July/August 2018

More articles in this issue:

• LiDAR Lights the Way
• iRobot’s Colin Angle
• Pay Dirt
• Color eReader Tech Close to Prime Time
• There’s No Place like a Smart Home

The recent rise of Bitcoin in the mainstream media has certainly begun a season full of blossoming initial coin offerings (ICOs). While only about three percent of the world’s population uses Bitcoin, it seems like every vertical is cashing in on the abundance of new digital currencies, which circumvent traditional banks, government regulation (at least for now) and the whims of the financial markets.

There are now more than 1,870 cryptocurrencies, according to Investing.com. And new entries appear almost daily. Keep in mind only a single cryptocurrency was available a few years ago – Bitcoin – but that is ages ago in today’s digital times. Total market capitalization for these virtual currencies is more than $312 billion. But this industry is extremely top-heavy, with the 20 biggest currencies (like Bitcoin, Ethereum, Litecoin, Stellar, Ripple and NEO) accounting for roughly 90 percent of the total market.

To better understand the current craze, one needs to understand the basics. Cryptocurrencies like Bitcoin are digitally mined by extremely powerful computers. These virtual tokens are stored safely on the blockchain, a decentralized public ledger of every transaction that has been carried out in that cryptocurrency. Hosted across millions of computers simultaneously, these public records are accessible to anyone on the internet.

The sports world has begun exploring cryptocurrency, although it’s treading softly into these new financial waters. The first to dip into this new source of revenue were the gambling companies like Wagerr, BlitzPredict and Edgeless. Also, traditional offshore sports betting sites like Sportsbetting.ag and BetOnline.com accept cryptocurrency as payment. After all, there’s a new class of wealthy cryptocurrency owners looking to play with their tokens, and gambling sites are more than happy to accept their virtual money.

The recent repeal of the Professional and Amateur Sports Protection Act of 1992 (PASPA) in the U.S. has opened the door to legalized gambling on a state-by-state basis with New Jersey already officially in the game. By 2019, as many as 20 states will offer legal sports betting, which also paves the way for cryptocurrency gambling. This area is sure to see solid global growth in the coming years.

Fantasy Cryptocurrency

When it comes to daily fantasy sports, more than 59.3 million Americans played last year, according to the Fantasy Sports Trade Association. A recent report from Eilers & Krejcik Gaming forecasts $3.3 billion in entry fees and $330 million in revenues in 2018 across all of the traditional sports.

Now, companies are beginning to combine blockchain technology with the fantasy sport leagues. Protoblock, for example, uses real NFL statistics within its network to offer a new way to play across Windows/Mac desktops and mobile devices. By providing cryptocurrency based on the player’s ability to predict NFL stats, Protoblock offers a novel, high-tech experience for fantasy fans to measure their skills. It’s also free to join and has its own currency: FantasyBits.

“Fantasy football players are finally getting rewarded for their skills, having acquired them over the past 20 years,” says Jay Berg, founder and core developer of the Protoblock system. “Not only did we eliminate fees, fraud and government censorship, our blockchain takes this one step farther, by eliminating the need to bet or risk anything.”

Protoblock is one of many companies embracing cryptocurrencies as a way to improve the transparency and payment methods of fantasy sports. These startups use decentralized networks to provide quicker verification, faster withdrawal speed and more payment options. Some also offer a wider range of sports and leagues, including cricket. In the past years, companies such as NoLimitCoin and MyDFS have raised funding, started a beta, and set plans to launch their own currency while expanding its platform.

“We’ve streamlined every underlying process to make our platform work quickly and transparently,” MyDFS states in its whitepaper. “Users can play their games, invest their winnings, and withdraw them quickly without facing insider gaming, bots, or other unfair practices that spoil the spirit of the game.”

Above all, apps like MyDFS and Protoblock ensure fair play, since having a decentralized, public platform lets players see each bet or transaction. While their identities still remain anonymous, anyone can monitor what is going on. It keeps the game both player and investor friendly.

“I designed the protocol for the public, with each Protoblock player as a part owner, and governance completely controlled by the collective fantasy football skill,” Berg says. “The peer-to-peer network and proof-of-skill protocol make the system inherently fair, open and transparent.”

Soccer Gets a Kick out of Cryptocurrency

The London Football Exchange (LFE) hopes to cash in on the cryptocurrency craze by democratizing club ownership, says Ben Leigh-Hunt, LFE’s main board advisor. With more than four billion soccer fans globally – roughly half the world’s population – LFE is in talks with over 50 clubs to participate in this new form of fan engagement.

LFE did an ICO of four billion tokens, which Leigh-Hunt envisions clubs will allow fans to use for various exclusives, including tours, meet-and-greets and discounts on merchandise. Down the line, there’s the potential for tokens to be used to purchase tickets, which would help improve current ticket technology and reduce the high fees of 8 to 15 percent that companies like StubHub charge consumers for using debit or credit cards. Blockchain technology would also make these ticket transactions safer than the current offerings, eliminating the threat of hackers.

LFE made 2.4 million of its tokens available for 20 cents, which allowed even less wealthy soccer fans to get involved. Leigh-Hunt says the idea for this new exchange is to go beyond the transactional token level marketplace and ecosystem by giving fans “ownership” in their favorite team. It’s also introducing a new revenue model for clubs, which can separately partner with cryptocurrency gambling partners. For example, Arsenal, like many premiere league teams, has its own cryptocurrency deal for gambling and has partnered with CashBet for CashBet Coin.

Betting is not a part of the LFE, which again makes it safe for even the youngest soccer fans to interact with. Leigh-Hunt says the advent of the LFE Group is the conduit for football fan engagement as well as club financing, while promoting the social good, youth development and gender equality. “These goals will sustain the LFE initiative long past the crypto craze,” he adds.

Esports: The Evolution of the Modern Athlete

According to research firm Newzoo, the global esports, or professional video game audience will reach 380 million this year. The worldwide esports economy will generate $905.6 million in 2018 with projections to top $1.4 billion by 2020. That’s why just about every traditional sports league is exploring esports directly, while many team owners and teams are investing heavily in esports organizations.

“Of course it is a ‘sport.’ It fills arenas and stadiums, has an [over-the-top] network built on it [Twitch], and there is a robust market in team purchases that is developing,” says David Stern, former NBA commissioner, answering one of the main hurdles that many traditional brands have faced with esports.

Esports is spread across many different types of games like Riot Games’ League of Legends, Valve’s Dota 2 and Counter-Strike: Global Offensive, Epic Games’ Fortnite, Activision’s Call of Duty, Blizzard’s Overwatch and Hearthstone, Electronic Arts’ FIFA, NHL and Madden, and Take-Two Interactive’s NBA 2K, with a diverse fan base that often doesn’t overlap – offering brands unique new ways to capture the attention of millennials and Gen Z.

“Tens of millions of people have watched our competitions over the past year. You can safely say that our games are being carried by more broadcasters around the world than any other game in esports,” explains Todd Sitrin, SVP and GM of competitive gaming at EA Sports.

But esports is more than the first truly global digital sport. Video games, by nature, are digital, which is opening up new ways to capture and analyze data. For example, Tobii has partnered with Turner Broadcasting to track the eyes of CS:GO players during ELEAGUE practice and competition. Where professionals focus on the screen creates valuable tips and strategies that can be used to improve other player’s performances, and also help amateur gamers further enjoy games where they have invested time and money.

Many esports games are free to play, but offer in-game microtransactions for gamers to customize avatars and purchase new characters. Epic Games’ Fortnite, which is now the most popular game in the world, brought in $300 million in April alone, according to SuperData Research.

NBA teams like the Philadelphia Sixers and Miami Heat own esports organizations Team Dignitas and Misfits, respectively. They’re sending their esports pros through the same type of boot camps that NBA rookies partake in at their team training facilities, which includes everything from nutritionists to physical trainers to psychologists. And tracking all aspects of their daily life from workouts to gaming to nutrition is now common for the professional video game athlete today.

These athletes are also revolutionizing the way fans can interact directly with their favorite players. Taking things well beyond social media, which is an established staple of traditional sports, livestreaming practice allows for pro gamers to chat and interact with fans daily. And through additional sponsorship partnerships with the likes of Turtle Wax, Domino’s Pizza and Fed Ex, esports pros are connecting with their global fan base live online and at physical tournaments at a rate far beyond any traditional athlete. These types of interactions are part of esports growth and popularity, and traditional sports simply cannot compete with this.

The new report from the Sports Innovation Lab, Tracking Trends in Sports Technology: A Sports Technology Market Outlook, finds that the esports market is skewed heavily towards sponsorship and advertising revenue, but as the industry continues to mature, revenues will become more evenly distributed across streams. These diversified revenue streams will, in turn, stabilize the industry, creating a more sustainable business model for all involved, while opening the door to others who have remained on the fence. The legalization of gambling in the U.S. will have far-reaching growth consequences for esports, alongside traditional sports.