Watch Out Boxing, Esports Head to Las Vegas

MGM bets big on hosting tournaments

A rendering of the MGM Luxor’s esports arena, set to open in 2018

In 1980, Muhammad Ali and Larry Holmes stepped into the ring for one of the most one-sided boxing matches in history. Holmes had won his past 36 fights while Ali was coming out of retirement, having not won a fight in two years. While the fight itself was forgettable, the event kicked off a trend that forever changed boxing and more drastically, Las Vegas, Nevada.

In the parking lot of the legendary Caesars Palace Casino, a stadium with 25,000 screaming fans was constructed for the event—and torn down the next day. It was by no means the first boxing match Las Vegas had hosted, but it was the beginning of an era of “Vegas Superfights.” Caesars Palace, the MGM Grand Garden, and Mandalay Bay would go on to host boxing legends like George Foreman, Mike Tyson, and Sugar Ray Leonard. When Manny Pacquiao and Floyd Mayweather finally agreed to the “Fight of the Century” in 2015, there was little doubt as to which city would play host.

Since that first superfight in 1980, Vegas has come to rely on boxing events as a draw to fill its restaurants, rooms, and roulette tables. In the Eighties, Caesars would even provide a guest with ringside seats, airfare, and a room, so long as that guest was willing to bring $50,000 for gambling in the casino ($125,000 in today’s money).

The Las Vegas Strip, home to over one-hundred thousand hotel rooms

Almost thirty years later, Vegas is on the hunt for a new attraction to fill her many rooms and green-felt tables. The Disneyland of the Desert has not done very well over the past decade, with revenues on the Strip down almost 15% at the end of last year. Many gaming industry experts cite a lack of interest from millennials, now the country’s largest generation, who see casinos as a “hub of grandma activity.”

Attempting to shed its aging image, Vegas has gotten creative with nightclubs, pool parties, and new events to attract a younger crowd. In February, the MGM Grand Garden played host to CS:GO’s DreamHack Masters finals, in the very same arena where Mayweather–Pacquiao brought in $500 million from pay-per-view alone. While the tournament did not attract quite the same attention, in 30 years, we may look back on this event like casino owners view the Holmes–Ali fight, as the beginning of a new era.

Last month, MGM announced a partnership with Allied Esports, the leading network of esports venues, to build a venue dedicated to hosting tournaments and events, complete with “state-of-the-art streaming and production studios.” The multi-level facility is set to take up over 30,000 sq. feet and give esports a permanent home on the Las Vegas strip. As esports continue to mature in North America, finals and majors can be expected to pack arenas for the foreseeable future, with games like League of Legends selling out Madison Square Garden and Staples Center in minutes.

Two different crowds pack the same arena: Madison Square Garden, once the “Mecca of Boxing,” hosted League of Legends’ World Championship in 2016.

It’s no accident that casino owners have turned to esports fans to bring in business to the pit. A 2016 study from tech-consultants at Activate showed that 77% of esports fans are engaged in gambling activity, compared to 33% of the general population. Chris Grove, in his report Esports & Gambling (definitely worth a read), estimates over $5.5 billion was wagered on esports events in 2016, which is expected to double by 2020.

With esports betting alone becoming an $11 billion dollar market, professional esports are becoming an industry that casinos can no longer ignore as millennials turn away from traditional gambling. Whether esports can prove to have the same draw to Vegas as boxing’s superfights remains to be seen. It is, however, a business model that the casinos have perfected over three decades, with individual fights bringing in over a hundred million dollars to the community in the past. Sin City is set to become esports’ premier destination in North America, packing its futuristic arenas with spectators—and to the casinos, potential gamblers.

It’s not hard to imagine a future where 25,000 screaming fans watch an Overwatch World Championship at Caesars Palace. Although this time, it won’t be in the parking lot.

Read more about the intersection of esports, money, and skill gaming here.