What is eSports and how should it be regulated?

Harrison Drury’s sports team takes a look at the fast-growing area of eSports and some of the emerging regulatory issues associated with it.

A simple way to attempt to define eSports would be to say “playing video games in a competitive environment for monetary or gift reward”.

The eSports industry is considered one of the fastest growing entertainment packages of a generation, with many experts predicting it to eclipse the viewing figures and revenue streams of the more ‘traditional’ sports.

A lucrative and growing market

The genre of games that most widely lend themselves to competitive gaming and those that have managed to capture global audiences are called Multiplayer Online Battle Arenas (known as “MOBAs”). Examples of the genre include League of Legends (LoL), Defence of the Ancients (DotA) 2, and Heroes of the Storm.

These games in particular are incredibly popular in Asia. Video games have managed to attract the Asian markets in a way that many established western sports have not. For example, the League of Legends 2016 World Championships achieved viewing figures on par with UK viewership of 2014 FIFA World Cup Final (around 14,700,000).

The prize fund for the tournament totalled $6,700,000. Other games include first-person shooter CounterStrike: Global Offensive (CS:GO) and the football simulator, FIFA; furthermore real-life professional football teams have taken the step of employing professional gamers to represent their team on the world stage.

The rise of eSports has created a lucrative new market for advertisers, sports teams and even bookmakers. One of the major challenges that the eSports world faces is the lack of definitive and overarching regulation. Being such a profitable market there is enormous pressure placed on the industry to ensure its integrity. Although different from highly regulated conventional sports, eSports should still be subject to the same legal scrutiny; due in large part to the numerous commercial interests vested in eSports.

What needs regulating in the world of eSports?

The UK Gambling Commission has published a discussion paper outlining the need for stringent gambling regulations to be imposed on eSports, which fall in line with the regulations that conventional sports are subject to. Mainstream bookmakers offer markets on various eSporting events; however, they are usually confined to the large ‘end-of-season’ tournaments such as the LoL World Championships or the DotA Invitational.

These high-profile tournaments are often highly invigilated by the organisers and the likelihood of cheating or betting irregularities is low. However, to reach the grand finals competitors are required to play a number of qualifying matches. It naturally follows that these rounds of matches are much more difficult to adjudicate. It is for this reason that mainstream bookmakers are not yet offering odds on such matches; however, there are a number of ‘unofficial’ online betting sites that offer odds on competitive matches for specific video games.

This leads on to another concern of the Gambling Commission; the use of ‘cryptocurrencies’ as a means to place and offer bets. There are a number of relatively established cryptocurrencies such as ‘Bitcoin’. Bitcoins are difficult to trace and difficult to regulate on their distribution, thus making them a currency widely used for unregulated betting.

The judicial system in the UK is starting to take notice of unregulated virtual gambling after a recent prosecution brought by the Gambling Commission against the two founders of FIFA virtual gambling website, “FUTGalaxy.com”. Following the hearing, over £200,000 worth of fines were ordered to be paid by the two men. District Judge McGarva, upon being shown evidence of a 12-year-old boy gambling on the website and of a 14-year-old boy losing £586 in one day, stated, “[the evidence] has hit home to me how serious this is”.

Another, perhaps less publicised, eSports specific concern regards professional gamer’s contracts of employment, or more accurately lack thereof. Often eSports athletes play for a ‘franchise-like team’, in the same way a football or rugby player does. Teams are sometimes required to train for upwards of 10 hours daily and yet it is alleged that they are often not paid a basic wage and therefore have to rely on sponsorship deals and tournament prize-money to earn a living.

What regulation is there?

There are a number of organisations that attempt to provide a regulatory framework for eSports as a whole. Whilst there are a number of regulatory bodies, there is no overriding authority and the extremely nebulous nature of eSports makes overarching legislation difficult to achieve.

The longest running organisation is ESL (Electronic Sports League). ESL has worked with the World Anti-Doping Agency to implement an anti-drug policy in the eSports world. This policy has included random drugs testing in the same fashion that conventional athletes are subject to. Some, but not all, tournament organisers have introduced similar policies.

Most recently, the eSports Integrity Coalition (ESIC) was formed in association with organisations such as ESL, ICSS (International Centre for Sport Security) and SIGA (Sport Integrity Global Alliance). ESIC are also partnered with betting regulators and providers such as Betway, Skybet and the UK Gambling Commission. Their mission statement is: “to be the recognised guardian of the sporting integrity of esports and to take responsibility for disruption, prevention, investigation and prosecution of all forms of cheating, including, but not limited to, match manipulation and doping”.

ESIC has been instrumental in imposing a number of bans on players and teams found to be cheating across a variety of games.

What does the future look like?

In conclusion, it can no longer be said that eSports is an emerging market; it is a serious multi-million-dollar player on the world’s entertainment stage. As with conventional sports, the gambling industry has very close ties and this opens up a multitude of potential legal issues.

For the industry to continue to develop and retain a captive audience there is a requirement to ensure its integrity is maintained to a high standard which can only be achieved with proficient regulation.

Ideally, the standard of regulation should be defined by an overreaching parent organisation who delegate regulation to smaller more “game specific” bodies. Consider, by way of an example, FIFA as the world governing body of football who then delegate powers to national bodies such as the Football Association.

This article was co-authored by the sports law team at Harrison Drury. For any issues relating to eSports, the sports law team can be contacted on 01772 258321.