The National Basketball Association (NBA) has, in many ways, led the way in navigating both the legal logistics of legalized sports betting and the growing industry of eSports, a recently popular form of competition using video games. The recent release of the first-ever NBA virtual sports betting game, NBA Last 90, conceivably foreshadows the future of how two of the most potentially lucrative sports-related industries could intertwine in a meaningful and profitable manner.
Since the 2018 Supreme Court decision of Murphy v. National Collegiate Athletic Association, which subsequently allowed individual states to decide whether or not to legalize sports betting, NBA Commissioner Adam Silver and the NBA have tirelessly lobbied government legislators for favorable laws for their interests and have explored business relationships in the sports betting industry. Additionally, in July 2018, MGM Resorts International and the NBA announced a multi-year partnership that named MGM the official gaming partner of the NBA and WNBA as its first step in capitalizing on the sports betting market.
This post will explore the power of this intersection and why it matters to players, fans and the NBA.
When Dreams Become (Virtual) Reality
With one minute and 42 seconds left in the Memphis Grizzlies vs. Los Angeles Clippers contest on March 31, 2019, the Grizzlies’ undrafted guard, Dusty Hannahs, entered his first NBA game. As a Little Rock, Arkansas native who eventually found collegiate basketball success for the University of Arkansas Razorbacks, Hannahs’ debut gathered the attention and admiration of Arkansas alumni and fans.
However, while the Razorback faithful knew well of Hannahs’ skill and tenacity, NBA executives and scouts did not, resulting in Hannahs’ omission from the names called at the 2017 NBA Draft. Despite this, Hannahs wasn’t giving up. Neither genetics nor fate propelled him to this moment in the Staples Center against the Clippers; rather, he earned the right to be there through sweat equity.
After almost two full seasons playing a total of 96 regular season games with the Grizzlies’ G-Leagues affiliate, the Memphis Hustle, and becoming the team’s all-time leading scorer, Hannahs’ dream of becoming an NBA player finally came true. When the Grizzlies announced him as a call-up on a 10-day contract, he responded on Twitter, “wow. what a blessing. im an NBA player.”
The first reply from a fan stated, “[c]an’t wait to play with you on 2K, that will be crazy.”
The Power of NBA 2K
What that fan understood was that being an eligible player in the NBA 2K video game series is now an accomplishment that pairs with becoming an NBA player. It allows fans to control their favorite players and feel like they can participate in their own personal NBA experience. When NBA 2K19 performed its frequent roster update, Hannahs appeared as a new eligible player for gamers to use. He is still available as a “free agent” on the game despite being waived by the Grizzlies prior to the end of the season.
“. . . [I]t was crazy for me to see,” Hannahs said when asked what it is like to appear in NBA 2K19. “Growing up in high school, I always dreamed of being on NBA Live or NBA 2K. For it to happen is a testament to hard work and dedication.”
Those involved in the business side of the NBA also understand that appearing in a video game in 2019 is as valuable as ever for professional basketball players.
“I think obviously with the rapid growth of eSports, appearing on any video game, especially one as popular as NBA 2K, is great for players’ personal brands,” said Austin Eastman, an NBPA-certified agent and CEO and Founder of the Odyssey Sports Group. “But more than that, I think it’s exciting for athletes’ families and friends to have the ability to play as the person they helped shape and raise.”
NBA players understand that their appearance on the game reflects some casual fans’ ability to recognize them on the actual basketball court. Some casual fans even judge players in real life based on their skill-level in individual categories, such as shooting, rebounding, as well as their overall player ranking.
Why NBA 2K Matters to Players
After being inactive in his first head-to-head contest and spending multiple seasons both in the G-League and in basketball leagues overseas, Hassan Whiteside accumulated his first triple-double in his career for the Miami Heat against the Chicago Bulls on January 25, 2015 with 14 points, 13 rebounds, and 12 blocks coming off of the bench in just 24 minutes. The 12 blocks set a franchise record for most blocks in one game. This was the performance that initially made Whiteside famous, and he eventually signed a four-year, $98 million deal with the Heat in 2018.
Whiteside was selected by Heather Cox for the prestigious on-court post-game interview. When Cox asked him what inspired him that day, he said among other motivating factors, “. . . I’m just trying to really get my NBA 2K rating up.”
Whiteside, who was rated as a mere 59 out of 99 overall in NBA 2K15, gathered the attention of NBA 2K creators with his post-game comments. NBA 2K15 updated its in-game rosters to boost his overall rating to 77. The following season, Whiteside was excited to announce via Twitter that he was to be one of just 50 NBA players to have an overall player rating higher than 80 in NBA 2K16.
Other players, meanwhile, have publicly denounced their portrayal on NBA 2K games. Marcus Morris told the Athletic in 2018 that he stopped playing the video game series a few years prior because he was upset that his beard was not represented on the game and that his overall rating was a 77.
“I averaged 14 [points per game] for the last three years,” Morris said. “There’s no way I’m a 77 [overall rating] and dudes who average less than me are in the 80s. I don’t respect it. So I can’t play it.”
The NBA 2K series has become another chess piece in a complicated professional basketball field. It seemingly impacts fan awareness, player self-confidence, and improves players’ personal branding. The NBA league office took notice of the growing influence of the video game series, along with the popularity of eSports. As early as 2015, the NBA wanted to become more involved in the eSports industry.
The Growth of eSports and the NBA 2K eLeague
According to CNN, eSports “describes the world of competitive, organized video gaming” in which “[c]ompetitors from different leagues or teams face off in the same games that are popular with at-home gamers.” The eSports industry brought in $865.1 million in revenue in 2018, according to Newzoo, and is estimated to reach $1.1 billion in 2019 based on Newzoo’s projections. Its revenue has averaged a growth rate of 22.3 percent year-to-year. In late 2017, major television networks such as ESPN, as well as Amazon-owned live streaming platform, Twitch, announced multimillion-dollar broadcasting deals for eSports leagues. However, the NBA jumped in even earlier on what is one of the fastest growing industries in the world.
In February 2017, the NBA and Take-Two Interactive Software, Inc. announced its plans to launch the NBA 2K eLeague, a league in which NBA organization-affiliated eSports teams compete in the latest version of the NBA 2K video game series for a championship. 2K Sports, the developer for NBA 2K, is a subsidiary of Take-Two Interactive Software, Inc.
The league included a live-draft in which Adam Silver announced the first pick. General Managers hired by each of the seventeen NBA organization-affiliated 2K teams selected actual video game players around the world for their respective teams. First round draft picks received a six-month based salary of $35,000, which, at the time, was above the average NBA G-League professional basketball player salary, according to Ozy.com. Players also received incentive-based prize money and were able to seek their own endorsements to earn extra income.
Navigating the eSports and Legal Sports Betting Industries
The success of the inaugural NBA 2K eLeague season was not surprising to NBA Commissioner Adam Silver, who foresaw the growth of eSports three years prior. Commissioner Silver attended a sold-out League of Legends eSports event at Madison Square Garden, one of the most historic arenas in basketball. This piqued his interest, and two months after he witnessed an excited New York City crowd cheer on their favorite video game players, Commissioner Silver told NBA owners and executives in a presentation that the league was extensively studying eSports and its potential intersection with the NBA.
Philadelphia 76ers CEO Scott O’Neil told ESPN in a feature story, written by Ohm Youngmisuk and Jacob Wolf, that the most compelling part of the presentation was when Commissioner Silver showed a slide comparing the number of viewers for the League of Legends World Championship to the viewership for the college football national championship game. 36 million people watched the 2015 League of Legends World Championship, with a peak concurrent viewership of 14 million viewers. Meanwhile, approximately 33.4 million watched the 2015 College Football Playoff National Championship, which, at the time, was the second-highest in the event’s history. NBA team owners did not need much convincing, as most of them had already noticed the lucrative potential of the eSports market. Some NBA owners were already individually investing in eSports.
This was just one year after Commissioner Silver wrote a revolutionary op-ed in the New York Times calling for the legalization of betting on professional sports. This was a vast contrast from previous NBA Commissioner David Stern. Stern testified before Congress on behalf of the NBA regarding the dangers of sports betting in support of the Professional and Amateur Sports Protection Act of 1992, which made sports betting illegal in almost every state until the United States Supreme Court ruled the Act unconstitutional in May 2018 for its interference with the 10th Amendment of the Constitution.
The NBA’s Last 90
The NBA recognizes both eSports and sports betting as two of their most potentially lucrative future revenue streams. Although it does not involve NBA 2K or other interactive video game platforms, the NBA has capitalized on the basic idea of an eSports and sports betting intersection through its official announcement of the NBA’s Last 90, the first-ever NBA virtual sports betting game in a partnership involving the NBA, the National Basketball Players Association (NBPA), and Highlight Games Limited, a specialist game supplier.
According to the NBA’s official release, “NBA Last 90 players will have the ability to wager on various outcomes, including which team will win, who will score on the first possession and the total number of points scored by both teams, during the last 90 seconds of a simulated matchup between two NBA teams. A vast archive of NBA highlights and footage will be randomly pulled from any matchup over recent seasons between the two teams, producing millions of possible outcomes.” The game will initially launch in Europe and will expand to include the United States later during the 2019-20 NBA season. Of course, it will only be legal in states which allow such activity.
“Virtual sports betting is incredibly popular in regions around the world and we’re looking forward to giving fans another innovative way to engage with the NBA,” said Scott Kaufman-Ross, Head of Fantasy & Gaming for the NBA. “With NBA Last 90, Highlight Games has created a new spin on virtual sports basketball and delivered an authentic gaming experience utilizing real NBA content.”
However, the game is powered by a random number generator and not on the abilities of the individual player. A true intersection of eSports and sports betting would likely involve a multistep process. One speculative scenario is that sportsbooks could allow betting on NBA 2K League games. Another more ambitious scenario is that the NBA could lobby government legislators in support of widespread legalization of peer-to-peer betting, which would allow bettors to bet with each other rather than with a sportsbook. This activity is not currently legal in the United States, but could be legalized by individual states.
For example, peer-to-peer betting could potentially allow 2K players to bet with each other while playing their favorite video game. This would likely require extensive partnerships between the NBA, NBPA, video game platforms, and Take-Two Interactive Software, Inc. in this hypothetical example. This could provide opportunities for gamers to use forms of virtual currency to bet with each other on game outcomes. The possibilities within the intersection of eSports and sports betting ultimately lie within the hands of state legislators who are currently deciding, or have already decided, what types of betting they will and will not allow within their respective state boundaries. Even if legislators created laws in favor of this type of business venture, each stakeholder in this hypothetical 2K venture would need to navigate how to control and divvy up extensive profits.
The Meaningful and Profitable Intersection of Industries
For now, the NBA has dipped its toes in the water of virtual sports betting before the other major professional sports leagues.
Perhaps NBA 2K League events will become more accessible via television programming in the future. For now, eSports is an industry that NBA players, agents, owners, the NBPA, and the NBA league office are aware of through the lens of NBA 2K. The video game has become a staple within the NBA community in ways never previously imagined.
As for professional basketball players like Dusty Hannahs, not only do they continue to fight for spots on NBA rosters, they are also fighting for something else: their inclusion in a video game.