Gaming

How to find a solution to legal issues of eSports tournaments in Italy

The legal framework regulating eSports tournaments in Italy is not straight forward, but there could be solutions

eSports tournaments have extensively become popular, and the potential legal issues in Italy could be sorted to enhance investments in a fast growing market.

I already covered some of the legal issues relating to the organization of eSports tournaments in Italy in this article “eSports tournaments limited by Italian prize promotion and gambling rules?“. With the increase of investments in the market though, I thought that I could provide more straight forward indications on what format of eSports tournaments could be used to limit the risk of legal challenges.

But let’s start from the issues and then analyze the possible options.

The legal issues of eSports tournaments in Italy

There are no ad hoc regulations applicable to eSports tournaments, and this issue represents the first complication in setting the appropriate regime. The legal challenges can be summarized as follows:

1. Italian prize promotion regulations

If eSports tournaments are considered as a promotional event of a video game publisher or in general of a brand, they will fall under Italian prize promotion regulations that, among others,

  • require the fulfillment of several formalities,
  • prevent prizes in cash and
  • oblige to have the promotion limited to participants located in Italy.

You can have a look at the DLA Piper Prize Promotions Laws Around the World Guide to have a full understanding of the difference between rules applicable to prize promotions in different jurisdictions.

2. Italian gambling rules

If eSports tournaments are considered games of skill with cash winnings where players pay to win a prize in cash, they might fall under gambling regulations that

  • do not regulate offline tournaments, while for online tournaments require to hold a dedicated gambling license, even if eSports tournaments are deemed games of skill;
  • provide for stringent technical requirements which are partially lifted for “pure games of skill” as eSports tournaments would be considered; and
  • sanction with criminal penalties the breach of the prohibition to offer games with cash winnings without a gambling license.

You can read on the topic above the article “eSports – The next big thing in the Italian gambling market?“.

3. Italian sports rules

Italian law grants the exclusivity to the State on “The organization and exercise of games of skill and betting competitions, for which a reward of any kind is paid and whose participation requires the payment of a monetary stake“.

In this respect, the risk is that the payment of an annual registration fee to an eSports tournament league might be considered as the monetary stake against which the reward is granted.

If sports rules apply to eSports tournaments, the exclusivity of the State would not be applicable, but as previously discussed in this article “Can eSports fall under the legal category of sports?” there is no regulatory definition of sports.

What solutions to legal issues of eSports tournaments in Italy?

The issue has to be assessed on a case by case basis, but the counterarguments that can be used to challenge the applicability of the above restrictions can be the following:

1. Italian prize promotion regulations

If an eSports tournament is part of a league, the event is not a mere promotion, but the performance of the business itself. And, the amount won by participants is not a mere prize, but the consideration for the services provided by participants as part of the tournaments which represents the whole business.

Besides, in case of online eSports tournaments run by non-Italian EU companies, there is an express exemption to the applicability of prize promotion regulations (Read on the topic “International online prize promotions get the green light in Italy?“)

2. Italian gambling rules

Regulations on pure games of skill represent a relevant opportunity for online eSports tournaments where players pay to participate and can win prizes in cash. It has not been exploited yet in the market, which gives the opportunity of being the first exploiters.

Apart from this option, in case of eSports tournaments where players pay a registration fee to the league, this payment is not the primary source of income of eSports tournaments and can be hardly be considered an actual stake against which there is a winning.

With the growth of the business, this scenario will exponentially become apparent, but the recommendation is to indicate the services that are paid through the annual registration fee to the league.

3. Italian sports rules

By the same token mentioned above, the registration fee to an eSports league might not be qualified as an actual price for the participation to an eSports tournament which would avoid the applicability of the exclusivity of the State in their organization.

Some countries are pushing for the recognition of eSports tournaments as actual sports, but in the meantime, there is room for the growth of this business.

My main takeaways

In my view, the main points to consider in addressing the legal issues of eSports tournaments in Italy are the following:

  1. there are legal challenges that require an ad hoc assessment to avoid the applicability of the prohibition above;
  2. the same format used for other jurisdictions might not be mirrored in Italy because of regulatory restrictions;
  3. once such safeguards are adopted, there is a potential competitive advantage to be exploited.

If you are interested in the issues above, you cannot miss the DLA Piper eSports Law Book.

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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. Top global IoT influencer and FinTech lover, finding solutions to what's next for our clients' success.

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