Berlin, the home of the upcoming EiG (European iGaming Conference), is a major tech hotspot, boasting a close knit start-up culture reminiscent of Silicon Valley back in the late 1990s, when eGaming got its start. Berlin was the recent hosts of last week’s European eSports Conference – I am seeing some interesting parallels.

Over the last couple of decades, eGaming has gone from a high-margin, high-risk gamble, operating from lesser known jurisdictions, to a mature, highly-regulated industry generating astronomical annual revenues, with the enthusiastic support of regulators, banks, and service providers in many respectable jurisdictions.

It has made some of those who got in on the ground floor into billionaires many times over. As I have been in the industry for some time, people often ask me what the next big thing will be to disrupt the market and create the next raft of millionaires and billionaires. Right now, the answer I am giving people is this: games of skill.

There are two types of skill-based games that have been driving massive growth in the sports side of the eGaming market over the last couple of years. The larger of the two is daily fantasy sports; Draft Kings and Fan Duel, the two big players in the USA, have both recently been valued at that magical unicorn level of USD 1billion. These ‘pools’ are run as a game of skill rather than a gambling offering in the US, Canada, and several other markets, although in the UK they are a licensed gambling activity.

Currently the smaller of the two, eSports may actually have even better long-term prospects, and there is definitely more room for disruptive new players in this market. This market is built around video game competitions, and it shouldn’t be underestimated. The 2015 DOTA 2 International tournament had a prize pool of almost USD18.5million. To put that in perspective, if it were a Poker Tournament it would be in the top 20 largest prize pools, rivalled only by the World Series of Poker – and the eSport tournament reached that total in only its fourth year, whereas the WSOP has been running since 1970.

So if these games of skill are already attracting big money, where is the ground-floor opportunity? Firstly, there is still more room for disruptive business models and new technology in these markets, which are less mature than, say, the casino, bingo, or poker markets, for example. Secondly, savvy companies are going to start looking at cross-monetisation opportunities between licensed (i.e. online casino) and unlicensed activities (daily fantasy sports), tying together traditional gambling markets with these new products.

At Boston, our multi-family office arm is already working with fantasy sports and eSports companies and we are also evaluating start-ups in these areas as part of our venture capital arm. As such, we are actively engaged in country-by-country legal reviews of games of skill, pools, and gambling, as these companies increase their geographic, product, and regulatory footprints. I think the next twelve months are going to be extremely interesting for eGaming, and it is this sort of emerging company that will be driving the industry’s news headlines.

Bruce Elliott is attending EiG in Berlin 20-22 October. If you would like to meet up with him, email him at belliott@boston.co.im.

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