Organized mainly by private entities – professional organizers and/or game publishers, video game competitions quickly aroused the interest of sports betting operators. If several countries have already authorized “esports betting”, notably Belgium, the United States, Taiwan, the United Kingdom and Sweden, others have expressly prohibited it, such as Germany, Switzerland and France.
If the legal framework does not currently allow betting money on the results of esports competitions, several platforms have developed an offer of statistics and predictions on the outcome of matches anticipating a gradual evolution of practices and legislation.
I. Video games and esports: video game compliance.
Article L320-1 of the Internal Security Code defines a prohibited game of money and chance as “All operations offered to the public, under whatever name, to give rise to the hope of a gain which would be due, even partially, to chance and for which a financial sacrifice is required by the operator from the participants”.
- The notion of expected gain refers to the possibility of directly or indirectly evaluating and converting or exchanging said gain into money. Applied to esports, it raises several questions concerning the status of certain winnings in the form of free games, ranking points and virtual currencies, images, avatars, prizes and loot boxes, benefits of new powers or abilities. Several criteria can participate in this qualification including direct economic profit, addictive potential, existence of payments during the game, random gain, possibility of resale (1).
- The notion of an operation offered to the public requires a strict interpretation, the existence of a subscription or prior registration or sponsorship not being sufficient to qualify the offer as private. (2). Such a private offer on an electronic platform runs the same risk of reclassification and sanction.
- Finally, the notion of financial sacrifice covers particularly varied forms – real money, crypto-currencies, gaming cosmetics – interpreted with great rigor by the courts. Purchases of bulletins or participation tickets, prior purchase of products including credits (3) or subscription, costs of sending the response or even potentially payment by making personal data available are all elements likely to constitute a financial sacrifice.
Ingame Item Betting. The example of ingame item betting deserves particular attention. Bets on virtual objects likely to be collected by a player or non-player character have developed and popularized with competition broadcasts. Legally qualified as intangible, potentially alienable goods, the player is in reality betting on a legal license granted and generally limited by the publisher both for its scope and for the ability to conclude sub-assignments. Such operations thus call into question the legality of the bet and the very existence of the financial sacrifice in question.
On the contraryand with the exception of connection fees, as long as a bettor does not commit his assets, the operation cannot be qualified as online betting.
As a reminder, offering a prohibited gambling game is punishable by significant criminal penalties: three years’ imprisonment and 90,000 euros in fines, which may be supplemented by additional penalties, particularly for legal entities, aggravated if the facts constitute an offense of laundering the proceeds of illegal gambling. (4).
Physical betting. In France, the organization of paid betting is prohibited (5). This position is explained by the historic state monopoly imposed on gambling. The public authorities justify it by considerations of public order: protecting vulnerable populations and excessive or addictive behavior, fighting against fraud and money laundering. A first legislative development in 2010 opened up to competition the taking of online bets limited to sports and horse racing bets, for betting operators approved by the ANJ. Regarding minors, they cannot participate in any gambling games, even free ones, except in the restrictive cases provided for, now including video game competitions. (6).
Online Betting & Esport. Severely regulated by legislation, online betting has been permitted since 2010 for the sole taking of horse racing or sports bets. (7). Since the legislator has refused to assimilate video game competition to a sporting practice, the legal exceptions provided for sport are not applicable to it. (8). In a roundabout way, the legal regime for video game competitions of 2016 refuses the taking of bets linked to esports (9).
The online gaming regulatory authority (ANJ) confirmed this ban, justifying it in particular by the lack of transparency in the organization of competitions as well as the lack of an official sports federation capable of effectively regulating the sector. Case law includes in this ban bets made by French people from foreign sites. (10) and more generally any offer of service intended for a public located on the national territory (11). Disputes arising from esports betting will take place before the ANJ, which may give notice to the organizers of illicit bets to cease their activity, order Internet service providers to take all measures to prevent access to the content of the illicit site and refer the matter to the president of the high court.
Precedents abroad. Historically regulated by the Professional and Amateur Sports Protection Act of 1992 (PASPA) which bans betting on sports throughout the federal territory except certain states, several scandals associated with esports betting have affected the United States, notably involving the game Counter-Strike: Global Offensive and its publisher, Valve.
The company was prosecuted for knowingly allowing the development, maintaining and facilitating an illegal online betting platform, in particular via skin betting. These cases lead the Valve company to repeatedly request the cessation of the activities of similar platforms (12) for non-compliance with the API terms of use.
II. Video games & Esport: towards an evolution of the ban on esports betting.
Recent legislative developments in the field of sports and betting demonstrate a progressive liberalization of sports and esports betting which could lead to its diffusion in other countries, notably France.
Such an opening will require strict guarantees. The leastmust be considered increased security on the part of professionals in the sector, in particular the publisher and the organizer, having to guarantee absolute control of the organizational chain of these events, the legal security of the statuses of the participants, the provision and monitoring of a healthy field, connected and uncompromised machines, from the control of the gameplay to the management of the players and their health, etc. If the place of the game publisher will remain central for the offer of bets on competitions around its own titles, case law holds the organizer responsible in the event of a legal violation on the subject (Cass, crim. 17.02.2016, n°14-87.709): the service provider is the true organizer of the game as long as it allocates all the resources useful to the games within the framework of a commercial activity.
Anticipating a possible liberalization of the sector, many traditional betting operators are mobilizing and developing partnerships with players in the esports market – clubs, organizers, publishers – offering the purchase of media content, statistics on players and competitions. Other structures are experimenting with taking esports bets by circumventing the legal regimes in place, in particular through the use of electronic or virtual currencies, risking the qualification of a financial sacrifice and therefore criminal sanctions.
The particular case of Fantasy Leagues, Daily Fantasy Leagues and other forms of sports game simulation can also be mentioned. Punters pit virtual teams made up of real players against each other, the outcome of the competitions being calculated on the basis of the real results and performances of the players and teams.
Existing in particular in France for football championships (13)the practice has extended to video games and Esport on the basis of titles such as “League of Legends”, “Counter-Strike: Global Offensive”, or even recently “Call of Duty”.
If there is a debate on the qualification of game or bet for this type of activity (14)the French regime prohibits any service of this type provided that it is paid for or involves a financial sacrifice.
This publication is an extract from the work “Law and professions of Esport” written by Pierre-Xavier Chomiac de Sas and published by Éditions Ellipses.
