Category Archives: Esports

Esports Betting Law: A Plain English, Lawyer-Approved Overview

esports betting lawWhen everyone else was backing virtual teams, pop-financer Mark Cuban was pouring money into Unikrn, a blockchain-powered esports betting platform. Yet another genius investment? Looks that way. According to experts, esports gambling action is careening towards the $10 billion mark.

So, let’s review the current state of esports betting law in the United States. What statutes govern the space? Is there an appetite for change? Let’s dive in.

Esports Betting Law: Are People Currently Placing Bets On Matches?

According to analytics firm Narus and researchers Eilers & Krejcik, “global wagering on esports” is expected to reach $6.7 billion in 2018. And expected, folks are busily crafting ways to profit.

Esports Betting Law: Industry Obstacles To Legalizing Esports Betting?

The road to legal gambling, however, is riddled with hurdles. For starters, only four states allow sports betting, but restrictions apply. Even Nevada has yet to categorize professional video gaming as a “sport” for betting purposes. Instead, it falls under the “other” category, as do professional drafts and award outcomes (like Heisman and Oscar winners).

Policymakers and advocacy groups are also concerned about the average age of esports enthusiasts. Though pro-gaming is increasingly attracting an older audience, many esports fans are still minors. As such, authorities must take tremendous care when considering the impact of esports betting.

Another hurdle? Match-fixing. Several big scandals have already rocked the arena, and the threat remains. Granted, this is a negligible issue that’s not unique to esports (we’re looking at you, Pete Rose!). Yet, it’s still a concern.

Esports Betting Law: Federal and State Sports Gambling Laws

Currently, three federal statutes outlaw most sports betting — and likely esports betting — in the United States.

Professional and Amateur Sports Protection Act (a.k.a., the Bradley Act)

In 1992, lawmakers passed the Professional and Amateur Sports Protection Act (PASPA), which effectively outlawed sports betting in every state, save for Nevada, Oregon, Montana, and Delaware.

Notably, the Supreme Court of the United States is currently reviewing a suit (Murphy v. National Collegiate Athletic Association) that could render PASPA null and void. Ultimately a “states’ rights” case, justices are considering whether or not the federal government can dictate state gambling laws. If the bench rules in favor of Murphy, PASPA would die, states could embrace sports wagering, and budget coffers across the country would balloon.

Unlawful Internet Gambling Enforcement Act

Codified in Title VIII to the SAFE Port Act, the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA) addresses online betting. The statute “prohibits gambling businesses from knowingly accepting payments in connection with the participation of another person in a bet or wager that involves the use of the Internet and that is unlawful under any federal or state law.”

Federal Wire Act

Ratified in 1961, and codified in Title 18 of the Criminal Code, the Interstate Wire Act (a.k.a., the Federal Wire Act) asserts:

Whoever being engaged in the business of betting or wagering knowingly uses a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest, or for the transmission of a wire communication which entitles the recipient to receive money or credit as a result of bets or wagers, or for information assisting in the placing of bets or wagers, shall be fined under this title or imprisoned not more than two years, or both.

State Sports Gambling Laws

Nevada, Oregon, Delaware, and Montana are the only four states that allow sports betting. And even in those states, not all wagers are created equal. As Seth Schorr, CEO of Las Vegas’s Downtown Grand Hotel and Casino, explained: “You can’t bet on football; you can bet on the NFL.” But encouragingly for esports betting investors, he also added that “Nevada [is] looking at specific esports leagues and offerings.”

Esports Betting Law: The Future

Esports investors are analyzing demographic shifts and positioning themselves for the future. As Rahul Sood, Unikrn’s founder, explained:

“If you look at the slot machine area [in any Las Vegas casino], there are probably more wheelchairs and walkers per square foot than anywhere else in the casino. Young people go straight to the nightclub and don’t spend time there.”

Moreover, and perhaps most importantly, there seems to be a growing appetite for less restrictive gambling laws on Capitol Hill.

Connect With An Esports Lawyer

The Gordon Law Group works with esports athletes, teams, leagues, and businesses on everything from contract negotiations to esports betting legalities. For three consecutive years, SuperLawyers has chosen our firm as a “rising star” and we’ve earned a reputation for crafting compliant, unqiue overseas business models. If you’re interested in exploring the legalities of esports betting business, let’s talk.

Esports Law: Let’s Talk Esports Unions

esports unions law and lawyerThomas “Morte” Kerbusch and  Scott “SirScoots” Smith are leaving on an esports train to Unionville.

“Every day I sign another guy,” enthused Smith about his recent efforts to develop an athletes’ collective for Counter-Strike: Global Offensive. “I would say 70 or so have signed an official membership document that they are for the players association, are behind the players association, they want to be in the players association.”

Is The CS:GO Really A Union?

While industry pundits (yours truly included) may use the term “union” and “unionization” as shorthand, due to international considerations, the CS:GO players association is not formally unionizing under U.S. law, which requires “authorization cards”; instead, participants are signing “membership letters.”

Esports Unions: Overwatch

Meanwhile in Overwatch world, athletes and lawyers are crafting a different type of players’ association than the CS:GO crew. Ellen Zavian, an attorney working on the effort, compared Overwatch’s unionization plans to the NFL and MBA. “I don’t see this PA (players association) as any different than any other PA just because it’s esports. So this isn’t something that will be a lighthearted step. This will be a big step,” she promised.

Esports Unions: League of Legends

A League of Legends union is also in the works. But instead of an athlete-coach-led initiative, Riot Games is helming the initiative. But as Compete points out, the model invites excessive corporate control. Riot league’s Chris Greeley, however, assures people that the players have no reason to fear. He told Compete:

“At some point in the future if the players decided that they want to unionize and register with the NLRB, they will have the option to forgo Riot funding and self-fund. It is our expectation and our hope that that happens at some point in the future, but in the meantime this association is designed to give the players a seat at the table.”

Got Esports Legal Questions or Concerns? Let’s Talk.

The Gordon Law Group works with esports athletes, teams, and industry businesses on everything from contract negotiations to arbitration and compliance. Our legal team can also facilitate unionization consults for players, sponsors, teams, and leagues. Get in touch today. The consultation is free, and we look forward to speaking with you.

G Fuel Lawsuit: Popular Esports Energy Drink At Center Of Controversy

G Fuel LawsuitThe Environmental Research Center (ERC) smacked Gamma Enterprises LLC (“Gamma”), the “Gatorade of Esports” and makers of G Fuel, with a lawsuit over elevated lead levels and non-compliance with California’s health reporting requirements. Will the G Fuel lawsuit affect athlete sponsorships?

G Fuel: An Esports Energy Drink

Gamma Labs makes G Fuel, an energy drink “marketed as a secret sauce to enhance focus and endurance for virtual battles.” To use an analogy: G Fuel is to esports as Gatorade is to football.

Proposition  65: Heath Reporting Requirements

An excerpt from a Californian government page:

In 1986, California voters approved an initiative to address their growing concerns about exposure to toxic chemicals. That initiative became the Safe Drinking Water and Toxic Enforcement Act of 1986, better known by its original name of Proposition 65. Proposition 65 requires the State to publish a list of chemicals known to cause cancer or birth defects or other reproductive harm. This list, which must be updated at least once a year, has grown to include approximately 800 chemicals since it was first published in 1987.

G Fuel Lawsuit: Too Much Lead?

According to authorities, G Fuel drinks contained excessive amounts of lead. Plus, the product label didn’t include proper ingredient warnings.

When it comes to marketing food stuffs, brands must follow regulations outlined by both the FTC and FDA. The financial penalties could be huge, weighing in at $2,500 a day, per violation. Since the allegations date back to 2014, authorities could force Gamma to hand over a whole lot of ducats.

Energy Drink Legal Compliance: A Brief History

This is not G Fuel’s first media hiccup. Back in 2016, a young boy was hospitalized after knocking back too much of the caffeinated beverage on his bus ride home from elementary school.

It’s only fair to note that G Fuel isn’t the only energy drink to face ingredient-related lawsuits. 5-Hour Energy and Monster Energy have both found themselves in the legal ring over marketing issues. In 2016, Morgan & Morgan sued Monster Energy five times over health deterioration allegations. However, all the cases were eventually dismissed. In 2017, the FTC dinged 5-Hour Energy for $4.3 million over deceptive advertising practices.

Will the G Fuel Lawsuit Affect Sponsorship Deals?

Will esports athletes sponsored by Gamma feel any ramifications because of this lawsuit? Most likely, no. In fact, to combat the negative press, Gamma may even amp up their advertising efforts. However, if authorities come out on top in this legal battle, Gamma may have to fork over a hefty fine, which could have a negative budget impact.

Esports and Marketing Lawyers

Gordon Law Group works with esports athletes and vendors on everything from contract negotiations to sponsorship agreements to product and marketing compliance. Let’s talk. Get in touch today to begin the conversation.

Esports Contracts: 5 Things Every Athlete Should Consider

esports contract tips
Esports Contract Considerations

With an unprecedented $1.5 billion in revenue in 2017 and a projected $2.3 billion by 2022[1], the esports industry is experiencing explosive growth. So much so that traditional sporting franchises have begun getting in on the ground floor, with multi-million dollar investments from owners of the Texas Rangers, Cleveland Cavaliers, and Golden State Warriors in 2017 alone.

And at the heart of it all is the players. Esports athletes are far more than casual gamers. They’re media personalities, content gurus, marketing mavens, and merchandise monarchs.

Given the rise in expectations, game complexity, and league competitiveness, players need to scrutinize their contracts more carefully than ever before. Having a lawyer explain your contractual rights and responsibilities is fantastic — and having an esports lawyer negotiate on your behalf is invaluable!

Below, we’ll discuss five key topics that esports players should pay attention to before signing professional agreements.

Esports Contract Consideration #1: Core Compensation

The typical esports athlete compensation package includes a base salary, performance-based bonuses, and tournament purse shares.

Securing an adequate, regularly paid base salary is priority #1. Esports athletes  should double check that their contracts don’t allow management to arbitrarily alter payment schedules.

Performance-based bonuses take on a range of different flavors; however, it’s important to make sure that the metrics are realistic and proportional to the bonus amounts. Typical industry bonuses include:

Tournaments are won on the backs of esports athletes – plain and simple. No amount of marketing, team swag, or viewership matters when it comes to game time: it’s all about the skills. And when a team wins, the media hype ultimately induces income for the club via sponsorships and endorsements. As such, many player contracts include tournament incentives — a win-win for both athlete and team.

Esports Contract Consideration #2: Non-Gaming Responsibilities

It’s no longer enough to just dominate at a game. To compete at the highest levels, esports athletes need to possess marketing savvy, social media prowess, and regularly engage with fans. The players’ individual social media followings and online personas are becoming every bit as coveted as their gaming skills. Accordingly, teams are imposing stricter streaming and social media posting requirements.

Protect yourself by making sure that the streaming and posting requirements are clearly spelled out (e.g., you must make a minimum of 3 Twitter posts per week) in your contract. If your agreement has a mandatory social media clause, make sure it doesn’t include broad language  like “upon request” or “as necessary.” Furthermore, if the contract limits individual streaming privileges (i.e.. cannot independently stream on Twitch or YouTube), it’s reasonable to request additional compensation. While exclusivity is not an uncommon request, you should be compensated for it. Also, avoid terms that would have you relinquish access to, or control of, your social media or platform accounts.

Teams also require players to attend a slew of live events outside of tournaments, including promotional galas, content production events, and interviews. Make sure that all attendance expectations are clearly delineated, and push for extra compensation if the team wants you on a tighter schedule or forces attendance at  non-listed events. Also, esports player contracts should require the team to provide reasonable advanced notice for events. Hey, your time is money!

Esports Contract Consideration #3: Sponsorship and Non-Gaming Revenue

Sponsorship and non-gaming revenue can be highly lucrative for professional esports athletes. With respect to sponsorships, they should be examined at both the team and individual levels. Teams often have connections that lead to big-name team sponsorships, but players should also be allowed to seek independent sponsorships.

Moreover, be aware of team exclusivity requirements or clauses that disallow private agent representation. Instead, see if management would be amenable to letting you secure non-competing independent sponsorships (oftentimes, the team’s consent will be required).

Going hand-in-hand with sponsorship considerations are uniform, gear, and food/beverage requirements. While team uniform and food/beverage mandates during tournament play will be unavoidable, you can push for more flexible terms. For instance, you could comply with a team’s uniform requirement by wearing their jersey during tournament play, but simultaneously promote a non-competing, independent sponsor by wearing a hat or sipping on an energy drink. Win-win.

Merchandise sales are another prime area for sizable passive income. It’s not uncommon to request compensation for any merchandise and in-game content that references your name, persona, logo, or likeness. For instance, the team may pay a premium to use your personal gamer tag or individual logo to help drive t-shirt sales.

Esports Contract Consideration #4: Intellectual Property

While a player’s gaming skills may seem like their biggest asset, the intellectual property they create are potentially even more lucrative. Esports pros create content via webcasts, interviews, and promotional material, plus develop online personas that attract loyal fans from around the world. Teams are increasingly trying to capitalize on such individual intellectual property by aggressively claiming near all rights to their players’ name and likeness during their time with the team. Read all terms pertaining to intellectual property and licensing very closely and have your lawyer push to minimize the scope of any license granted to the team. The more control you have over your IP, the better.

In reviewing a contract’s IP terms, keep in mind that you want to do everything in your power to maximize control over your brand, which is distinct from the team’s brand. As a player, your gamer tag, online persona, and fan following are all integral components of your personal brand. It’s important to maximize the degree of ownership and control that you have over that brand and over your personal intellectual property. Specifically, over such elements as:

  1. Ownership to the trademark rights in your gamer tag and any reputable phrases or expressions associated with you;
  2. Ownership to your past content creation; and
  3. Ownership of your gaming (e.g., Origin, Steam, and Xbox Live accounts) and social media accounts.

Whenever you part ways with the team, you’ll want to take as much of your brand and related intellectual property with you as possible – after all, you created it!

Esports Contract Consideration #5: Termination and Trading

Crafting favorable clauses to address termination, incapacity, and trading is every bit as important as a strong compensation clause, but these areas are frequently neglected by players. Improperly negotiating these items could have disastrous consequences. Esports teams are increasingly resembling their traditional sports counterparts by including lofty buyout prices as a penalty for a player’s early termination. It is crucial to fight for a termination clause that will give you maximum flexibility and allow you to leave on terms that are fair to both parties.

Given the extreme competitiveness of the esports industry, player trading is becoming more common. Teams typically push for more control over their players and often seek restrictions that prevent players from being ‘poached’ for a higher salary by a competing organization, or retaining the exclusive ability to trade a player – even without the player’s consent. You should request that the team obtain your consent to be traded and push back against any contractual parameters that require you to notify the team of offers from competing teams – your business should be kept your business.

Also watch out for broad language that empowers the team to ‘bench’ you at their discretion for an indefinite amount of time. Try to ask for specific metrics with regards to benching so that you understand where your performance needs to be to remain league-competitive and compliant with your contract – and to keep you off the bench. Make sure you have an out, in case things don’t work out with the team or you’re being unfairly benched. Along the same lines, note how the contract defines “player incapacity” so that a minor illness or injury will not provide grounds for termination.

Connect With An Esports Lawyer

Gordon Law Group works with esports athletes on everything from intellectual property protection to contract negotiation and counsel. Got questions? Give us a call — the consultation is free.

[1] Per a report from statistics company SuperData (link)