Esports, Gambling and Athletes

Esports is here to stay. What started as late night LAN parties and friendly competition in a friend’s basement where the stakes were bragging rights and the loser got stuck cleaning up has exploded into a worldwide gaming phenomenon that envelopes every corner of the globe.

Thousands of esport athletes from dozens of countries compete in ‘game-centred’ tournaments like CS:GO, Dota 2 or LoL.  As the scope and popularity of these tournaments grow, so do the competitive ecosystems surrounding them – the game, the teams and the athletes. Last year ‘The International’ tournament for Dota 2 topped 25 million dollars in prize money and there is no indication that this upward trend will ease any time soon.

The Bigger Picture

The global nature of esports presents a tricky regulatory situation. If every country’s laws surrounding labour or IP were the same, there would be a level playing field from which to regulate. This is not the case… nor is it the case when it comes to betting and gambling. Legislation and regulations surrounding gambling vary from state to state, province to province and country to country.

So, because I happen to find myself in Ontario, Canada, let’s explore some of the legislation regarding gambling here.

Gambling in Canada in 2019

In Canada, any organization or company that wishes to operate a gambling activity or gambling facility may approach their provincial government with a proposal for that gambling facility.  The province then manages the establishment, with the petitioning organization acting as an operator under contract with the government. What this all means is that gambling in Canada functions as a ‘licensing’ scheme.

What is a Gambling Activity?

What constitutes ‘gambling activity’ in Canada is defined primarily by Section 207 of Canada’s Criminal Code, and some case law that has interpreted the section over the years.  In general, there are three identified game-styles that can occur – each of which are dealt with by the Criminal Code in a unique manner:

  1. Games of Pure Skill

As you might guess, this is an activity that involves two people competing against one another and the outcome of the game is determined by the player’s skill level. Examples of games of pure skill are chess or checkers. All of the decisions are made by opposing players, and neither game includes a random element. This game style does NOT fall within the definition of an illegal gambling activity found in the Criminal Code.

  1. Games of Pure Chance

Some games can be agreed upon to be games of pure chance. Examples of games of pure chance might be Candyland or the card game ‘War’. No amount of skill can help you succeed at either of those games. All of the outcomes are determined completely by chance. These games are considered an illegal gambling activity UNLESS there is no monetary value exchanged to enter, play or to win a prize.

  1. Games of Mixed Chance and Skill

Poker is a great example of a game that combines random chance with skill. Chance determines which cards you’re dealt but a player’s decisions about how to play those cards is also a determining factor in the outcome. Games like poker are also considered an illegal gambling activity UNLESS there is no monetary value exchanged to enter, play or to win a prize.

Fantasy sports are another example of a game that combines skill with chance. Knowledgeable players who can identify value in salary cap draft leagues can achieve more success than players who just pick their teams at random. But, as any sports fan will tell you, anything can happen. In fact, you can count on at least one major upset every week in the NFL, meaning that an unskilled fantasy football player can win individual matches against skilled fantasy football players.

So, which one of those three categories does esports fall under?

Currently, in Canada, there is an on-going debate about how to classify esports, fantasy betting, and other types of ‘digital or online gaming’.  The question then becomes: does esports equal sports? Can the laws for one be applied to the other? What about gambling and betting? Does esports betting constitute sports betting?

At present, there is no legal definition of ‘online, mobile, digital, electronic gaming’.  Canadian provincial governments are permitted to provide any digital gaming activity they desire subject to restrictions in the Criminal Code.  In Canada, legal gambling activity DOES NOT include activities of bookmaking, pool selling or the making or recording of bets, on any race or fight, or single sport event or athletic contest.

So, essentially, esports remains a legal grey area and an unregulated area in Canada.

So why does this matter for athletes?

Well, for the most part – it doesn’t.  Gambling is typically something that is done OUTSIDE of the particular event, and any athlete participating in that event really should not be gambling on the outcome.  With that said, technology is improving and it’s creating new opportunities for individuals to choose their own path, make their own money, and be more independent.

For example, Unikrn, an esports betting and news media company, announced earlier this year that individual streamers will be able to have their streamed matches bet on, with up to the minute odds that will change as the match unfolds.  The caveat is that streamers need to be “affiliated” (i.e. approved) by Unikrn.

A platform like this is a brand-new concept, and there is a lot left to work out.  But, it signals yet another shift in the esports landscape – a shift toward the individual rather than an organization.  This platform means empowerment for streamers and athletes, and a shift, however slight, in the power dynamic between the athlete and the esports organization.

At the end of the day…

Betting is happening. Gambling of all kinds is happening. Understanding and creating new legislation addressing these new definitions and realities is vital in regulating this facet of the digital and esport landscape. How countries individually and collectively react to these innovative technologies will have MAJOR implications on the esports industry.  Keep your eyes out for next week’s blog for more.

 

Thanks for reading my blog. The above content is not legal advice but observation about the vast esports field. If you have any questions or comments or would like to schedule me to speak at your event, head over to my website www.ecesports.gg