Buzzword Battle Royale: When Esports Meets Web3 in a Crypto-Powered Loot Box
Find out what's on the tasting menu from regulatory hell...
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Patch Notes:
When Esports Meets Web3 in a Crypto-Powered Loot Box - Community Gaming’s Forkast leaves more questions than answers
Moist Moves, Dry Returns - Moist Esports was losing a lot of money
Ninjas to Dabble in Dhabi - NiP to relocate to UAE, attract $40 million
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Buzzword Battle Royale: When Esports Meets Web3 in a Crypto-Powered Loot Box
Community Gaming has partnered with ‘the blockchain built for gamers,’ Ronin, which will see its prediction market platform integrated into the blockchain.
The release outlines that Forkast will bring prediction markets ‘to the forefront of Ronin’s ecosystem,’ allowing users to ‘stake CGX tokens,’ ‘earn Loot Box rewards,’ and ‘participate in curated markets tailored to gamers.’
The Community Gaming Whitepaper (ahead of the $CGX launch) correctly outlines that streamers such as iShowSpeed and Kai Cenat have some of the largest fanbases in the world. But there exists an absence of a way to gamble on, sorry, I mean, use a global prediction market to ‘enhance fan engagement.’ The Forkast product is designed to motivate fans to ‘return to watch streams regularly’ and promises to nurture a sense of community among spectators.
The whole thing reads like a tasting menu from regulatory hell:
CFTC? Never heard of her: Prediction market platforms have been newsworthy in the United States of America after Kalshi won a court battle against the Community Futures Trading Commission (CTFC), allowing the company to offer legal election betting in the country. The decision has since been appealed, although President Trump’s new head of the Commission is considered pro-election betting.
Robinhood, also regulated by the CFTC, offers similar markets. In addition, the regulatory body has recently suspended Crypto.com’s sports contracts relating to the Super Bowl and other events while assessing their legality.
Considering Community Gaming is New York-based per press releases and social media, one would have thought regulation would be atop the list.
New York, New York! In the Empire State, Sen. Joseph Addabbo has again filed for the legalization of online casino. He has also made a point of curbing illegal gambling as part of his push for iGaming regulation. In a release, Addabbo said, “Without an option for safe, regulated online gaming, many individuals will fall victim to sweepstakes casinos that entice customers through free play advertising with the potential for prizes through the purchase of gold coins. I encourage my colleagues and the Governor to take action against unregulated sweepstakes casinos while reconsidering the benefits of allowing legal iGaming operators to provide sanctioned services in a popular and ever-growing industry.”
Sound familiar? $CGX has the potential to appear to be sweepstakes meets prediction meets crypto.
Loot Box or Pandora’s Box? Community Gaming has also announced that players who stake CGX tokens will earn loot boxes weekly. The UK government has examined loot boxes for potential gambling harms, and they have been outright banned in other countries (see Belgium).
CG will feature public probability disclosures.
Users can earn higher-tier boxes by ‘staking additional tokens for extended periods’
Loot boxes will contain Platform Credit, Fungible Tokens (CGX, USDC), and items from partnered games.
$USDC is pegged to the fiat currency, the US Dollar, and as such, players can effectively win money - by buying loot boxes. You can earn more boxes by… staking more tokens. The whole product utilizes language that is very common in gambling, yet there is no mention throughout the Whitepaper of any regulation (gambling or otherwise). There’s nothing on verified age limits, and blockchain anonymity will sound the regulatory klaxon.
Community Gaming’s primary function (currently) is facilitating gaming tournaments. The emergence of futures markets and loot boxes with readily transferable rewards at the fingertips of a younger audience may well cause a regulatory stir.
They know what they’re doing, too. Federal law should state, “Anyone found to use the word GAMBA on social media or elsewhere should be prohibited from wagering.”
Moist Moves, Dry Returns: YouTube creator MoistCr1tiKaL has revealed that he has lost over $4 million in the last four years, owning the esports team Moist Esports.
The team recently merged with Shopify Rebellion, and in a video discussing the merge, commented, “Over the last 4 years, I have lost, in total, right around $4.2 million across all the games we’ve competed in across all of these years. And you know what? I’d do it all over again. In fact, I’d continue to do it.”
Both MoistCr1tiKaL and Ludwig now own a part of Shopify Rebellion, one of the better-known brands in the esports space.
Like traditional sports, it shows that owning a professional team is often a heavy-loss leader and more of a passion project. Given the limited revenue streams available to teams, the esports team landscape tends to be characterized by fragility, player power, and over-inflated salaries.
Full story on Dexerto
Ninjas to Dabble in Dhabi: The Ninjas in Pyjamas Group has announced a multi-year deal with ADIO Holdings Restricted Limited, established by the Abu Dhabi Investment Office.
Per a report by The Esports Advocate, ADIO will invest $40m across four years in Ninjas in Pyjamas (depending on performance milestones). It will see NiP move its global headquarters to the United Arab Emirates.
Ninjas in Pyjamas’ most recent financial results per TEA show a net loss of $4.7 million for the first half of 2024.
This re-emphasizes the difficulty of making money as a team or in the esports ecosystem. Saudi Arabia has recently made considerable progress in esports (and sports), and the UAE is not far behind. In December last year, Indian company EsportsXO announced it would be opening a regional HQ in Abu Dhabi.
This is in addition to Abu Dhabi receiving coverage from the likes of Forbes in April 2024 for ‘building the world’s first esports island’. Not sure it’s quite there yet…