Emerging Legal Issues in eSports

By: Neil Braslow, Esq.

Walters Law Group

The booming eSports industry is expected to become a $3 billion dollar industry by 2017.  As a relatively new industry experiencing unprecedented growth, legal issues are continuously emerging.  While eSports is a niche that is developing its own set of unique issues, many of the hurdles are similar to those faced by other traditional sports organizations.

Similar to almost all traditional sports organizations, the significant eSports profits are going to the event venues and owners.  Just like in traditional sports, event venues benefit from merchandising, concessions, and ticketing.  In addition to the event venues, governing bodies are starting to form, and will dominate the majority of revenue streams in the near future.  Governing bodies have the benefit of potentially lucrative broadcasting deals.  As the younger generation continues to move away from traditional sports to eSports, television channels are gobbling up eSports content at an astounding rate.  Additionally, eSports is the ideal fit for newer platforms that are looking to become major players in sports content acquisition such as YouTube, Twitter, Facebook, and Instagram.  With younger viewers seeking outlets other than traditional TV to view sports content and programming, eSports could position itself to be a leader in this area.

Blizzard Entertainment recently announced the formation of an eSports league which will adopt the hallmarks of traditional sports leagues.   Teams will be based in a major cities worldwide, and players will be scouted and signed through free agency.  Keeping with their model of a traditional sports league, players will receive guaranteed salaries and benefits.  While the salary structures are currently unknown, if eSports continue to grow at the current rate, players will be set to earn salaries that rival those of professional baseball and basketball players.  However, since the industry is still relatively new, it is expected that salaries will begin at a somewhat modest rate.  In order to supplement potentially modest salaries and prize money, cyber athletes should look to the structures adopted by traditional professional athletes to grow their revenue streams.

Endorsements and sponsorships will begin to become a significant factor in player revenue streams as eSports continues to grow.  Just like endorsement and sponsorship contracts in traditional sports markets, cyber athlete should become knowledgeable and seek appropriate counsel for agreements that they are entering into.  Endorsement and sponsorship contracts should specifically outline the expectations and scope of considerations for the cyber athletes.  Additionally, cyber athletes should avoid entering into agreements that are overly restrictive and poorly drafted.  As an example, a skilled cyber athletes could be paid $10,000 for using particular equipment during a mainstream gaming tournament.  For the equipment brand, having the player being seen using their equipment would be worth the investment.  Additionally, a player endorsing their brand could significantly boost sales and brand awareness.  A cyber athlete endorsing gaming equipment will soon be no different than a basketball player wearing a particular brand of sneakers or a tennis player using a certain type of racket.

Unlike most traditional professional sports, eSports is still determining how to move forward with intellectual property (IP) issues.  Traditional sports leagues and teams generally copyright, trademark, and license their IP.  The main issue for the eSports industry is that game publishers, studios, and commercial organizations usually own and control the IP.  Specifically, this becomes a major issue during tournament and league play.  For example, cyber athletes typically do not even own their own avatars during these competitions.  While some cyber athletes have been able to navigate their way through tricky IP issues, it appears to be a significant hurdle for players that will require further clarification moving forward.

While eSports continues to take the world by storm, legal issues are emerging at almost the same rate.  The previously mentioned issues only touch upon some of the different areas of law that the eSports industry should be concerned about.  Gambling, governing law, regulations, and player representation are just some of the additional issues that the industry is facing.  Considering the popularity and ever expanding monetary value of the eSports industry, it will be critical to sort out and address these legal issues.  While eSports has many of the same legal issues as traditional professional sports, the niche issues will need to be addressed so the industry can continue to flourish.

Walters Law Group, represents clients involved in all facets of the eSports industry. Nothing in the foregoing article is intended as legal advice. Neil Braslow, Esq. can be reached via email: neil[at]firstamendment.com, or toll free: 800.530.8137.