Is eSports betting legal in USA and Australia?
Last updated & tested: 2019-08-03
eSports is huge right now and is spreading in popularity worldwide. In fact, recent studies from Super Data Research found that the market made $892 million last year in revenue, and this year they’re expecting it to rise to over $1 billion. So what makes it so popular?
Well, if you’re anything like us you’ll love the immersive qualities of video games. Whether you’re summoning creatures or blasting away your enemies with the latest in assault rifles it is nice to be able to escape for a little while. Since the 70’s people have been using the escapism of video games to give them a break from modern life – if only for a few minutes.
And the games are also great for bringing out your competitive edge. Many players will talk about their need to be the best and drive their scores higher or collect more skins than their competitors. And who doesn’t love that moment just before victory as your opponent is about to be defeated in battle?
What are eSports?
So what is the difference between video games and the eSports industry? Well, the eSports definition has never been completely hammered out, but we’ll go with what Nick Tofilluk of the UK Gambling Commission (UKGC) defines it as:
‘It is difficult to define eSports but for the purposes of our discussion paper, we use the term to describe the playing of computer games which can range from play by two individuals to playing in professional competitions.’
So, basically, he’s saying that if you play a video game with a friend (or your arch nemesis) whether you are taking part in a professional eSports competition or not, you are technically an eSports player. Suddenly that time we all played COD to determine who bought the pizza seems much more important.
But on more serious topics than pizza, we’re going to take a look at eSports tournaments. If you’ve never experienced an eSports tournament first hand, you’re gonna be in for a shock. These are huge events where professional players face each other in a knockout competition (to the death – well, not really) either individually, or more commonly as part of a team. The audiences of these tournaments are huge, we’re talking millions of people online and thousands in attendance. To give you some idea of the popularity, 36 million people logged in online to watch the World Final of League of Legends between SK Telecom and the Koo Tigers. That’s more than the NBA final worldwide. Five million more people to be precise!
The teams come from all over the world, and each region has their own tournaments. That doesn’t mean that a Korean team couldn’t play in the UK or Sweden though, and vice versa. The US for example is home to Major League Gaming, which features a variety of games and specialities. In the UK, there is also the European Gaming League which focuses just on Call of Duty tournaments.
Most of the competitions offer prize funds, and some of these are HUGE! The esports industry is a big money business and has grown to such a size that millions of dollars are often up for grabs. In DOTA 2 in 2015 an incredible $31,015,892 was awarded to players of the game. That is without taking into account the revenue from advertising or esports betting in USA (or anywhere else in the world for that matter).
As the esports betting industry is an emerging market, many countries have been slow to organise suitable regulation for it. The USA and Australia are no exception. Most of the difficulty in regulating eSports happens because eSports is difficult to define. Using the word ‘sports’ to describe something that is essentially video gaming leaves a lot of the industry frontrunners cautious. But if we consider again Tofiluk’s definition of eSports then it is pretty straight forward. If you and I logged into our Steam accounts and played a game of StarCraft 2 we’re taking part in eSports. Same goes for us guys competing over the pizza bill earlier. But the sticking point comes when deciding where the bet would fall under gambling laws. Should it fall under sports betting? Well, if it is a sport that’s a yes. Or should it be covered by gambling laws? They are video games you’re betting on, right? This confusion has caused big delays in regulation, and while games are unpoliced this can open the backdoor for exploitative gambling sites.
Legality of eSports betting in USA
Interested in placing a bet on esports in the USA? In the US, eSports legal consideration is a difficult thing. Online gambling is subject to a lot of red tape, taking into account at least four layers of legal tradition and three federal laws. These are:
- The Interstate Wire Act
- The Professional and Amateur Sports Protection Act
- The Unlawful Internet Gambling Enforcement Act
Here’s what each one of them means in a nutshell:
The Interstate Wire Act
This act was first passed in 1961 and made it illegal to use bets using wire communication, which it was originally argued included online gambling. It has been amended many times over the years, most notably in 2011, to include casino and poker gambling, but notably, sports betting isn’t allowed under the act. This has been the biggest issue with eSports betting, as many argue that it is in fact a sport. If that is the case then esports betting in USA will not be tolerated. However, the Interstate Wire Act was originally put in place to stop large scale gambling operations, and no-one has been knowingly prosecuted for putting a small scale wager on a sporting event.
The Professional and Amateur Sports Protection Act
This is a much smaller law, and is actually pretty much covered by the Interstate Wire Act. It was formed in 1992 to specifically state that sports betting (and by proxy esports betting in USA) is banned countrywide. The key words in this act are:
“It shall be unlawful for a governmental entity to sponsor, operate, advertise, promote, license, or authorize by law or compact, or a person to sponsor, operate, advertise, or promote, pursuant to the law or compact of a governmental entity, on a contest based directly or indirectly (through the use of geographic reference or otherwise) on one or more competitive games in which amateur or professional athletes participate.”
What that rather daunting bit of text says in simple terms is no state can create a law to bypass the current laws banning the betting on sports events. This act was officially invoked recently in Atlantic City when the state tried to legalise sports gambling. The law also outlaws the use of fantasy sports which has also been a sticking point for the US esports betting industry.
The Unlawful Internet Gambling Act
This is possibly the act with the biggest impact on online gambling and esports betting in USA. The act was passed at the last minute as part of the SAFE Ports Act in 2006. Its function is to stop online betting by disallowing businesses to accept bets and stop banks and financial institutions from processing payments for gambling purposes. The key wording is this:
“…prohibits gambling businesses from knowingly accepting payments in connection with the participation of another person in a bet or wager that involves the use of the Internet and that is unlawful under any federal or state law.”
This act seems pretty clear cut, right? If you were asked ‘is eSports betting legal in the USA?’ you would probably answer no. But technically this bill only makes it more difficult to send and receive money from a known gambling site. Many gambling websites have found a way of getting around this issue by using third party financial institutions.
The act also doesn’t regulate fantasy bets or many skill games, meaning technically, eSports is not covered by the act. The act is also aimed at larger illegal gambling rackets, rather than individuals.
Individual State Gambling Laws
Each individual state will have their own gambling laws and they can vary wildly depending on where you are located. Indiana is one of the states with heavy anti-gaming laws that are based on traditional values. It is one of the few states to outlaw online gambling in any form, obviously affecting the esports betting industry. Possibly the most liberal of all outside of Nevada is Massachusetts, who allow wagers on a variety of markets. Online gambling here is not specified in their gambling laws, but is generally tolerated. Positive stuff for those who would like to bet on esports in the USA.
So can you bet on eSports if you live in the US? Well, technically yes, but that will all vary depending on the state you live in. It’s important to check out your own state laws for detailed information.
Legality of esports betting in Australia
If you are looking for the answer to ‘is eSports betting legal in Australia?’ you’ve come to the right place. But like esports in the United States there is a lot to consider from state to state. Australia has the highest rate of gambling in the world, with over 80% of Australian adults engaging in the activity. As a result, gambling in most forms is regulated heavily. ESports is no exception. There have been many calls in the country for eSports legal consideration and specific regulations to police the industry. As a result there have been a few developments on eSports betting in Australia. So sit back and read carefully to ensure that you have all the information you need before making a bet on the eSports market.
In 2001, the Interactive Gambling Act was passed which aimed squarely at gambling operators offering real money gambling to Australian residents, but this seems to have done little to deter online Australian bookmakers from offering odds on various markets. So is eSports betting legal in Australia? Well, technically yes if you are a resident. Using and accessing gambling services is not an offence in Australia, and this bill is aimed mainly at bookmakers. Gambling is also considered a pastime, which means that in most states taxes are not applied.
However, this is different in South Australia who have added an eyewatering 15% tax to all gambling transactions punters undertake while living in the state. The state have also become the first state to ban eSports betting in Australia after becoming concerned with skin betting and its appeal to younger people and children. The ban came at a terrible time for esports in Australia, coinciding with a Mario Kart competition in Adelaide. The eSports bookies in Australia are unlikely to be worried though. The growth of eSports in Australia has been incredible with regular tournaments of CS:GO, COD and Mario Kart boosted by influences by Melbourne’s Crown Casino. Their incredibly popular events cost anywhere from $56-$500 a ticket. And eSports betting in Australia is offered by some of the industry’s leaders such as Ladbrokes and William Hill.
Final Remarks regarding eSports betting in the US and Australia
So we’ve got to the end of our look at eSports betting in both the USA and Australia and we’re sure you’ll agree that there is an awful lot to consider depending on whereabouts you live. Laws vary from area to area so you’ll need to ensure that wherever you live you are legally able to bet on eSports. The USA has MANY more rules and regulations than Australia, but be sure to watch out if you live in South Australia. And of course if you do choose to bet make sure that you choose a reputable site.
It’s also worth considering that eSports is still an emerging betting market and so you may experience teething issues along the way. Still, if you’re as crazy about video games as we are then a great way of increasing the fun could be to put a cheeky bet on your favourite game on the side. Who knows, you may even earn enough money to get the pizza in.
Check out the top ranking EU regulated eSports Betting websites with our reviews:
|BEST ESPORTS BETTING SITES|
|1||96 / 100||Esportsbetting Review||GO TO ESPORTSBETTING|
|2||95 / 100||Betway Review||GO TO BETWAY|
|3||94 / 100||Arcanebet Review||GO TO ARCANEBET|
|4||93 / 100||Pinnacle Review||GO TO PINNACLE|
|5||92 / 100||10Bet Review||GO TO 10BET|
We always recommend our readers to choose eSports Betting Operators which are either overseen by the UK Gambling Commission, or alternatively fall under European Legislative bodies, thus ensuring security and transparency when betting on eSports.