eSports: between gambling, promotions and social gaming

The fine distinction between gaming and gambling in eSports might make the difference

eSports are facing considerable growth, but its qualification as gambling, social gaming or prize promotion is based on a detailed review of the features of the game.

I discussed in the past about the regulations governing eSports with cash winnings, the launch of bets on eSports in Italy and the fine distinction between gambling, social gaming and the complex regime applicable to prize promotions, with also an overview of global prize promotions regulations through the guide published by my law firm.

But how are these principles applied to eSports games?

Lack of elements of chance? You are not on the safe path!

The position in other jurisdictions is that if the elements of skill prevail in eSports over elements of chance, there are no significant restrictions to the offering of the game that cannot be qualified as gambling.

It is true that the absence of elements of chance can avoid the applicability of Italian gambling regulations, but prize promotions regulations would still apply, obliging to comply with the strict procedure required by Italian law. Indeed, prize promotions regulations apply both to games of chance and skill games and prohibit both any payments in cash and kind as well as any cash winning.

In relation to the above, interesting case law has been increasing on the qualification of live poker tournaments as skill games rather than gambling, if there are some conditions. And the same reasoning might apply to eSports under certain circumstances.

Watch payments and winnings

Most of the discussions around the qualification of social games, including eSports, concern the presence of any amount to be paid to play and the winning to be awarded.

If players are paying in cash to participate in an eSports tournament which contains elements of chance and obtain a winning in cash or in kind with economic value, the game might be considered gambling. On the contrary, if the winning sits within the game and players are only allowed to pass for instance to the next stage of a tournament where they will not win anything other than the possibility to continue playing, it might be argued that no gambling rules or prize promotions regulations apply and this is a mere social game.

Are bets on eSports gambling?

As I mentioned in the article “eSports betting live in Italy“, bets on eSports with cash winnings fall under gambling regulations.

But, what about bets on eSports with prizes in kind? In such a case, the response is not unique since this conduct might amount to a mere prize promotion, but authorities might also try to argue that this is a solution aimed at by-passing gambling regulations.

eSports are a very hot topic at the moment, and you can read on the same topic “eSports – The next big thing in the Italian gaming market?” and our book “Legal Challenges of eSports“.

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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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