It is one of the fastest growing entertainment sectors, yet esports lacks regulation and governance, leaving it open for unethical practices and risky behaviours.
In October 1972, a small group of enthusiasts gathered at Stanford University in California. They had come to watch the Intergalactic Spacewar Olympics, the first ever video gaming tournament. The event marked the birth of the electronic sports industry.
Esports, which encompass everything from fantasy football to massive online battle games like Fortnite and League of Legends, are a fast-growing, global marketplace with valuation expected to reach US$1.5 billion by 2020.
Unlike the first contest where the prize was a year’s subscription to Rolling Stone magazine, today’s players can expect far higher rewards. Prize money can now be as much as $24m, while audience figures now often surpass those of traditional sports.
The Intel Extreme Masters World Championship 2017 in Poland, for example, had 173,000 people in attendance and over 46 million viewers online. Professional esports athletes and teams – now major influencers, are attracting endorsements from big brands, keen to resonate with next generation audiences and participants.
Although esports are fast becoming mainstream, they still operate in a world of their own, where none of the usual rules apply. Associate Professor Sarah Kelly, an expert on sports marketing and law at UQ Business School says, “esports are one of the fastest growing entertainment sectors, but there is a glaring lack of governance and regulation across the industry. "
“Competitions may be streamed directly to millions of viewers, yet the players can say and do what they like. Because esports are not yet recognised as a sport, they are not subject to various sports-related legislation, nor is much existing general legislation current enough to capture esports. While there are several governance bodies in different jurisdictions, they are somewhat fragmented, lacking any universal governance response to operate effectively on a global scale."
Despite the lack of rules, the industry is increasingly attracting sponsorship. Players and spectators are predominantly young and well-educated, from high socio-economic backgrounds. Brands such as Coca Cola, Red Bull, McDonald's and Mercedes Benz see it as a good way to reach millennials and Generation Z. Conventional sports teams are also trying to diversify into the esports market – though some may be shocked by the unregulated frontier they find.
Match-fixing and unregulated gambling are amongst the most significant issues and some of the most popular games such as League of Legends and Counter-Strike: Global Offensive have been touched by scandals. Doping is reportedly common, and some contestants openly discuss their use of stimulants.
There are fears about the vulnerability of minors and exploitation of players; while cyberbullying, tax avoidance, lack of intellectual property rights, and breach of immigration rules are also amongst the list of legal and governance concerns.
Sarah says, “traditional sports are usually governed by self-regulatory bodies which arose in the 19th century. As yet, there are no obvious counterparts in esports – probably because the publishers who create the games are driven by profit, rather than social motives. It is difficult to see why they would voluntarily relinquish control to a governing body.
There is also an underpinning anti-authoritarian culture permeating esports communities, which renders it problematic for third party governance structures. The fragmented industry structure is also another challenge.”
There have been several efforts to create governing bodies, though none enjoys the recognition of all stakeholders. The UK-based Esports Integrity Coalition (ESIC) aims to be the leading industry guardian. Its founder Ian Smith, says the ‘lack of a centre’ to the industry remains the greatest challenge to effective regulation.
There is also the World esports Association (WESA) which was established by a tournament organiser, the Electronic Sports League (ESL), and the International eSports Federation (IeSF) which was formed by nine national esports member associations and publishes a range of standards.
“There are signs that self-regulation is starting to kick in,” says Sarah. “Some publishers including Tencent in China have recently started to restrict access beyond a benchmark to children under 12. The ESL has adopted the WADA Prohibited List, the anti-doping protocol, in an attempt to combat the growing problem. However, while this is a step in the right direction, there are still many players and competitions without any form of protective regulation.
“At present competitive gaming is somewhere between a business and sport, which creates confusion as to whether existing sports law applies. There is limited case law yet on esport disputes. The fact that these are international games played online across geographical borders creates additional complexity.”
Sarah believes the best solution may be to bring esports within the realm of existing legislation and, where necessary, create new laws to address their unique features such as live streaming, global reach and digitalised content. There is also the brand risk associated with unhealthy lifestyle and gaming addiction, recently named by the World Health Organisation and the American Psychiatric Association. Adequate governance on these risk factors would ensure greater long term growth and support from commercial and community stakeholders.
Ultimately, the industry needs to consolidate its governance efforts to support positive growth and consolidation of the communities. “Esports and esports athletes need to build trust or risk upsetting sponsors,” adds Sarah.
“Therefore regulation of the industry could be driven by commercial forces rather than by social considerations as in traditional sports. Regulation and governance will be essential if esports is to have a sustainable future.”