CUBE Panel Tackles eSports Industry’s Growing Pains

Imagine getting an offer of nearly $1 million per year to play a sport but no contract to make it official, or getting paid thousands of dollars for winning a game but having no bank account in which to deposit the money. That’s the reality for a growing number of people around the world who make a living in eSports. Once an obscure pastime, today watching players practice and compete against one another in video games, like the multiplayer online battle arena game League of Legends, is approaching a $1.1 billion industry and in dire need of good lawyers. The growing pains and opportunities in this booming “sport” were the focus of a Feb. 23 panel sponsored by the Center for Urban Business Entrepreneurship (CUBE) and Legal Hackers.

“eSports is posing unique and novel questions of law and business,” Dean Nick Allard said in his opening remarks. “Lawyers are going to have to grapple with this just the same way they have grappled with disruptive industries and technologies like Uber, drones, and medical innovations.”

Professor Jodi S. Balsam moderated the panel, which included Rachel Young Gu, associate editor of ESPN eSports; Joe Ragazzo, co-founder and CEO of Slingshot Media; Ryan Morrison, founding partner of Morrison & Lee; Harris Peskin, eSports and corporate attorney; and Keith Sheldon ’07, senior vice president of programming at Barclays Center. The panel had an animated discussion about everything from player representation to the future of the industry as traditional sports franchises and media companies look to cash in on its growth.

Sheldon, who handles booking for Barclays Center and Nassau Coliseum, said he expects an international sports broadcaster to start its own eSports league in the next few years. In the meantime, he said, eSports attorneys—of which there are currently very few—need to come to a consensus on governance. The way the industry is currently set up, players are members of teams that are owned by the game developers. Professor Balsam likened this to an entity owning the game of football itself rather than just a team.

“People are getting taken advantage of,” said Ragazzo, who runs the publication Slingshot Esports and is also the publisher of the popular political blog Talking Points Memo. “There’s not clear cut governance in the space yet, so we play the role of watchdog.”

One major issue is players’ lack of power. They are often required to live in team houses, work out in the gym every day for two hours and play for hours on end. In some instances players are regularly denied the money they are owed or their play status is terminated without warning.

“Players have very little leverage,” said Morrison, who is a top attorney working on eSports contracts. “Someone who’s a professional gamer doesn’t have the same social skills as an NBA player would, so they’re less able to ask for what they deserve. It’s harder to get them to ask for it than to get the team to give it to them.” Morrison said the good news is that this problem has created a lot of new jobs for lawyers in the industry, especially in the tax and privacy disciplines.

Peskin, who is the former chief of operations and associate general counsel for H2K Gaming—Europe’s premier League of Legends team—helped put together a team owners’ association in Europe. He now works in private practice representing players and consulting with teams and executives looking to invest in the industry. He said that while players certainly don’t have much power, teams aren’t getting a fair chance either.

“The developers determine how the league will run. They just hand you a license to play,” Peskin said. “Right now, there is a significant disparity in bargaining power between teams and developers. There’s an influx of venture capital revenue, but they’re not seeing that revenue coming right back to them.”

Some developers are more hands-on than others, and Gu expects more third parties to join the fray as mediators so that the developers cannot continue to “act as judge, jury and executioner.”

But, as Peskin noted, “there needs to be a better definition of ownership before we can talk about rights.”