Will eSports be the next phenomenon to tax gambling regulators?

From relative anonymity less than a few years ago, eSports has seen an explosion in popularity, fuelled by our seemingly insatiable appetite to be entertained. From community-based amateur game-playing to competitive tournaments, eSports encompasses casual leisure users through to professional video game players.

This is a guest post from my colleague and friend at DLA Piper, Steve Ketteley republished from City A.M., I am sure you will enjoy it. And just to add an insight from an Italian gaming persepective, regulations already provide the possibility to offer eSports!

Ever since the first games consoles, we have seen the production of increasingly sophisticated video games, many of which have evolved into globally recognisable brands. Just as impressive is the fact that this industry has grown into a global spectator sport viewed by tens of millions, yielding tens of millions of dollars in prize money globally. The result of any rapid induction of the niche into the mainstream is that regulators begin to pay attention.

The initial crossover with gambling came when a small number of people realised that the growth in tournament gaming could, if allowed to go unchecked, stray into the realm of gambling. This could happen if participants are required to pay to enter tournaments with the potential to earn large sums of prize money, with concomitant potential for the organisers and sponsors of these events to turn a significant profit in the process. The keynote address at the Oslo Conference of the International Association of Gaming Regulators in 2013 urged regulators to sit up and take notice of well-known video games that were being offered on a tournament basis for anyone (including potentially minors) to win money.

Since that speech there has been limited legal comment on eSports, but in early 2015 gambling regulators began to show curiosity about this still relatively young industry. This interest was not piqued by consumer protection, nor the safeguarding of minors, as had been the case with social gaming some years past. Rather, their interest in eSports was driven by the fact that a number of gambling brands had begun to offer books on real-life eSports tournaments that were becoming increasingly popular in Korea, China and the US.

Whilst they may fully understand the inter-relationship between betting and traditional sports, regulators don’t necessarily understand certain nuances within eSports, in particular the issue of “betting integrity“. A key approach toward the standardisation and regulation of the industry must involve increased efforts to reduce the damage caused by some of the sector’s more nefarious aspects, such as match fixing. Sadly, match fixing is an ever-present threat that hangs over any sport and, in the same way, there will always be those within eSports that seek to subvert its integrity for personal gain.

Although bookmakers are much better placed to share information with industry bodies and gambling regulators, eSports remain a relatively uncontrolled phenomenon. As with social gaming it is incumbent upon the eSports industry to be proactive in any discussions with regulators (be they gambling or consumer-focused) as there is real danger of immediate reactions being borne out of ignorance, stifling the development of what is a clearly innovative and extraordinarily popular form of entertainment.

As the prizes on offer at eSports tournaments begin to climb into the millions of dollars and blue chip companies spot the opportunity to piggy-back the industry’s remarkable ability to both innovate and monetise, increased scrutiny is not only inevitable, but desirable.


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Giulio Coraggio

I am the head of the Italian Technology sector and the global head of the IoT and Gaming and Gambling groups at the world-leading law firm DLA Piper. IoT and artificial intelligence influencer and FinTech and blockchain expert, finding solutions to what's next for our clients' success.

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