Esports Q&A: Seth Schorr, Fifth Street Gaming

Seth Schorr, the Downtown Grand boss and esports aficionado, says he believes esports will benefit greatly from the repeal of PASPA, but even as competitive video gaming spreads to other locations across the country, he sees Vegas remaining as the natural North American hub of the vertical

What does the lifting of the US sports betting ban mean for esports?
For esports in particular I believe the lifting of the ban will introduce esports betting to more people than the lifting of the sports ban will introduce people to traditional betting.

What I mean by that is that in North America there has been illegal sports betting going on for decades — the American Gaming Association states that $150bn a year is wagered on sports betting and 5% of that is in Nevada, so if you do the maths 95% is done illegally in many different ways.

But the typical esports bettor is not aware of all these illegal forms of betting — there are lesser known illegal ways but there are no local bookies taking esports bets. Now all of a sudden, there are going to be far more legal, advertised ways of betting on esports so I believe esports betting will see a dramatic increase.

Do you think states regulating sports betting will lump esports in with other sports or want to regulate them separately?
That is definitely a good question and each state will have to go through its own regulatory and exploratory process. That is why organisations such as the Nevada Esports Alliance work so closely with the Esports Integrity Coalition (ESIC), which signed an MoU with the Gaming Control Board last year.

That got the Nevada Gaming Commission comfortable with esports betting and in particular which leagues and which tournament operators they should allow sports betting on. Each state will go through the same process. Some will take Nevada as the gold standard, others will take a different approach.

Certainly in all of the main gaming states, the gaming authorities have esports on their radar.

You’ve recently been in Atlantic City working on an opening that also has an esports component. Can you tell me about that?
In Atlantic City, New Jersey we are opening the Ocean Resort Casino on June 28 this year, which happens to also coincide with the opening of the Hard Rock Casino, so it is a very exciting day for Atlantic City. Ocean Resort Casino is working very closely with esports operators in Philadelphia, including the Overwatch team, Philadelphia Fusion, and we are holding a major esports event in October.

Ocean is also working with William Hill as our sportsbook operator and William Hill has taken esports bets in Nevada so should the Division of Gaming Enforcement allow it – and today we are not sure if they will – then William Hill will more than likely take esports bets in New Jersey.

We are also opening a longue called The Den, which will have an esports component where weekly casual tournaments will take place in the summer, so there is a whole slew of esports experiences happening at Ocean.

With openings like Ocean and also the rollout of sports betting across the US, do you think Nevada will remain the natural hub of esports betting in the US?
Absolutely, because with esports the betting component is just one part of esports. Where Nevada has an advantage over other jurisdictions is that it is an entertainment destination, because it has arenas that are being converted into either esports-friendly arenas or permanent esports arenas. #

Nevada has two of the best esports arenas in the country: the Millennial Esports Arena in Downtown Las Vegas and the Allied Esports Arena at the Luxor. There is nothing like that in any other jurisdiction.

The Downtown Grand is to date the only esports friendly hotel in the United States, with its permanent training facility — the boot camp facility — and a video game suite. So the fact that these hotels are so committed to esports is the reason why Las Vegas is going to continue to be successful, not just because we can take a wager.

How is the entertainment mix changing in Vegas and how are you adapting to this?
I don’t know that it is changing as much as we are always adding new entertainment experiences, which is what esports is. Boxing and casinos have gone together like peanut butter and jelly since the 1970s. The USC was born out of Las Vegas and the integration of sports with casinos is nothing new.

Esports is simply another sport that casinos are using to activate their resorts and drive traffic. The difference is that esports is the only sport where the spectators, after they watch the professional match, can go and play.

You can’t go and box after a boxing match. You can’t go and wrestle after a USC fight, but you certainly can go to the Allied Esports Arena or the Downtown Grand and play in a tournament after watching a tournament.

The Allied Esports Arena has been built on the site of a former nightclub, do you see esports replacing the nightclub scene in any significant way?
The nightclub scene may be a little oversaturated; there are so many nightclub experiences so I think we are starting to see nightclubs shift but I wouldn’t take it that far.

I’m a big fan of what Allied Esports has done, however I don’t think they are quite yet there and I believe they may transition to a combination of nightclub and esports.

It might be a new form of nightlife where you may go to a nightclub and there may be drinking and dancing and flirting and all the things that we do at nightclubs, but people can also play and watch video games.

Have the strategies pursued by your casino and others such as MGM and Luxor proven successful in terms of shifting the demographic towards the emerging demographic of Millennials?
It depends on how you define success and what your expectations are. I can speak specifically to the Downtown Grand and say that we do consider our esports efforts to be a success in this regard. We knew going into it, being the pioneers and having zero roadmap or someone’s playbook to follow, that we would have to try different things. Some things exceeded our expectations, others didn’t, in which case we pivoted and course corrected.

You’ve previously talked about new developments in slot machines that incorporate a level of skill to capture the interest of Millennials and gamers. Are these groups spending money on these games?
A company that I am on the board of called GameCo has created video game slot machines where people’s video game skills allow them to get the best payout. We rolled it out in Atlantic City, New Jersey first and a few other jurisdictions across the states.

In Nevada we are going through the licensing process today but what we have seen is when these devices are placed in the right locations we have seen Millennials play these machines who would otherwise not play a traditional slot machine.

Many of the Millennials, specifically gamers, are used to being rewarded for getting better at a game — the more they play, the more skilled they are and they get rewarded for that skill. That does not exist in a slot machine. There is no skill involved in a slot machine, it is 100% based on luck. That is not attractive to a gamer as it goes against everything a gamer believes in.

So by creating some element of skill – there is still an element of chance — that enhances your odds of winning or enhances the payout it becomes something that is attractive to a gamer. In our early trials and it has only been on the floor for a year, we have seen that gamers like this type of gambling better than slots based gambling.

What else is coming down the pipeline that is supportive of this Millennial-focused strategy?
My company has developed a patent pending technology solution called Kappabox.com that allows bars and restaurants in North America to become esports friendly and even become sportsbooks. So a sports bar may want to show esports matches — they don’t want to become 100% esports but they want to add esports to their programming just like they have football, soccer, golf, etc.

We have designed a technology that allows them to easily stream esports content from Twitch and other channels and also allows the guests to control what is on that TV, it’s just like a jukebox but here we are now allowing people to control the video.

This is very important for esports because there are so many channels to choose from that if a random bar in North America wants to start to show esports matches it is very difficult for them to know what to choose. It is very obvious in traditional sports — most sports bars know what to put on. Most sports bars do not know what to put on with esports.

We did a pilot test over the last couple of months and we found that guests love it and bars love it, because it allows them cater to this new audience that they otherwise don’t know how to.  And now that PASPA has been repealed, as a customer is watching esports there is a direct link to sportsbook operators, which then allows them to take bets.