By Elizabeth G. McCurrach, of BakerHostetler
The lucrative nature of the sports industry is no secret. The Super Bowl, the NBA Finals, the World Series and the World Cup are all advertiser’s dreams, with captive audiences locked in and immersed in every second of the action. But the popularity of traditional sports is slowly being challenged by a relative newcomer: eSports. With eSports viewership cresting into hundreds of millions of viewers and arenas routinely selling out tournaments, revenues and investors are growing exponentially with regulation trying to keep pace. The legal issues raised with this rapid evolution are myriad.
What are eSports?
ESports are organized multiplayer video game competitions, amongst players either individually or as part of a formal professional team. The first known video game competition occurred at Stanford in 1972, with the winner rewarded a year’s subscription to Rolling Stone. Today gaming is more lucrative; the Fortnite World Cup has a $30 million prize pool, with the solo champion guaranteed at least $3 million.
Although always present in gamer culture, competitions gained popularity in the late 2000s, paving the way for video game developers to create games with professional tournament play in mind. Fortnite, a multi-player game, launched in late 2017 and quickly rose to popularity amongst amateurs and professionals alike. The most popular Fortnite game mode is a “battle royale” format, with players participating in a gaming version of The Hunger Games set in modern-day Earth. While technically free, players can use money to buy items to help them survive the game and add to the personality of their avatars. Within weeks of its release, ten million people were playing Fortnite, with millions more streaming to watch the players on YouTube and Twitch. Less than a year after launching, Fortnite’s developer– Epic Games– announced that the game had over 125 million players.
Perhaps the largest and most pressing legal issue facing eSports is the lack of uniform regulation. Traditional sports leagues like the NBA or the NFL have had years to formalize rules and regulations. As video games launch, they are usually regulated by the game’s publisher, rather than any centralized body. For example, Riot Games oversees all League of Legends tournaments and play, and Epic Games oversees all things Fortnite. Without unified standards on the issues of gambling, eligibility, match fixing, and drugs, sustainability questions abound for the entire industry. The eSports Integrity Coalition (“ESIC”) is a non-profit member organization formed in 2015 by certain eSports stakeholders to address these common issues. The ESIC has created specific standards concerning ethics, doping, and anti-corruption but its reach is limited by its membership. Given its global popularity, eSports occupies a unique position that may require a more universal governance structure than currently exists.
One of eSports’ most notable attributes is its democracy- anyone can play regardless of skill, gender or age. Yet the extreme anonymity inherent in the industry also creates a number of red flags, including concerns about age. Some eSports players are so young they are unable to even enter into binding contracts. Jun Tae Yang is one the youngest players to have ever debuted on the professional stage, joining a team at 12 and competing in professional matches by 13. American child labor laws prevent anyone under the age of 17 from formally declaring as a professional and appearing in a live tournament, but these laws are nearly impossible to enforce when the players are at home. The age rating for Overwatch, League of Legends, and Fortnite is 13 and up, but actual enforcement of that standard lies with parents and guardians. Additionally, considering the violent nature and shooter-style format of many eSports, arguments about increased aggressive behavior amongst exposed youth abound.
ESports are also not immune to the same gambling concerns that permeate other sports leagues. In fact, its global popularity likely makes eSports even more attractive for criminal elements looking to fix matches and transfer funds, with predictions that eSports wagering could reach well into the billions by 2020.
One famous example involves the eSports skins market. In 2013, the game Counter-Strike: Global Offensive introduced the “Arms Deal Update” which allowed players to unlock crates that contained “decorative weapons skins” that could be bought, sold, traded, and gambled. The update was eventually manipulated through third party gambling vendors to allow for virtual casino-style gambling for holders of skins, including roulette, poker and dice play. Lawsuits in multiple jurisdictions immediately ensued against the game developer, Valve, for knowingly facilitating illegal gambling. Valve eventually sent cease and desist letters to the third-party gambling vendors, leading to the shutdown of many of these vendors. But it would be naïve to think that games are not still being manipulated by third party websites and players themselves. Adding to the morass, with children and teenagers playing at home, the likelihood of underage gambling rises exponentially. As the eSports industry continues to grapple with global standards concerning eSports gambling, it seems likely that more litigation will ensue.
While traditional performance enhancing steroids are unlikely to give a competitive advantage in eSports, doping concerns still abound. An eSports player can spend more than 12 hours a day playing. Drugs typically used to treat ADHD are rampant in the industry to help players improve focus and reflexes. Professional Counter-Strike player Kory “Semphis” Friesen has openly admitted that he and his teammates were using such drugs during a tournament. Days after his statement, Electronic Sports League (“ESL”), the organizer behind the tournament, announced the implementation of random drug testing in all future tournaments. Other leagues have been slow to follow suit, with speculation that the leagues might not want to know the truth. Further complicating potential anti-doping enforcement, ADHD is covered under the Americans with Disabilities Act blurring the line between treatment and abuse. However, as eSports continues to grow and player profits continue to rise, leagues may be forced to adopt stricter anti-doping measures and subject players to the same level of scrutiny borne by athletes in other sports.
As eSports continues its rise, leagues will continue to confront issues of gambling, doping and regulation, not to mention numerous other issues not covered in this piece such as intellectual property, streaming rights, immigration policies, and real estate to name a few others. Where eSports goes next is unpredictable, but with a new generation of eSports players joining daily, the popularity of the industry is a sure bet.
1 The NBA 2K League is a notable exception, the first American eSports league to be operated by a traditional professional sports league with Major League Soccer following suit.