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Turkish esports website Esporkolik recently reported that Riot Games intended to allow gambling sponsorship, but Riot representatives have denied this statement.
Valorant rushed to fast popularity as an esport after its release in June 2020, with only a month passing before the first tournament – the Ignition Series in July 2020. Game Awards voted it the esport of the year in 2022, and Riot have established several initiatives, such as their partnership scheme where teams can buy into the league. The aim is to create a mutually beneficial ecosystem of revenue to provide stability and financial security.
However, with the current economic downturn, several sources indicate that the fuel for sky-high esports salaries is starting to dry up as private sponsors take their money elsewhere.
Reported change of policy
On March 15, Esporkolik reported that Riot Games would allow gambling sponsorship in their esports leagues in the near future, presumably with the intention of opening additional avenues of funding for struggling mid-league teams. The repeal was especially intended for one of their newer competitive games, Valorant.
Riot met this with a quick denial. A representative gave a statement to journalist Max Katz that they did not intend to allow gambling sponsorship.
George Geddes of Dot Esports later tweeted a confirmation that he had received the same statement from representatives.
Riot themselves have not, to date, issued a public statement regarding the report from Esporkolik. Esports players have reported uncertainty regarding the financial future of the Valorant league.
Gambling sponsorship ban
Currently, Riot prohibits sponsorship by companies related to betting and gambling in their VCT Handbook – a ban in the company of alcohol products, firearms, and other intoxicants. They also don’t permit gambling sponsorship for League of Legends.
This differs from other esports – CS:GO and FIFA both allow sponsorships from sports betting companies. It opens another avenue of funding for teams from an industry intrinsically linked with both traditional sports and esports.
Most likely, Riot’s stance against gambling sponsorship comes from their younger player base. Most video game players are in the 18-25 bracket, but Valorant has 24% of players under 18. Amidst research showing a correlation between advertising and gambling addiction, banning the association with role model esports players safeguards underage teens.
Sanna Heinonen at kasinonetti.com expressed: “While it’s obvious that player protection comes first and foremost – particularly for minors – it’s plain that there’s great potential for sponsorship deals within the Valorant league, and we’ll be interested to see if Riot Games choose to change their tact on partnerships with betting companies in the future.”
FTX and subsequent collapse
However, if Riot had repealed its ban on gambling sponsorship, it wouldn’t be the first time the company has changed its stance.
In 2021, Riot waived the prohibition of funding via unregulated financial organizations to allow TSM, an organization in the LCS, to partner with FTX – a cryptocurrency organization that soon went bankrupt.
After the company’s collapse, Riot sought to get FTX to reject the $96 million LCS agreement in an attempt to salvage their public image.
FTX’s recent bankruptcy had huge implications for the related esports industries, with heavy layoffs of workers and a reduction in available league funding.
Nerd Street Gamers, a Philadelphia-based team, were reported to be struggling to pay invoices despite many previous corporate sponsors, but there are speculations that their struggles began after their partner’s bankruptcy collapsed other high-profile deals.
A struggling mid-league
It’s exactly the impact that hopefuls hope allowing sponsorship from sports betting companies may counteract. While highfliers still rake in plenty of cash with partnership deals, there’s a growing struggle for mid-league Valorant teams financially. Top Valorant players can earn around $40,000 a month, but many players in the national leagues are struggling to secure funding. The Latin American Valorant Masters Champions (LDM) considered resorting to a public fundraiser to help keep the team afloat.
Tournament holders such as Promod also now claim to be operating the league at cost.
Despite the danger to younger players, esports and gambling go hand-in-hand.
Private sponsors are beginning to pull out of funding esports teams as they find little financial return from even top-tier sponsorship. A company producing gaming PCs sold only 28 models as a result of sponsoring a premier League team.
However, sports betting companies with strong esports gambling marketing could be a fresh avenue of funding.
By allowing gambling sponsorships, Riot could tap into a new vein of cash to inject new life into the game.