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July 12, 2021 Deal Watch

XL Center, long known for live entertainment, could become home to an esports venue

PHOTO | SCI Architects/CRDA A rendering of what an esports theater could look like inside the XL Center, where a sportsbook could also be on tap.

The overseer of the XL Center is hoping Connecticut’s newly legalized sports betting law could spur a major investment that’s been otherwise hard to secure for the aging arena in the heart of downtown Hartford.

As the Connecticut Lottery Corp. vets bids from sports betting operators vying to run 12 brick-and-mortar sportsbooks across the state, the Capital Region Development Authority (CRDA) is hoping a chosen operator will end up running a sportsbook at the 16,000-seat XL Center arena.

As CRDA awaits word, its executives are evaluating how competitive video gaming, or “esports,” might play a role in revitalizing XL, whether or not sports betting becomes a reality.

“We’ve programmed esports into our XL renovation plans,” said CRDA Executive Director Michael Freimuth. “The industry is still defining itself.”

Esports, where players and teams battle it out virtually or in person in skill-based games such as Counter-Strike, Dota, and League of Legends, is expected to surpass $1 billion in revenue this year from the sale of sponsorships, media rights, event tickets, merchandise and other areas, according to esports analytics firm Newzoo.

That figure is solely for professional and semi-pro esports activity, and doesn’t include amateur esports revenue nor esports gambling revenue.

Connecticut’s newly legalized sports betting law does permit esports wagering, though it places some restrictions on betting on the growing number of varsity esports teams that have formed at Connecticut colleges in recent years.

“Esports are on an upward trend, and with sports betting being new and growing, it does have some operational aspects that link very nicely,” Freimuth said, including the IT backbone and infrastructure, food service, and some similar seating arrangements. “Developing them together could produce an economic opportunity.”

While CRDA has been thinking about esports for the past few years, it’s now taking a fresh look.

There are questions about how sports betting and esports might cross over, complement each other or simply coexist, as well as about how XL Center could be laid out to accommodate esports.

“It may be logical to do it in the concourse area, but it could also be in the exhibition hall or elsewhere,” he said. “We’re looking at everything.”

Esports competitions are often held virtually, and COVID-19 has added uncertainty about how quickly in-person gaming events would rebound from their 2020 decline. However, online esports events also tend to be less lucrative for esports teams, according to Deloitte.

No ‘Field of Dreams’

Jason Chung, an assistant professor at the University of New Haven and executive director of the school’s one-year-old Esport Business Program, said he would be rooting for anything that expands Connecticut’s esports market, but cautioned that XL would be up against plenty of challenges, including competition from other venues vying to secure regional or national esports competitions, including arenas in Las Vegas and Los Angeles.

“This is not a ‘Field of Dreams’ situation. A lot of people are building a lot of stuff,” Chung said. “It really comes down to execution and whether it makes sense in terms of convenience.”

“There are a lot of infrastructure questions, and then, will teams want to come? Will fans want to come? How much can you draw?” he added.

UNH, which has its own 2,500-square-foot esports center on campus, could need a larger venue for specific multi-school competitions in the future, but that decision would likely come down to price and the specific offerings within the venue.

“If the XL Center made a compelling case, obviously we’d consider it,” Chung said.

Construction of a $50 million purpose-built esports venue in Philadelphia called Fusion Arena was put on hold last fall not long after it began due to the pandemic, according to media reports.

Freimuth said he is planning to visit the Fusion-adjacent Wells Fargo Center in Philadelphia, which has hosted esports competitions, to learn more about whether and how a brick-and-mortar arena might make hay out of the growing sector.

Freimuth, who has three sons who are esports enthusiasts, says he has no misconceptions about competitive video gaming being a silver bullet for the XL Center, but if a private-sector operator sees a worthwhile investment, it would at least boost food and beverage sales and help pay for the venue’s operating expenses.

An esports venue at the XL Center could also be used by amateurs, like a group of friends on a bachelor party or just looking to have a good time, Freimuth said.

That’s an added revenue stream.

“Sports betting is a whole different thing,” Freimuth said. “But esports could be an opportunity to provide something new, exciting and fun and produce a few bucks.”

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