Esports Earnings: Structuring Tournaments So All Pros Can Collect Winnings

March 4, 2019

Pro-gamers in Japan, Brazil, and the Philippines are bound to regulations that constrain their ability to collect prize winnings. But there’s good news: Recently, event coordinators at EVO Japan developed a workaround that could help.

Esports Earnings: Limits on How Much Esports Athletes Can Make

Gambling regulations are a massive problem for some professional esports players. To illustrate, let’s look at the plight of pro-gamers in Japan.

Japanese Law Curbs Gambling and Gaming Profits

Under Japanese law, professional gaming tournaments funded by player registration fees are considered gambling and earnings are capped at ¥100,000 (US $900). In the past, events tried to skirt the law by setting up direct payments between developers and winners. But authorities kiboshed that quickly, declaring that such setups could lead to “unjustifiable premiums and misleading representations.”

JeSU Establishes Esports Athlete Licensing Program

To better accommodate the nation’s pro-gamers, the Japanese Esports Union (JeSU) launched a licensing program, to which authorities agreed, wherein a panel bestowed special earnings eligibility to top players.

The program, however, proved controversial. In a show of protest, high-profile Street Fighter player Yusuke Momochi rejected the license. In his opinion, the process was unfairly arbitrary and eroded the gaming community’s grassroots.

Fast forward a few months. Momochi recently won ¥1,500,000 JPY (US $13,500) at Evo Japan. Would he be able to keep his winnings? The answer wasn’t clear for a few days. But news broke that he’ll be able to hold onto the award because a non-developer sponsor furnished it.

Structuring Esports Tournaments Moving Forward

Esports is a global phenomenon prone to contractual quagmires. Industry growth, in large part, depends on finding cross-border legal solutions that work for athletes, teams, and sponsors. Structuring tournaments with a big-sponsor purse provider is an easy way to ensure that players from all corners can easily collect earnings.

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Our law firm loves the esports industry. We work with athletes, teams, and sponsors on everything from contract negotiations to esports intellectual property issues to cross-border governance and compliance.

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