Esports is often considered an emergent market, but not many fans know that its origins reach back to 1972 when Stanford University, a prestigious research university in California, hosted its "Intergalactic Spacewar Olympics".

The event was held at the Artificial Intelligence Laboratory at Stanford University, where twenty-four players battled for bragging rights and the heady prize of a one-year subscription to the Rolling Stone magazine.

As small as the event may have been, it is considered by gaming historians as the birth of competitive gaming - a niche that would eventually lead to the high-stakes world of competitive esports we know today.

The Journey from Spacewars to the Esports World Cup

While the arcade and home gaming niche experienced continuous growth, the competitive scene emerged and then stalled several times over the years. As you can see from the table below, it wasn’t really till video game live streaming was popularised by platforms like Twitch that it gained any real momentum.

 Gambling Fans Will Always Follow the Money

With the realisation that popular streamers could draw massive online audiences, and arena tournaments could sell out, in addition to the millions of online viewers, esports began to receive enormous cash prizes and investment.

This also saw esports gain the attention of the betting community, and it soon became its own category at leading casinos and betting platforms.

While the fast-paced gaming and betting, with the potential to deliver huge paydays, garnered interest from bettors looking to take action on everything from NBA 2K tournaments to DOTA to CS:GO, the only ones making money this way were betting sites and punters who made the correct predictions.

The esports teams and organisations that shelled out massive salaries and signing bonuses to attract the hottest talent were banned from taking action themselves and from onboarding sponsors related to casinos or sportsbooks.

If these “staffing” costs were not enough, Riot, the developer behind Valorant and League of Legends (LoL), introduced a pay-to-play tournament system in 2017, with an entry fee of $10 million. Teams had to shell out millions just to compete.

 What Goes Up, Had to Come Down

During the lockdowns, esports events experienced a surge in popularity, resulting in increased financial investment, larger prize pools, and a rise of new esports superstars who demanded increasingly higher paydays to remain engaged.

However, once the world began to return to normal, so-called “normie” interest in the market waned, driving down its media and ad spend potential, effectively draining this new ecosystem of the cash it had become accustomed to having.

In 2023, John Needham, President of Esports at Riot Games, would post about the impact of waning funds and how the company was doing all it could to help sustain the industry and help it find its new normal.

This led Riot to rework its entry fee system for the VALORANT Champions Tour (VCT). Participating teams weren’t paying such high cash fees but rather “maintain their slot by investing in marketing activities, producing content for broadcast, activating their fans around VCT events, and supporting their pro players”.

This also saw them lean heavily into the sponsor space themselves, bringing on Master Card, Mercedes-Benz, Coca-Cola, and other big-name brands to create a foundation from which to revitalise the space.

 Riot Games Finally Gives Gambling the Green Light

The one vertical that they tried to steer clear of was online gambling. While they recognised that gambling would take place, the aim had been to keep the cash-rich market out of sponsorships and other approved marketing campaigns.

However, that final bridge was crossed in June 2025, with Needham announcing that Riot Games was officially opening betting sponsorship for Tier 1 LoL and Valorant teams based in North America, South America, and EMEA (Europe, the Middle East and Africa).

In response to why esports betting was now an option, Needham highlighted betting data from Sportradar, which showed that betting turnover (total wagers placed) on LoL and VCT events equated to nearly $11 billion in 2024 alone.

While it makes good business sense to get a piece of the action that is being built on the back of your products and tournaments, there is a secondary vision as well - directing esports betting to licensed platforms.

 Encouraging Safer and Sustainable Esports Betting

Sportradar also revealed that 70% of bets placed on these events occurred at unlicensed venues. Riot Games aims to promote licensed partnerships with approved online casinos and sportsbooks to encourage fans of the tournaments to gamble with regulated sites, ensuring fair play and safer gambling.

From their side, Riot Games has outlined how the vetting and approval process will work for gambling sponsors:

1. Riot will vet and approve all betting sponsor applicants
2. All approved sponsors must use GRID to power their offers
3. The enforcement of safeguards like Team Integrity checks
4. They will uphold responsible gambling practices

While the T1 teams will be revenue drivers under this new agreement, a portion of the revenue will be earmarked for the development and upliftment of Tier 2 teams. This will include more generous prize pools, the implementation of integrity programs, and training and education programs for tournament operators and up-and-coming star players.