gambling websites in the country. But bettors are rarely prosecuted. And most sports betting sites, including Pinnacle Sports, don't service American customers, despite the fact that three U.S. states have since legalized online gambling.
But the sites are expanding abroad, and they're focusing increasingly on video games. In 2011, James Farrowy and four partners left another betting company to begin Datbet, a real money betting site focusing on esports.
The company is open to bettors in Europe and until recently was active in the U.S. Farrowy sees two groups of customers: casual bettors who put $15 or $20 on their favorite teams and more hardcore bettors who will risk hundreds of dollars at a time.
Datbet, which has about a dozen full-time employees, takes around 10 percent of its bets and also sponsored the Netolic Cup, another Dota 2 tournament. It was also a sponsor of Speed Gaming, an American Dota team that is now with the esports organization Cloud 9. (Marco Fernandez, the owner of the Netolic Cup and Speed Gaming's former manager, was criticized for alleged mismanagement and the team left under bad terms.)
Esports betting is still far less developed than traditional investing, with far fewer users on betting sites compared to the major equity markets. But the scene has the advantage of drama and excitement over the drier world of finance, a quality that has made it more attractive to fans looking for a thrill rather than just a return.
"Watching esports is more fun than watching stocks go up and down," says Farrowy.
With fans placing hundreds of thousands of bets on video games every day, it's apparent that many people agree.
Images: Jakob Wells, Valve, Alexey Berezin