Esports betting, integrity, and growth: Insights from Talon CEO Xiao Zhang ??
The esports industry is witnessing a dramatic rise in betting, with market forecasts projecting an increase from $0.51 billion in 2024 to $2.41 billion by 2033. This trend, while promising new opportunities for fan engagement and revenue, is also reigniting discussions around integrity and sustainability within competitive gaming. Speaking exclusively with SiGMA World, Talon Esports CEO and Co-founder Xiao Zhang offered insights into how this evolution is shaping the future of esports.
“Generally, any sort of competitive sport will always have some sort of betting attached to it,” Zhang said. Drawing parallels to traditional sports like football and basketball, he emphasised that wagering is a natural component of competitive viewing experiences. “People want also to guess who they think is going to win.”
But with this inevitability comes risk. Zhang acknowledged that “esports has gone through many scandals already,” naming titles such as Counter-Strike, Dota 2, StarCraft, League of Legends, and Valorant. These scandals have, at times, tarnished the image of organisations and players alike due to the “amounts of money that are thrown around, which can be quite significant.”
Despite the risks, Zhang believes esports should not be treated differently from other sports. “I don’t think betting is a negative thing, but obviously, from an integrity point of view, you have to be very, very careful.” He stressed the importance of education, saying that teams and publishers must help players understand the consequences of compromising competitive integrity.
Scaling across Asia-Pacific: Localisation and adaptability
Zhang also shared with SiGMA World the rapid expansion of Talon Esports across the Asia-Pacific region, which he said has brought both opportunities and complex challenges. “We started in some smaller markets like Hong Kong and Taiwan,” Zhang explained, “and quickly realised that operating in those markets was quite difficult from a revenue and profitability point of view.”
This led to the formation of a regional model spanning “Japan all the way down to Australia.” But scaling wasn’t without its lessons. “The hardest lesson is just how diverse every market is in Asia,” Zhang said. “Different platforms, different countries have different preferences towards games and platforms, and language and content style.”
Zhang highlighted the company’s focus on localisation: “We’re very focused on localisation.” Despite these challenges, Talon found unexpected benefits. “It’s just the opportunity to cross-pollinate fans, united by one game.”??
Esports’ business model
Profitability remains elusive for many esports organisations, and Talon is no exception. Zhang detailed a bifurcation within the industry: teams focused on financial sustainability versus those operating as marketing arms for larger corporations. “Sustainability in esports requires a balance of revenue and expenses,” he noted.
One persistent challenge is “the escalating player salaries, driven by competition among teams.” Meanwhile, revenue often resides disproportionately with game publishers. “Teams can generate income through sponsorships and merchandise, but the majority of revenue is concentrated with the publishers,” he said.
However, new revenue models are emerging. “Publishers beginning to share digital item revenue with teams” offers hope, Zhang said. This allows teams to “focus on community building” and develop new income streams outside traditional sponsorship and prize winnings.
“Some esports teams may have overlooked the importance of fostering a strong community,” Zhang remarked. “A dedicated community is crucial as they directly support teams through merchandise and digital item purchases.”
Blockchain and AI: Promising but early days
On the topic of technology, Zhang is cautiously optimistic about AI and blockchain. “I’m not an expert at AI (artificial intelligence),” he admitted, “but I think when it comes to [the] performance of esports athletes, AI can be interesting.” However, he emphasised the current limitations, pointing out that most tools are third-party and “not really integrated directly into games.”
Blockchain, however, seems to be making more tangible inroads. “There is a huge amount of overlap between those who are into Web3 and those who are into gaming,” Zhang said. Talon recently partnered with crypto exchange Flipster, rebranding their Dota 2 team as part of the collaboration. “The link is actually quite strong because you’d be surprised how many of the gaming community actually are into NFTs, trading and all the different aspects in that culture.”
Still, Zhang noted that Web3 gaming adoption will be slow, primarily due to the current lack of incentive for publishers to support secondary markets. “My overall feel is that there’s a huge crossover between these two communities even though there haven’t been a lot of good case examples.”
Game selection: Balancing data, brand, and sustainability
Talon Esports employs a structured approach when evaluating new titles. “It’s very data-driven,” Zhang said. Their internal model evaluates “revenue and expenses, the potential eyeballs and brand awareness.”
The Talon Esports CEO said that sustainability is key. “We can do smaller esports if we can get one sponsor and create a niche community around that.” For more prominent titles, the company takes a long-term view, often investing over “2 or 3 years” to achieve desired outcomes.
Zhang cited Overwatch as an example of when data and community signals led Talon to exit a game. “We used to have a huge community and presence in Overwatch,” he said, but tier 2 instability and difficult relations with the publisher prompted their departure.
Fan retention: From hype to long-term loyalty
Audience retention is a critical challenge for many esports organisations. Talon has tackled this by heavily investing in “content and community.” Localised marketing teams are essential. “There are language differences and differences in content based on local interest levels,” Zhang explained.
Winning helps, but Zhang emphasised entertainment value. “We have to put a smile on people’s faces, we have to make people upset, we have to make people angry.” He sees esports teams as entertainers, not just athletes.
The backgrounds of its founders also shape Talon’s brand tone. “Asian teams tend to be a little bit more conservative around like shit talking and the hype,” Zhang said. “But my co-founder and I both grew up in Australia.” This hybrid approach brings a unique flavour to Talon’s public persona.
Betting, business, and the future of competitive gaming
Zhang is optimistic about the future. “I honestly do believe that esports will be one of the biggest sports, if not the biggest, by 2030,” he said. With advances in mobile, internet speed, and graphic fidelity, Zhang sees no reason why esports shouldn’t rival traditional sports in cultural and economic relevance.
He attributes this growth to generational shifts. “15, 30, 35-year-old males and females, this is the generation that’s growing up on gaming and digital devices.” While older generations balance physical and digital play, younger ones are “very heavily on digital first.”
The evolution of esports, Zhang argues, is more than just business it’s cultural. “Gaming is very centred it’s their communities and what they do. As they mature and they have kids, it’ll be interesting to see how this transition happens.”
As esports continues its transformation into a mainstream entertainment and sports medium, the surge in betting underscores its growing seriousness and reach. While it raises pressing concerns around integrity, it also offers new avenues for engagement and monetisation.
Zhang remains clear-eyed about both the challenges and the possibilities. Esports may still be young, but with careful stewardship and adaptability, it is poised to become a cultural mainstay by 2030.
“This digital realm, whether it be through creators, whether through gaming, whether it be through esports and things like that, more and more so, I think it’s going to be a culturally relevant, important component,” he concluded.
