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Introduction
Esports is an emerging sports entertainment field that has recently become a billion-dollar industry, with a current market value of approximately $1.88 billion in 2022 and projected to grow at a compound annual growth rate (CAGR) of 26.8% from 2023 to 2030. Esports break the hindrances created by physical fitness and the traditional sports industry, allowing the common people to become the players, which makes the connection of the younger generation with esports seamlessly, surging the rise of millions of spectators, players and viewership, leading to make Esports an overnight sensation in the sports industry.
Though the Esports industry is in its nascent stage, it will never be the same. This niche of the sports industry is evolving rapidly and will cross the 10 billion dollar mark in 2032. Now, the question unfolds: Is our legal system ready enough to deliver justice in this section of the sports industry? Various rules and regulations were made to regulate traditional sports. Is there any current regulation regarding Esports?
The legality of esports is not very simple. What makes it more complicated is the blend of the various rights of various stakeholders in this industry, the copyright of the game developer, the Human rights of the player, Gambling protection, anti-cheating measures, and more. In this blog, we will examine the various legal facets of esports, examining the advancements and difficulties to make the expansion more equitable, justiciable, and viable. This blog will provide you with information about the present state of the law and potential future changes pertaining to Esports.
About Esports:
As the name suggests, esports has a linkage with electronics and sports. Esports is an electronic sports event organized online or offline where professional players compete with each other in multiplayer video games to win prizes and other external rewards, and sometimes just recognition does a lot. This type of sports event is different from traditional sports events, employing different kinds of people and differences in players, suppose in traditional sports there is a need for hard work and physical strength of the player along with their playing strategies, and for setting up the ground/field there is need of set of skilled and unskilled labour. While in Esports, physical strength has no significance in the player’s ability to perform; only player skill, strategy, and teamwork affect the player’s ability to perform. Also, in esports events, there is a need for semi-skilled to skilled labourer either as technical support, online hosting support or database support.
Playing this virtual game is possible from anywhere in the world. The primary criteria[i] for a video game to be deemed an e-sport are competitiveness, a large number of subscribers, and substantial funding; without any one of these, the sport would undoubtedly fail.
Intellectual property rights
The rapid commercialization of esports has led to concerns over intellectual property (IP) rights. Developers own the copyright to their video games, including characters, music, storylines, and game mechanics. Unauthorized monetization of these elements constitutes a violation of IP laws. Consequently, developers can earn royalties by licensing their intellectual property for esports tournaments.
However, players and teams also possess IP rights, particularly in unique gameplay strategies, content creation, and branding. Streaming platforms allow players to showcase their skills, generating revenue through sponsorships and advertisements. While fair use doctrine applies in some cases, esports competitions involve a higher degree of control by developers, raising disputes over content ownership.
Trademark infringement is another major concern. Esports events often feature merchandise, branding, and sponsorships similar to traditional sports. Organizers using game logos or symbols without authorization risk legal repercussions. A notable case, Riots Games vs Shanghai Moonton Technology Co., Ltd, highlighted the importance of brand protection. Riot Games successfully sued Moonton for using the name “Riot Squad Esports,” demonstrating the need for stringent trademark regulations in esports.
Internationally, legal frameworks such as the Berne Convention and the TRIPS Agreement play a crucial role in IP protections. Esports teams often license game content under fair use or contractual agreements, ensuring compliance with copyright and trademark laws.
The contradiction between Esports events and the Public Gambling and Prize Competition Act
As the number of spectators increases in online gaming industries, it will also lead to an increment in gambling in society, which is prevented under the Public Gambling Act 1876. However, there are still no specific regulations governing esports itself. Existing laws like the Public Gambling Act (1867) and the Information Technology Act (2000) might be applied in certain situations, but esports generally doesn’t qualify as gambling due to the emphasis on skill.This act prohibits people from engaging in gambling activities. Although the Hon’ble Supreme Court distinguishes between a game of skills and a game of luck in the famous case of RMD Chambaugwalla vs Union of India (1957), and by applying the rule of severability, the Hon’ble Court keeps the game of skill outside from the ambit of the Prize competition Act and Public gambling act ultimately legalizing the game of skill, still, there are some loopholes which can be exploited.
For instance, in Esports events, players are equipped with the skill of the game, and they are playing taking consideration of the risk and the skill, so they are outside the ambit of the Public Gambling Act, but for spectators, it is not the game of skill to guess which team will win so. Still this Public Gambling Act can apply to some particular section of the esports community.
Player’s Contract
As esports as a tournament is recognised, players, team guilds and other stakeholders have to enter into a contract for the service and as it is a well-settled phenomenon that the first user and beneficiary of the new technology of entertainment is the younger generation it is undeniable that younger generation has first mover advantage on the opportunity. Now, when these new players come into the professional field of gaming they have to do the formalities of the regular employee and are more likely to be treated as mere employees of the guild/team, the contract must be formed between them which has a certain degree of the descent with the conventional laws like the Labour Laws, Contract Act and The Child Labour (Prohibition and Regulation) Act as these amateurs usually are below eighteen and in rare case scenario it is sixteen like:-
- Age of the player– The younger the player the more legal difficulties will arise. As per section 11 of the Indian Contract Act 1872, legally minors can’t enter into a contract for service delivery or employment and also a person below 16 is not allowed to be employed as per various acts, which creates the disparity between the recognition of the events and the legality of the functioning of the event as young players are the foundational pillar and torchbearer of the evolution of the esports in India.
- Enforceability of the contract- Even if the contract is made between the players and the guild, there will be various issues regarding the enforceability of the contract, as it is already ruled out in the Mohori Bibee vs Dharmodas Ghose that minors agreement is void-ab-intio. Which undermines the relationship between the players and employers.
- Exploitation There is always a risk of harassment and exploitation of the young player as they are not aware of their legal rights and duties which make them vulnerable to be coerced in future transactions. Overtime, less- payment and other factor pilled up to form a mountain increasing the mental pressure of the player.
There is nothing completely black and white in law and we all live in the multiple shades of these two extremes, unfortunately in the field of esports, multiple shades are yet to emerge from these two extremes. On one side there is the case where the player finds enjoyment in playing, to increase their performance which is not as similar to normal office pressure as traditional office pressure work. Conversely, some players are not convinced to commit more time to play to improve their performance. In these two extremes, the law has to make it in the middle way where working hours; Overtime: etc for esports have to be coined separately from the traditional laws.
Challenges & Future Outlook
Despite its rapid rise, esports faces several legal hurdles:
- Lack of Standardized Regulations: Different countries have varying legal approaches, creating inconsistencies in international tournaments.
- Grey Areas in Gambling & Betting Laws: The intersection of esports with real-money gaming needs clearer definitions.
- Player Rights & Employment Protections: The absence of collective bargaining frameworks in many regions leads to player exploitation.
The future of esports legality depends on governments adapting existing laws and drafting esports-specific legislation. Recognizing esports as a distinct industry with clear labor rights, contract laws, and gambling regulations will ensure sustainable growth.
Conclusion
The esports industry is growing at an impressive rate, bringing with it unique legal challenges. Issues such as intellectual property rights, player contracts, and gambling concerns highlight the need for updated regulations to suit this digital and global sector. While laws distinguish skill-based games from gambling, gaps remain, especially regarding the rights of players, particularly minors, and the protection of game developers’ intellectual property. As esports evolves, intellectual property protection becomes even more crucial for developers and teams, while player contracts must address the risks of exploitation and ensure fair treatment. To keep pace with the sector’s growth, the legal system must adapt, providing clearer frameworks for contracts, rights, and protections. With these adjustments, esports can continue to thrive in a fair, equitable, and legally secure environment, fostering sustainability for all stakeholders in this booming industry.
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