Esports without a bookmaker: fairy tale vs harsh reality
Bookmaking is one of the most significant sources of income for all esports business participants. It's worth looking at the excitement caused by the ban on Parimatch Ukraine by the Ukrainian government. Together with IKLA's Chief Operating Officer, Tatiana Kuzmenko, bo3.gg will try to figure out what is happening in the domestic market of the esports industry and what alternatives exist for its development.
Tatiana Kuzmenko, the COO of the Ukrainian esports organization IKLA, has been working in marketing and sales for more than 14 years, including over 7 years in esports. She began her career in the industry with NAVI, where she spent about 5 years, and also made her mark with a year-and-a-half period at Hellraisers, where she worked with many local Ukrainian brands, including Mazda.
The withdrawal of Parimatch is an opportunity for others
The withdrawal of Parimatch from the Ukrainian market due to sanctions may lead to a change in the bookmaking industry in Ukraine. First and foremost, one can expect the emergence of bookmaking companies such as VBET and FavBet. Typically, both have stayed away from esports, but too much—unoccupied space in the market is unlikely to remain unoccupied for long.
It's a matter of time and how many opportunities and desires the mentioned bookmakers have to take advantage of this situation. I have talked about cooperation with both VBET and FavBet. If we talk about esports, I have not seen them seriously looking to occupy this niche. Perhaps this is due to the war in Ukraine, which russia unleashed. Perhaps there are other reasons. Overall, all businesses are cautious in their decisions and do not take risks. But if they have the financial means, I would definitely take advantage of this opportunity if I were in their place. It would trigger me.Tatiana Kuzmenko, COO IKLA
Both companies have a strong presence in the football market in Ukraine. Still, now they can expand their business and occupy more advantageous positions among the young audience. These companies can become full—fledged replacements for esports clubs, organizations, and content makers previously tied to sponsorship contracts with Parimatch.
It is worth noting that VBET and FavBet have something to offer esports clubs and content makers to attract them to their side. The former even has experience in our industry — they signed WePlay talent Oleksii yxo Maletsky:
People working in this field are well—versed in their craft and deeply immersed in esports. VBET has a fairly strong presence in Ukrainian football, and they also have a cool poker client, — Maletsky shared in a comment on bo3.gg.Oleksii yxo Maletsky
As Tatyana mentioned, both companies are currently waiting, which means only one thing — a sober assessment of the market and its potential is underway. If these events had happened 5-6 years ago, there would be no doubt that we would see loud announcements and extravagant investments. In 2023, we can confidently expect that the first news will only come after the CS:GO major in Paris, at the end of the second financial quarter.
Bookmakers are one of the most powerful sources of revenue but not the ultimate one
If you take a look at the list of partners for the teams participating in the RMR tournament at the Blast Paris Major 2023, you can see that out of 32 teams:
- 9 bookmakers
- 8 energy drink manufacturers
- 19 hardware suppliers
- 76 other partners (food, automotive industry, etc.)
Thus, it is quite obvious that it is more than possible to run a successful business in esports, particularly in CS:GO, without the support of a bookmaker. The most important factors are sufficient results and a capable team marketing department.
The main responsibility lies on the shoulders of the teams. If we exclude all traditional sponsors in esports from the equation, the first thing a club will encounter in negotiations is a complete lack of understanding of the industry from a potential partner. Esports is rarely seen as a separate phenomenon, much more often — as part of the casual gaming community. And this is a challenge: how to you explain to a marketing specialist of a partner company that working with an organization is more beneficial than paid advertising with a general targeting? Esports has advantages:
- Esports organizations have a quality and focused audience, which the brand receives through opinion leaders (players, talents, influencers)
- Esports is primarily an image story that bears fruit in the long run. Short—term goals can be achieved through special projects
Yes, the cost of such cooperation is higher than just advertising on Instagram, but the effect for the brand turns out to be much more stable and native.
Casinos as an alternative to betting — the risk of getting involved in a scam scandal
To put it bluntly, collaborating with casinos is a kind of stigma compared to other potential partners. Fans and viewers look at such collaborations as a deal with the devil. It is widely known that casinos never lose, meaning their advertising is a scam against their fan base.
Although this logic may have some validity, it is fundamentally flawed. Casinos are never a way to make money, no matter what anyone tells you. First and foremost, they are a way to have fun. The logic is similar to any other form of entertainment: if you go to the cinema, you buy tickets; if you place bets, you top up your account, and so on. By the way, bookmakers were stigmatized for a long time but found their way into esports. Tatiana speaks about this:
Previously, bookmakers were viewed quite negatively by the esports audience, and it took time to correct this. But now, bookmakers are title partners for many organizations, and fans perceive it as normal — they make bets and participate in promotions and various activities. The same story is true for casinos and roulettes. It only takes some bold major players in the gambling market to enter esports, not just because of advertising talent, but with a multi—year contract.
But as experience shows, it is very important to have a good clean reputation and to be legal in Ukraine. For example, there is a well—known online casino in Ukraine, Kosmolot. We also had negotiations with them. But they are not ready yet either. I see their advertisements in many cases, often on news Telegram channels, where seeing them is strange and inexpedient. This is amazing marketing, in my opinion. Trust from the audience and authority must be gained differently.Tatiana Kuzmenko, COO IKLA
I'm sorry for the language, but casinos in esports are like sex. If both sides engage in it without considering protection and consequences, they may end up standing in line at the doctor's office for a long time. But all parties will be satisfied if it's done with trust, mutual respect, and control over what's happening. Perhaps esports representatives need to take a step towards the "casinos" to take their businesses to a new level.
There is one caveat that one should keep in mind when collaborating with a casino. Casinos and roulettes are a "no go" for other sponsors. Andriy Yatsenko, Director of Strategic Partnerships at StarLadder, told us more about this.
If you have conditional sponsors like Red Bull, Monster Energy, Kyivstar, Logitech, and any other well-known brands that care about their reputation, as soon as you sign with a casino, all these sponsors automatically leave you because they won't stand next to a conditional Kosmolot. Moreover, very often, even in sponsorship contracts, there is a ban list for such sponsors from "black categories" like tobacco, alcohol, casinos, etc.Andriy Yatsenko, Director of Strategic Partnerships at StarLadder
By the way, while this article was written, a "case" has arrived! The leading voice of the Maincast studio, Vitaly Volochay, has signed up with Kosmolot. We hope that the result will be long—lasting and successful for both parties.
Esports thrives worldwide without bookmakers
In the early days of esports, the main sponsors were computer and device component manufacturers. These companies provided players with quality equipment and technology that could improve their performance in the game. This was important for players who aimed to achieve better results in tournaments.
Over time, other companies entered the market, sponsoring teams and tournaments. One of the most notable examples is energy drink manufacturers, who allowed players to increase their concentration and endurance during the game. Of course, in the early days of esports, professional players did not receive the giant salaries they do today. However, even then, the esports industry was relatively stable and constantly evolving.
Just think, in Asian esports, bookmakers are not the main sponsors of clubs. Instead, the main sponsors are telecommunications companies, banks, manufacturers of technology, and automobiles. Perhaps in Ukraine, esports organizations will bridge a young audience and conventional, outdated TV channels looking for new sources of content distribution.
Partners are no longer interested in just branding uniforms or social media. They want more — content, interaction with the audience, and special projects involving talent. Entertainment content will always be interesting to the audience. But here, it is important to be able to combine everything harmoniously — so that it is interesting, informative, and humorous, and integration with the partner can be done correctly.Tatiana Kuzmenko, COO IKLA
And in Ukraine, esports should not rely solely on bookmakers. Searching for new cases and attracting more traditional sponsors, such as banks, technology manufacturers, automobile manufacturers, and other product categories, is essential. This will help diversify the sources of income for clubs and make Ukrainian esports more resilient to market fluctuations.
Ukrainian esports and current partners
Ukrainian esports has been around for many years, and during this time, it has gained popularity and recognition both in Ukraine and beyond its borders. Before the start of the war on February 24, 2022, the Ukrainian esports market had many partners who were constantly investing in it.
Among the main partners of Ukrainian esports were electronics manufacturers Lenovo, Samsung, and ASUS, who provided high—quality equipment for tournaments and, importantly, money for prizes. In addition, as partners of UPEA and UESF, representatives of the banking sector, such as UKRSIBBANK and PrivatBank, supported Ukrainian esports players financially and informatively.
Another sponsor was the energy drink manufacturer NON STOP, as energy drinks can significantly increase the performance and endurance of players — this is their direct audience. In addition, computer and component stores were also partners of Ukrainian esports since gamers constantly strive for modern and high—quality equipment. Even the manufacturer of men's cosmetics NIVEA MEN did not stand aside. By the way, representatives of this industry have had their eye on esports for a long time, conducting various special projects. One of these — "Become a hero with L'Oreal Men Expert," was the idea of the Zenith Ukraine agency and the L'Oréal Paris brand to partner with the Ukrainian "cyber mammoth" Starladder. As a result, the project received a bronze award at the Effie Awards Ukraine in the Beauty & Personal Care category.
But that was before russia's invasion of Ukraine, constant air raid sirens, and the war. How bombs in the sky and constant threats in the country affected the revenues of the clubs — Tatiana Kuzmenko says:
The war has had a great impact on all spheres, including esports. But I see some positive changes as well. Finally, the concept of the Eastern Europe region in esports, to which Ukraine belonged before, is disappearing. Finally, we are getting closer to Europe and being recognized here.
Finally, content in the Ukrainian language began to appear on YouTube and other social networks. We at IKLA are one of the few clubs generating such content, and that's really cool, in my opinion.
Any crisis is an opportunity for someone.
For example, for us. We decided that this is the best time to develop Ukrainian esports and prove to the world that it exists and what we are capable of, even during the war in the country. That's why we are actively working on both sports results and the development of our media.Tatiana Kuzmenko, COO IKLA
According to the chief operating officer of IKLA, Ukraine has always had problems: limited financial resources, a lack of understanding of the esports industry, and the adaptation of standard marketing metrics for esports marketing. Now, in addition to these challenges, there is also the war.
When it comes to finding partners, it has become even more difficult than before. A military conflict has compounded the risks that have always existed for Ukrainian organizations. In addition, many are directing their finances to support the Ukrainian Armed Forces, which is understandable. However, just six months ago, brands needed to prepare to negotiate, and the situation is slowly changing.Tatiana Kuzmenko, COO IKLA
The fact that the Ukrainian industry has finally shed the label of the "CIS" only helps to identify the audience correctly. One of the employees of an energy drink company in the country told bo3.gg that an essential factor in signing influencers is the production of content in Ukrainian — this way, the brand can be 100% sure of the audience behind the blogger.
How can bloggers and content creators survive?
After Parimatch's withdrawal from the Ukrainian market left many esports bloggers and content creators needing sponsorship contracts. Immediately after this, many exciting projects were put on hold.
Are there enough esports "names" in Ukraine to be interesting for partnerships? If we're talking about pure esports, the first names that come to mind are petr1k, Tonia Predko, ceh9, and yxo. Of course, many other representatives are not from CS:GO; such as professional player Ghostik from Dota 2, his colleagues from the talent pool Texas and Olsior. Let's not forget the relatively isolated Wanderbraun with his endless stream of Age of Empires 2 content.
It is important to understand that when it comes to bloggers and content creators, esports figures are mixed in with regular streamers and bloggers — in short, they are part of the entertainment industry. With the start of the war, having lost their usual partners, bloggers focused on their subscribers and donations from them.
The Ukrainian gamer audience has up to 2 million people. And to cover it, having millions of subscribers, is unnecessary. For example, we at IKLA have almost 30,000 subscribers. Still, we can reach the entire Ukrainian audience through smart targeting, exciting content, and talents — ours and those we collaborate with.Tatiana Kuzmenko, COO IKLA
If you look at the Ukrainian blogosphere, you can often see the online insurance service Hotline.finance, the Rozetka online store, and many English language courses. The war is making it increasingly difficult to find sponsors, but with the right approach, even small platforms can show impressive coverage, as IKLA's practice confirms.
Today, Ukrainian esports is going through difficult times due to the lack of support from bookmakers, including the withdrawal of Parimatch, the main sponsor of clubs, streamers, and content creators. However, despite these difficulties, Ukrainian esports can survive and continue to develop. New investors will help Ukrainian esports remain competitive and demonstrate tremendous progress.
The article was worked on by Taras Bortnyk and Yaroslav Bashtanikov
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