Introduction: A Deal with the Devil
In March 2021, the esports industry witnessed what appeared, on the surface, to be a series of standard, high-value commercial partnerships. ESL, the world’s largest esports company, and WePlay Esports, a rapidly growing tournament organizer (TO), both announced global sponsorship deals with the online betting operator 1xBet. These agreements, promising to inject significant capital into premier esports circuits for games like
Counter-Strike: Global Offensive and Dota 2, were framed as collaborations to “enhance the overall experience for esports players and fans”. However, these were not standard business deals. They represented a critical and alarming inflection point for the esports industry, a moment where globally respected organizations chose to align themselves with an entity widely documented not merely as controversial, but as a criminal enterprise with a history of fraud, illegal operations, and consumer harm.
This report argues that these partnerships, driven by a toxic confluence of 1xBet’s aggressive “reputation laundering” strategy and the esports industry’s profound financial dependency on sponsorship revenue, constitute a catastrophic failure of corporate governance and due diligence. This failure has introduced systemic risk to the entire esports ecosystem, exposing a deep-seated vulnerability that threatens the industry’s long-term integrity and commercial viability. The decision to partner with 1xBet was not an isolated misstep; it was a symptom of a fragile financial structure and a fragmented regulatory landscape that leaves the industry susceptible to infiltration by predatory actors.
To deconstruct this unholy alliance, this report will pursue four primary objectives. First, it will provide an unassailable, evidence-based profile of 1xBet, moving beyond vague labels to establish its documented history of criminal and unethical conduct. Second, it will analyze the mechanics and motivations behind the ESL and WePlay partnerships, placing them within the context of 1xBet’s global strategy. Third, it will assess the ethical, reputational, and financial fallout for all parties involved, including the broader esports community. Finally, it will deliver a set of strategic recommendations designed to help the industry mitigate such risks and build a more sustainable and ethical future.
The analysis presented herein is built upon a synthesis of findings from extensive investigative journalism, official corporate statements, regulatory filings and actions, a vast record of user-generated complaints, and professional industry analysis. By assembling and examining this body of evidence, this report aims to provide a definitive account of a scandal that should serve as a stark warning to the entire esports world.
Section 1: Anatomy of a Phantom Enterprise: The Criminal Profile of 1xBet
To fully comprehend the gravity of the partnerships forged by ESL and WePlay, it is essential to first establish a clear and evidence-based understanding of their partner. 1xBet is not simply a controversial gambling operator with a poor reputation; it is an organization with deep roots in criminal activity, a deliberately opaque corporate structure designed to evade accountability, and a long, documented history of regulatory sanctions and consumer harm across the globe. Any rudimentary due diligence process would have uncovered a mountain of red flags, painting a picture of an entity fundamentally incompatible with legitimate partnership.
1.1 Russian Origins, Criminal Enterprise
The origins of 1xBet are rooted in a criminal operation based in Bryansk, Russia. The company was founded by three Russian nationals: Roman Semiokhin, Dmitry Kazorin, and Sergey Karshkov. The background of Karshkov is particularly alarming, as he was a former high-ranking police official who once led the cybercrimes division of the Interior Ministry’s Bryansk Regional Office—the very type of agency that would be tasked with investigating illegal online gambling.
In 2019, the Russian Investigative Committee’s Bryansk Regional Office opened a major criminal case against the founders. The investigation concluded that from October 2014 to May 2019, the trio developed and operated the 1xBet online gambling platform without a license from Russia’s Federal Tax Service. Through this illegal operation, they were accused of generating more than 63 billion rubles in revenue, a sum equivalent to nearly $886 million. To underscore the staggering scale of this illegal income, investigators noted that it exceeded the entire annual budget of the Bryansk region where the operation was based.
As part of the criminal case, Russian authorities seized assets belonging to the accused valued at 1.5 billion rubles (approximately $21.1 million). Subsequently, Russian investigators placed all three founders—Semiokhin, Kazorin, and Karshkov—on an international wanted list. Despite their status as international fugitives from Russian justice, they have operated with apparent impunity from Cyprus, where they have reportedly obtained citizenship or residency. They have been involved in significant business ventures on the island, including the construction of a 22-story office building in Limassol intended to house 1xBet’s developers. This open activity highlights their ability to leverage their wealth to find safe havens, far from the reach of the authorities seeking their arrest. In June 2023, it was reported that one of the founders, Sergey Karshkov, had died in Switzerland.
1.2 A Global Trail of Illicit Activity
The criminal investigation in Russia was not an isolated event but rather the most prominent part of a global pattern of illicit and unethical behavior. A pivotal moment in exposing 1xBet’s international operations came in 2019 with a damning investigation by the UK’s The Sunday Times. The exposé revealed a shocking array of improper conduct, finding that 1xBet was:
Promoting a “Pornhub Casino” which featured topless croupiers.
Taking bets on children’s sports, including under-16 basketball games that appeared to be taking place in school gymnasiums.
Advertising its brand, often emblazoned with the logos of its prestigious sports partners, on illegal websites and live streams of cockfighting.
The fallout from the Sunday Times investigation was swift and severe, particularly in the United Kingdom, a key regulated market. The UK Gambling Commission immediately launched its own investigation and suspended 1xBet’s license to operate in the country. This regulatory action created a toxic environment for 1xBet’s high-profile partners in English football. Facing immense public pressure and direct warnings from the Gambling Commission that any promotion of an unlicensed operator could lead to unlimited fines and imprisonment, premier league clubs Chelsea, Liverpool, and Tottenham Hotspur were all forced to terminate their multi-million pound sponsorship deals with the company.
This pattern of regulatory sanction was repeated across the globe. 1xBet has been blacklisted, had its license suspended, or is otherwise banned from operating in numerous jurisdictions, including Russia, the UK, the US, France, and Spain. In Kenya, a country with a significant problem with gambling addiction, its license was suspended over tax issues. In 2023, Somalia’s government announced a ban on the platform, citing the spread of propaganda and indecent content.
The case of Ukraine is particularly illustrative of 1xBet’s controversial methods. In March 2022, shortly after Russia’s full-scale invasion, Ukraine’s gambling regulator, KRAIL, controversially issued two licenses to a local entity to operate the 1xBet brand. This decision sparked public outrage, leading to a petition that prompted President Volodymyr Zelensky to order an investigation. The investigation subsequently confirmed that the brand was controlled by its Russian founders, and in September 2022, KRAIL revoked the licenses, citing the company’s ties to an “aggressor state”. Ukrainian authorities later moved to confiscate nearly UAH 2 billion in assets from Royal Pay Europe, a Latvian company identified as a “wallet” for 1xBet.
1.3 The Corporate Shell Game: A Structure Designed for Evasion
The ability of 1xBet to continue operating and securing major sponsorships despite its criminal background and regulatory bans is enabled by a deliberately complex and evasive corporate structure. This structure is not merely a product of complex international business; it is a purpose-built system of legal and jurisdictional arbitrage designed to make the company a phantom, impossible for any single authority to regulate, prosecute, or hold accountable.
At the heart of this structure is its Curaçao eGaming License (No. 1668/JAZ). While this provides a veneer of legitimacy, experts within the betting industry describe the Curaçao license as functionally meaningless for player protection. It is widely known as a “black market license” that is notoriously easy to obtain, requiring little more than a registered local company and a fee, with minimal ongoing oversight or enforcement. This license allows 1xBet to project an image of being regulated while operating far outside the robust consumer protection frameworks of jurisdictions like the UK or Malta.
While licensed in Curaçao, the company’s operational and financial hub is in Cyprus. The company is registered there, its founders reside there, and payments are often processed through Nicosia. Cyprus is well-known as a jurisdiction offering financial secrecy and has long been a favored hub for Russian business interests seeking to move capital and operations into the European Union. The company operates through a web of shell corporations, including entities like Klafkaniro Ltd., Bonnal Ltd., and the now-bankrupt 1XCorp N.V., further obscuring true ownership and operational control.
This is compounded by a franchise business model. This model allows the central 1xBet brand to distance itself from the actions of its myriad global partners. When accused of advertising on illegal websites, for example, the company’s standard response is to blame its “overseas marketing partners” or “third-party networks,” promising to investigate while deflecting direct responsibility.
Perhaps the most cynical element of this strategy is the use of “legal clones.” In Russia, where the main 1xBet.com site is banned, a nearly identical platform called 1xStavka operates legally. This “clone” is run by a legal entity named Bookmaker Pub. Investigation of Russian corporate records reveals that the founder of Bookmaker Pub is none other than Dmitry Kazorin, one of the three internationally wanted founders of 1xBet. This mechanism allows the brand and its principals to continue profiting from the Russian market while technically complying with the letter of the law that bans their primary illegal site.
This evasive structure has not made the company immune to financial consequences. Its parent company, 1XCorp N.V., was declared bankrupt in both the Netherlands and Curaçao after failing to pay out significant winnings to customers. This legal action, brought by a foundation representing victims of online gaming, provides official court validation for the widespread complaints of non-payment.
1.4 A Legacy of Consumer Harm
Beyond its corporate and legal malfeasance, 1xBet has cultivated a reputation for systematically harming its own customers. A review of consumer complaint platforms, forums, and social media reveals a consistent and overwhelming pattern of predatory behavior, primarily centered on the refusal to pay out legitimate winnings.
The complaints follow a clear and repeated script. A user places bets, accumulates winnings, and attempts to make a withdrawal. At this point, they are met with a series of obstacles designed to prevent payment:
Sudden Account Blocking: Many users report their accounts being suspended or permanently blocked without warning immediately after submitting a withdrawal request.
Endless Verification Loops: The company is notorious for subjecting winning players to an arbitrary and often impossible verification process. Users are asked to submit an endless stream of documents, often with shifting requirements. One particularly egregious case involved a user of over 10 years who, after a large win, was asked to submit 41 different selfies to verify their identity, only to have their ₺250,000 withdrawal remain blocked.
Delayed and Missing Payments: Withdrawals are frequently delayed for weeks or months, or simply never arrive, even after the user receives a confirmation that the transaction has been processed.
Voiding Winning Bets: In some cases, the company has been accused of retroactively voiding or canceling winning bets, often with flimsy or non-existent justifications.
The sheer volume and consistency of these complaints, documented across numerous independent platforms, indicate that this is not a matter of occasional customer service failures. Instead, it points to a deliberate business practice. A legitimate betting company profits from the statistical margin on bets. The evidence strongly suggests that 1xBet’s business model supplements this by systematically entrapping player funds and refusing to honor winning bets. This transforms the company from a high-risk gambling operator into a fraudulent enterprise whose model relies on theft.
Section 2: The Unholy Alliance: 1xBet’s Infiltration of Tier-One Esports
The decision by ESL and WePlay to partner with 1xBet cannot be viewed in a vacuum. It was a calculated move by a criminal enterprise to execute a global “reputation laundering” campaign, and a catastrophic misjudgment by esports leaders who either failed to conduct basic due diligence or willfully ignored the overwhelming evidence of their new partner’s malfeasance. The partnerships triggered immediate and severe backlash, revealing deep fissures within the esports ecosystem and highlighting a new vector of risk for tournament organizers.
2.1 The ESL and WePlay Deals
In March 2021, the esports world was hit with a rapid-fire succession of partnership announcements. ESL Gaming named 1xBet the “official global betting partner” for its flagship ESL Pro Tour in CS:GO and its ESL One circuit for Dota 2. The deal was initially set to run through the entirety of 2021 and conclude with IEM Katowice in 2022, though 1xBet’s own promotional materials later claimed the partnership extended to IEM Katowice 2027. The collaboration was publicly positioned as a way to “enhance the overall experience for esports players and fans” through activations like data-driven player cards, match predictions, and other custom broadcast segments.
Almost simultaneously, WePlay Esports announced a similar partnership, making 1xBet a sponsor for all of its tournaments throughout 2021. The collaboration was set to begin with the WePlay Ultimate Fighting League (WUFL), a major event for the fighting game community (FGC). WePlay’s public statements echoed ESL’s, framing the deal as a joint effort to “expand the esports scene” and create new, exciting content for viewers. For 1xBet, these deals represented a major coup, securing a prominent position within two of the most-watched esports circuits in the Western world.
2.2 Immediate Backlash and Industry Fallout
The response from the esports community was not one of excitement, but of immediate and widespread condemnation. On platforms like Reddit, users and industry insiders alike were aghast that prestigious TOs like ESL and WePlay would align with a company so notoriously toxic. Threads quickly filled with evidence of 1xBet’s criminal background, its history of scamming players, and its banning in multiple countries. The YouTube video “The Criminals Invading Esports - 1XBET and the ESL,” which methodically laid out the case against the operator, became a central rallying point for the community’s outrage. Many questioned the hypocrisy, particularly in WePlay’s case, which had cultivated a reputation for high production value and community engagement, only to partner with a brand seen as fundamentally exploitative.
This backlash quickly escalated beyond community forums and had direct, material consequences. In a move that sent shockwaves through the industry, the game developers themselves intervened. NetherRealm Studios (developer of Mortal Kombat) and Bandai Namco (developer of Tekken and SoulCalibur) both announced they were cutting ties with WePlay and would no longer allow their games to be featured in the WePlay Ultimate Fighting League. This unprecedented action was taken specifically because of WePlay’s partnership with 1xBet. The IP holders of the very games the tournament was built around effectively vetoed the sponsorship deal, crippling the event and forcing WePlay into a major crisis.
Faced with this firestorm, the official responses from the tournament organizers were widely seen as inadequate and disingenuous. ESL Gaming released a terse statement acknowledging it was “aware of allegations made against one of our partners” and claimed it was “currently investigating this matter”. WePlay’s defense was even more questionable, stating that “1xBet has assured us that the brand abides by all the relevant laws and regulations in every jurisdiction in which it operates”.
These statements crumble under the slightest scrutiny. The “allegations” ESL was “investigating” were not hidden secrets; they were matters of public record, including an international criminal investigation and a well-publicized UK regulatory action that had occurred two years prior. WePlay’s claim of being “assured” by 1xBet suggests a level of credulity that borders on willful negligence, accepting the word of a documented bad actor over a mountain of publicly available evidence to the contrary. This situation points to one of two damning conclusions: either these major esports organizations failed to conduct even the most basic due diligence on a global partner, revealing a shocking level of operational incompetence; or, they were aware of 1xBet’s background and chose to proceed anyway, prioritizing revenue above all else, making their public statements a cynical exercise in damage control.
2.3 A Pattern of “Reputation Laundering”
The infiltration of esports was not an isolated strategy for 1xBet but a key component of a broader global campaign of “reputation laundering.” The company has systematically pursued sponsorship deals with some of the most prestigious and beloved brands in global sports, using their credibility as a shield to mask its own illegitimate operations.
Before partnering with ESL, 1xBet had already secured deals with football giants like FC Barcelona and Paris Saint-Germain, as well as league-wide partnerships with Italy’s Serie A and the Confederation of African Football (CAF). The goal of these high-priced sponsorships is not merely advertising; it is to “whitewash” the company’s criminal reputation. By placing its logo alongside trusted and respected brands, 1xBet manufactures a veneer of legitimacy that it could never achieve on its own. This borrowed trust is then weaponized to attract new, unsuspecting customers to its predatory platform. The ESL and WePlay partnerships were simply the next logical step in this campaign, extending the strategy from traditional sports into the heart of the rapidly growing esports market.
The withdrawal of the game developers, however, signals a crucial difference between the sports and esports ecosystems. In traditional sports, a league or federation is the ultimate authority. In esports, the game publisher is the ultimate IP holder. The decision by Bandai Namco and NetherRealm to intervene represents a critical shift in power dynamics. It demonstrates that publishers are not just passive licensors but are increasingly willing to act as ethical arbiters for their competitive ecosystems. This creates a new and powerful check on the behavior of tournament organizers. A sponsorship deal is no longer a simple two-party agreement between a TO and a sponsor; it is now a three-party risk calculation where the publisher’s implicit or explicit approval can make or break a tournament’s viability. This introduces a new and potent vector of risk for TOs considering partnerships with controversial brands.
Table 2: Official Statements vs. Public Evidence
| Official Statement/Claim (from ESL/WePlay/1xBet) | The Verifiable Reality |
|---|---|
| ”1xBet has assured us that the brand abides by all the relevant laws and regulations in every jurisdiction in which it operates.” (WePlay Esports) | 1xBet is the subject of a criminal investigation in Russia, its founders are on an international wanted list, and it has been banned or had its license suspended in numerous countries, including the UK, Kenya, and Ukraine. |
| ”ESL is aware of allegations… we are currently investigating this matter.” (ESL Gaming) | The “allegations” were public knowledge for years. The Sunday Times exposé and UK license suspension occurred in 2019, two years before the ESL partnership. The Russian criminal case was also public. |
| ”The partnership will… enhance the overall experience for esports players and fans.” (ESL & 1xBet) | 1xBet has a vast and well-documented history of consumer harm, including systematically withholding winnings, blocking accounts, and providing non-responsive support, creating a negative experience for thousands of users. |
| ”We take very seriously the allegation that 1xBet’s brand has been promoted on prohibited sites, which is strictly against our policies.” (1xBet) | The company’s business model relies on a massive, decentralized affiliate network that it uses to penetrate markets where it is banned and advertise on illicit platforms, while maintaining plausible deniability by blaming “third-party partners." |
| "1xBet is a leading global bookmaker brand… headquartered in Cyprus.” (1xBet) | The company was founded by Russian nationals in Bryansk, Russia, who are now fugitives from Russian justice. The Cyprus headquarters and Curaçao license are key components of a corporate structure designed to obscure ownership and evade regulation. |
Section 3: A Faustian Bargain: Analyzing the Strategic Motivations
The partnership between a criminal enterprise and respected esports leaders, while shocking, was not irrational. It was a Faustian bargain driven by powerful and complementary strategic needs. For 1xBet, the deals were a critical component of a global growth engine designed to manufacture legitimacy and circumvent advertising laws. For the esports industry, the influx of cash from a controversial but profligate sector offered a solution to its own precarious financial realities, creating a powerful incentive to compromise on ethical standards.
3.1 The 1xBet Growth Engine: The Affiliate-Sponsorship Flywheel
The core of 1xBet’s global expansion strategy is its massive affiliate marketing program, known as 1xPartners. This program is not merely a marketing channel; it is a distributed, global system for customer acquisition that operates with formidable efficiency. The program claims to unite over 100,000 affiliates worldwide, driving over 3 million players to its platform.
The terms offered to affiliates are exceptionally attractive and designed for rapid growth. Partners are promised high conversion rates of registrations to deposits (up to 65%) and a highly profitable lifetime commission or revenue share on the players they refer (up to 50%). Combined with weekly automated payments and a vast library of ready-to-use promotional materials, the program creates a powerful incentive for individuals and website owners to promote the 1xBet brand.
High-profile sponsorships with trusted brands like ESL are the essential fuel for this affiliate engine. The logos on broadcasts and jerseys, and the official designation as a “global partner,” provide the “impeccable reputation” and brand recognition that affiliates then leverage to monetize their traffic. The sponsorship acts as a powerful, implicit endorsement. It creates a veneer of trustworthiness that lowers the psychological barrier for a potential user who might otherwise be skeptical of an unknown betting site.
This creates a self-perpetuating flywheel:
Sponsorship: 1xBet invests a portion of its massive revenues into high-profile sponsorships with trusted brands like ESL or FC Barcelona.
Legitimacy: This association “launders” the 1xBet brand, creating an aura of legitimacy and safety.
Affiliate Recruitment & Conversion: The 100,000+ affiliates use this manufactured legitimacy in their promotional materials (on blogs, forums, social media, etc.) to drive new player registrations and deposits with much greater effectiveness.
Revenue Generation: The influx of new players generates enormous revenue for 1xBet.
Reinvestment: A portion of this revenue is then reinvested into securing even more prestigious sponsorships, starting the cycle anew with greater momentum.
Furthermore, this affiliate structure serves a more insidious purpose. As 1xBet is banned from directly advertising in many key Western markets, the affiliate program functions as a decentralized system for circumventing these laws. It outsources the marketing—and the associated legal risk—to a diffuse network of tens of thousands of global partners. The company explicitly provides affiliates with tools like “special promo codes” that allow them to attract players “without links,” a technique designed to evade automated detection and blocking by regulators. When caught advertising on illegal sites, the company can simply blame its “third-party partners” and feign ignorance, a defense it has used repeatedly. The ESL sponsorship provides the essential air cover of legitimacy for this entire grey-market operation.
3.2 The Financial Realities of Modern Esports
The reason this toxic partnership was possible lies in the financial structure of the modern esports industry. Unlike mature traditional sports leagues, which have diverse and robust revenue streams, the esports ecosystem is critically, and dangerously, dependent on sponsorship revenue. For the industry as a whole, advertising and sponsorships can account for nearly 60% of total revenue; for specific leagues and tournaments, that figure can be as high as 90%.
This dependency is structural. Most major esports TOs do not own their own stadiums, meaning they lack significant revenue from ticket sales, concessions, and corporate hospitality. Merchandise sales, while growing, are a much smaller fraction of revenue compared to traditional sports. While in-game item sales represent a huge potential revenue stream, this requires a revenue-sharing agreement with the game’s publisher, which is not always forthcoming or favorable.
This leaves sponsorships as the primary pillar supporting the entire enterprise. It is sponsorship money that funds the massive prize pools, player and staff salaries, high-end broadcast production, and global travel required to operate a top-tier esports circuit. Within this landscape, betting companies have emerged as some of the most aggressive and lucrative sponsors available. They are willing to pay “big money” for partnerships, often outbidding more traditional, non-endemic brands.
This creates a powerful and perverse incentive structure. The financial pressure on TOs to accept the highest bid is immense. The situation can be viewed as a market failure where the massive supply of cash from a legally and ethically dubious sector—offshore online gambling—creates a competitive dynamic that forces a “race to the bottom” for ethical standards. Evidence from the community suggests that Valve, the developer of CS:GO and Dota 2, attempted to push tournament organizers to refuse betting sponsors for its games. However, the TOs reportedly refused, arguing that the money was simply too significant to turn down, forcing Valve to back down.
This dynamic creates a classic prisoner’s dilemma for TOs. The collective long-term interest of the industry may be to maintain high ethical standards to attract prestigious, stable, blue-chip sponsors. However, the individual short-term interest of any single TO is to secure the largest possible sponsorship deal to fund its operations and remain competitive with its rivals. In this environment, the organization willing to compromise its values and partner with a controversial but wealthy sponsor gains a significant financial advantage. This structural vulnerability is precisely what actors like 1xBet exploit to infiltrate and legitimize themselves within the ecosystem.
Section 4: The Cost of Doing Business: Ethical Breaches and Reputational Damage
The partnerships with 1xBet, while financially lucrative in the short term, came at a profound cost. They represented a severe ethical breach, caused significant and lasting reputational damage to the brands involved, and introduced a systemic risk that threatens the long-term health of the entire esports ecosystem. The money came with a hidden price tag of eroded trust, community alienation, and a lower ceiling for the industry’s future growth.
4.1 Targeting the Vulnerable: The Ethics of Predatory Promotion
By placing the 1xBet logo at the heart of their broadcasts, ESL and WePlay were not simply advertising a generic gambling service; they were actively normalizing and endorsing a specific, documented predatory operator to a uniquely vulnerable audience. The ethics of this are deeply troubling.
Research has provided preliminary but stark evidence that the esports betting population is at a significantly higher risk for gambling-related harm than their traditional sports betting counterparts. One study found that 64.8% of esports bettors met the criteria for being problem gamblers, compared to just 17.3% of traditional sports bettors. The esports audience is characterized by risk factors associated with problem gambling: it skews young and male, and its members are often exposed to gambling-like mechanics such as loot boxes and skin betting from an early age through the games themselves. This early and frequent exposure can normalize gambling behaviors and lower inhibitions.
Promoting any gambling product to this demographic is ethically questionable. Promoting 1xBet—a company known for illegal operations and refusing to pay winnings—is a profound ethical failure. It leverages the trust and passion of a vulnerable fanbase to funnel them toward a platform designed to exploit them. Furthermore, the very nature of a gambling sponsorship creates a potential conflict of interest that can undermine the perceived integrity of the competition itself, making fans question whether outcomes are legitimate.
4.2 The Erosion of Trust and Brand Integrity
The immediate and visceral backlash to the partnerships caused significant reputational harm to ESL and WePlay. These organizations had spent years building brands synonymous with top-tier, professional esports. This credibility was their most valuable asset. By partnering with 1xBet, they allowed that credibility to be sold off, leading to widespread accusations of “whitewashing” a criminal enterprise and “selling out” the community for profit.
This is a textbook example of brand contagion, a phenomenon where the negative attributes of a toxic partner brand transfer to the host organization. ESL and WePlay lent their legitimacy to 1xBet, and in return, the community began to associate their brands with 1xBet’s core attributes: greed, deception, a lack of integrity, and a fundamental disregard for the well-being of the community. This is a much deeper and more lasting form of brand damage than a temporary public relations crisis, as it fundamentally alters the audience’s perception of an organization’s character and values.
The alienation of the core fanbase was palpable. On community forums, users expressed disgust, describing the presence of such sponsors as leaving a “scummy taste in my mouth” and calling 1xBet a “shit stain” on the industry. This erosion of trust is not an abstract concept; it has tangible long-term consequences for viewership, fan engagement, and the willingness of the community to invest its time and money in a product it feels has betrayed its values.
4.3 Systemic Risk to the Esports Ecosystem
The damage caused by the 1xBet partnerships extends beyond the specific brands involved and poses a systemic risk to the entire esports industry. The normalization of deals with predatory or criminal enterprises creates a dangerous precedent that can stunt the industry’s growth and threaten its financial stability.
First, the presence of sponsors like 1xBet can actively deter legitimate, blue-chip sponsors from entering the space. Mainstream, non-endemic brands from sectors like automotive, financial services, and consumer goods are highly risk-averse. They will not want their logos and brand messaging appearing alongside an entity associated with illegal gambling, pornography, and criminal investigations. By allowing such actors into the ecosystem, esports organizations are poisoning the well for the very type of stable, reputable, and long-term partners the industry needs to mature.
Second, the over-reliance on a single, controversial industry sector like offshore gambling creates a fragile financial bubble. The esports sponsorship market has become dangerously dependent on revenue from betting companies. This financial structure is inherently unstable. A widespread regulatory crackdown on gambling advertising—a measure that has already been seriously reviewed in the UK and other jurisdictions—could cause this bubble to burst overnight. If that revenue stream were to suddenly disappear, teams and tournament organizers who have built their budgets around it would be left scrambling to survive, potentially leading to a market-wide collapse.
This entire situation is enabled by the core systemic failure of the esports industry: the lack of a unified governing body with the power to regulate sponsorships. The governance landscape is described as “piecemeal” and “fragmented”. Game publishers act as de facto regulators for their own titles, leading to inconsistent rules. Riot Games, for example, bans gambling sponsors for its
League of Legends tournaments, while Valve has taken a much more hands-off approach with CS:GO and Dota 2, creating the opening for deals like the one with ESL. Without an independent, empowered regulatory body that can set and enforce baseline ethical standards for sponsorships across the entire industry, there is nothing to prevent the “race to the bottom.” Individual TOs, acting in their own short-term financial interest, will remain vulnerable to predatory actors, perpetuating a cycle of controversy, reputational damage, and systemic risk.
Section 5: Conclusion and Strategic Recommendations
The unholy alliance between major esports tournament organizers and the criminal enterprise 1xBet represents a watershed moment for the competitive gaming industry. It is a case study in the catastrophic consequences of prioritizing short-term financial gain over fundamental ethical responsibilities and sound corporate governance. The analysis has shown conclusively that 1xBet is not merely a controversial betting company but a documented criminal organization with a business model predicated on illegal operations and consumer harm. The decision by ESL and WePlay to partner with such an entity was the direct result of a catastrophic failure of due diligence, driven by 1xBet’s calculated “reputation laundering” strategy and the esports industry’s dangerous structural dependency on sponsorship revenue.
This scandal, however damaging, must be treated as a necessary and urgent wake-up call. It has laid bare the profound risks of unchecked commercialism and the critical need for more mature, robust, and unified governance structures. The industry has reached a point where it can no longer afford to operate with a fragmented, “wild west” mentality. To secure a sustainable and reputable future, and to attract the tier-one, blue-chip partners it desires, the esports ecosystem must collectively commit to a framework of accountability, transparency, and ethical conduct. The following strategic recommendations provide a pathway toward that future.
5.1 A Framework for Responsible Partnerships: Recommendations for a Sustainable Future
Recommendation 1: Establish an Industry-Wide Independent Ethics & Oversight Committee. The fragmented nature of esports governance is the root cause of this systemic vulnerability. To remedy this, key stakeholders—including major tournament organizers, team organizations, game publishers, and independent player associations—should collaborate to form an independent ethics committee. This body’s primary mandate would be to establish and enforce a binding Code of Conduct for commercial partnerships. A crucial element of this code must be the explicit blacklisting of potential sponsors that have a documented history of illegal activity, are under active criminal investigation by major international bodies, or whose beneficial owners are on international wanted lists. This would create a unified, industry-wide standard that prevents a “race to the bottom” and protects the entire ecosystem from toxic actors.
Recommendation 2: Implement a Multi-Stage, Transparent Due Diligence Protocol. Tournament organizers and teams must move beyond simply accepting the assurances of potential partners and adopt a mandatory, rigorous, and transparent vetting process for all high-value sponsorships. This protocol must be standardized and should include, at a minimum, independent verification of:
Corporate Structure and Beneficial Ownership: Identifying the ultimate individuals who own and control the entity, piercing through shell corporations and offshore structures.
Licensing and Regulatory Standing: Confirming valid operating licenses in reputable, well-regulated jurisdictions (e.g., UK, Malta, New Jersey) and identifying any history of sanctions, suspensions, or bans in major markets. A license from a “flag of convenience” jurisdiction like Curaçao should be treated as a significant red flag, not a mark of legitimacy.
Legal and Public Record: Conducting a thorough review of any history of litigation, criminal investigations, and a systematic analysis of public consumer complaints on reputable platforms. This protocol must be a non-negotiable stage gate in any partnership negotiation.
Recommendation 3: Diversify Revenue Streams to Reduce Sponsorship Dependency. The existential pressure to accept toxic sponsorship deals is a direct consequence of an unhealthy over-reliance on a single revenue stream. The industry must make a strategic, long-term commitment to diversifying its business models. This requires closer collaboration between tournament organizers, teams, and publishers to develop and scale alternative sources of income. Key areas of focus should include :
In-Game Content: Expanding the creation of team- and league-branded in-game items (e.g., skins, banners, voice lines) with more favorable revenue-sharing agreements with publishers.
Premium Digital Offerings: Developing tiered subscription models that offer fans exclusive content, behind-the-scenes access, advanced analytics, or ad-free viewing experiences.
Enhanced E-Commerce: Moving beyond basic merchandise to create more sophisticated and integrated digital and physical product lines. Reducing the industry’s dependency on sponsorship from 60-90% of revenue to a more balanced portfolio is the most effective long-term defense against predatory partners.
Recommendation 4: Mandate Publisher Co-Approval for Key Sponsorship Categories. The intervention by Bandai Namco and NetherRealm demonstrated the immense power that game publishers hold as IP owners. This power should be formalized into a system of checks and balances. For high-risk and controversial sponsorship categories, particularly gambling, publishers should have a formal right of co-approval or refusal for any tournament using their game’s IP. This leverages the publisher’s inherent interest in protecting the long-term health and reputation of their game’s ecosystem, creating an essential backstop to prevent a TO from making a reckless decision that could damage the community and the game itself.
Table 3: Risk Assessment Matrix for Esports Sponsorships
| Risk Category | Low Risk Indicators | Medium Risk Indicators | High Risk Indicators | Mitigation Strategy |
|---|---|---|---|---|
| Legal & Regulatory | Licensed and in good standing in multiple Tier-1 jurisdictions (e.g., UKGC, MGA). No history of major regulatory sanctions. | Licensed in a mix of Tier-1 and Tier-2 jurisdictions. Minor historical sanctions that have been resolved. | Licensed only in a “flag of convenience” jurisdiction (e.g., Curaçao). Active sanctions, bans, or license suspensions in major markets. | Mandate independent legal review of regulatory history. Blacklist sponsors with active bans in key markets. |
| Corporate Transparency | Publicly traded company or clear, verifiable beneficial ownership. Transparent corporate structure. Headquarters in a well-regulated country. | Private company with ownership identifiable through corporate registries. Some use of offshore entities but for clear tax/business reasons. | Opaque ownership structure using multiple layers of shell companies. Headquarters in a known secrecy haven. Founders are anonymous or have criminal records. | Require full disclosure of ultimate beneficial owners. Refuse partnerships with entities that cannot provide a clear ownership structure. |
| Public Reputation & Consumer Trust | Overwhelmingly positive consumer reviews on trusted platforms (e.g., Trustpilot). Strong record of customer service and timely payments. | Mixed consumer reviews with some legitimate complaints about service issues. No widespread allegations of fraud. | Widespread, consistent allegations of fraud, non-payment of winnings, and predatory behavior across multiple independent platforms. | Conduct systematic review of public complaint forums (e.g., Reddit, Quora, complaint sites). Set a threshold for complaint volume/severity that triggers rejection. |
| Product & Service Ethics | Clear, prominent, and effective responsible gaming tools. Strict age verification processes. Advertising adheres to ethical standards. | Standard responsible gaming tools available but not prominently featured. Advertising is aggressive but within legal bounds. | No or ineffective responsible gaming tools. Evidence of targeting minors or vulnerable groups. Product is associated with illegal activities (e.g., “Pornhub Casino”). | Review the sponsor’s platform and marketing materials for ethical compliance. Blacklist any sponsor found to be targeting minors or promoting illicit content. |