There are a lot of different scams out there. From a Nigerian prince needing money to win a lawsuit to your more traditional ‘you have an outstanding ticket’, these scams all focus on stealing money. One of these methods, among many, is a Ponzi scheme. A Ponzi scheme is a fraudulent investment scam that generates returns for earlier investors with money taken from later investors. The scheme’s operators promise high returns with little risk, but the operation requires a constant flow of new money to survive. The scheme relies on new people investing, because as soon as they stop, there are no new funds to pay original investors. This causes the original investors to leave and ask to cash out. This is an issue for the Ponzi scheme because they often do not have the funds to pay out that cash. Similar to this is Valorant—a 5v5 first-person tactical shooter by Riot Games—which has become popular since its release in June 2020. The game revolves around team strategy and precise gunplay. Like any popular video game, Valorant also has an esports league, called Valorant Champions Tour, and is run by Riot Games. Riot gives out partnerships to organizations (who are essentially teams) that pay for players to compete in the league. In order for the organizations to keep their partnership, they need to play well, meaning they need good players. Good players are expensive, and therefore, the organizations need a lot of money to keep their teams afloat. The problem? These organizations are broke. Almost none of the teams have a large revenue, and need to scrape together significant amounts of money. Ticket sales for in-person tournaments are marginal, prize money is never guaranteed, and selling branded merchandise is far from the method to meet quota. By and large, the majority of money comes from sponsorships.
Valorant organizations rely almost entirely on the money they receive from sponsorships. In order to get that money, sponsors need an incentive—viewership. Many people will be watching the games, and because of that, many will see the sponsor’s brand. Due to that exposure, the brand will make more money overall, and the investment will have paid off. Realistically, there are a few holes in this promise. First of all, organizations will often lie about their viewership to these sponsors. They will inflate numbers, and when those numbers are actually decreasing, they often shift to softer metrics—like engagement—to steer eyes away from the decline in viewership. This also ignores viewbotting, a method of artificially increasing the number of viewers of a stream. The streamer will buy ‘bot accounts’ that are not run by real people, but when they are active on a stream, the viewer count will increase all the same. Sponsorships are often the main source of revenue for the organization; they must get the deal no matter what, meaning theory would be ready to lie if it means the sponsor agrees. This includes hiding the actual financial health of the organization. Another thing these organizations do is show how successful they are with the amount of money they have, often trying to convince the sponsor that the money has come from viewership. This, however, is a lie—their money comes from other sponsorships.
Overall, Valorant esports organizations are notorious for manipulation. Like a Ponzi scheme, they promise that whatever money is invested will be multiplied, either through direct money or through exposure that will eventually result in profit. This promised revenue, however, is rarely realized, and sponsors lose money on their investments. In this, it is clear that Valorant Esports has managed to become a (barely) legal Ponzi scheme, staying afloat on borderline illicit methods of getting money.
