INTRODUCTION
The onset of the lockdown brought a halt to the world. However, the only industry which was not just unaffected by the lockdown but has also witnessed remarkable progress was eSports Industry. The advent of the digital era and the rapid increase in advancements in technology coupled with the proscription of popular virtual games has taken eSports to the public eye in the recent past.

In addition to this, the Asian Games of 2018 witnessed the uprise of eSports where India’s Tirth Mehta won a bronze medal in the eSports game ‘Hearthstone’, thereby celebrating the initiation of India’s medal count in eSports. The International Olympic Committee (“IOC”) has taken aback the worldwide audience by heralding their intention to initiate the ‘Olympic Virtual Series’ which would consist of multiple eSports events in the Olympics.

The term ‘eSports’ as defined by the Cambridge English Dictionary means “the act of playing games digitally against other people often for commercial gains through virtual viewership[1]”.

Internet connectivity has reached worldwide to almost all households and therefore, eSports have a huge influence on the young population at large. Moreover, such streaming cannot be restricted to the domestic boundaries of a nation given the free access to the internet thus presenting a legal challenge of governing it globally. The uprise in viewership of eSports and the facilitation of multiple platforms to the game streamer, influencing the mass, calls for an urgent need for a legal framework governing the eSports industry.

LEGAL CHALLENGES

1.         Inclusion of eSport under Sports

In India, the sports sphere is largely unorganized and unregulated. There are no existing legislations neither at the state nor at the national level to regulate and govern sports in the country. The introduction of the National Sports Development Code of India, 2011, has also focused on bringing together various guidelines and notifications issued by the Ministry of Youth Affairs and Sports to regulate different National Sports Federations in the country. However, no regulatory framework has yet been brought into force for monitoring the field of sports in the country. The formulation and implementation of the legal framework should specifically focus on providing exhaustive guidelines of categorizing different sporting disciplines as ‘Sports’ which shall include eSports thereby demarcating the ambit for the term ‘Sports’.

1.         Dearth of legislations regulating betting, match-fixing etc.

The Oxford Dictionary defines ‘Betting’ as an act of risking money on the unknown result of an event.[2] Betting has always been surrounded by the social stigma of vices such as fraud, unethical malpractices, and deceptive techniques like ‘match fixing’ involves the predetermination of the outcome of any sporting event thus manipulating the results and violating the spirit of the sport. In July 2017, the Supreme Court, in the case ‘Board of Cricket Control in India v. Cricket Association of Bihar and Others[3], made a reference to the Law Commission of India to examine the issue of legalising betting in India and therefore, on July 05, 2018, the Commission published its report titled ‘Legal Framework: Gambling and Sports Betting including in Cricket in India’ wherein the Commission made various recommendations and issued guidelines for regularising betting in the country. ‘The Prevention of Sporting Fraud Bill, 2013’ and ‘The Sports (Online Gaming and Prevention of Fraud) Bill, 2018’ were both envisioned to put together a mechanism for penalising offences pertaining to sports but have been inefficacious. It is evident that no dedicated legal framework has yet been brought in the country for prohibiting unfair means in sports and such menace could intrude with eSports given the large fanbase already involved in it. Additionally, due to the involvement of technology and lack of regulations, eSports entail their own set of nuances like hacking and usage of unfair means.

It is suggested that a dedicated legal framework be enacted prohibiting the usage of any unfair means in eSports which comprehensively deals with unfair usage of technology to one’s advantage in a sporting event.

1.         Absence of statutory governing body

Ministry of Youth Affairs and Sports (MYAS) has been constituted by the Government of India with an objective to create the infrastructure and promote capacity building for broad-basing sports as well as for achieving excellence in various competitive events at the national and international levels. Under the National Development Sports Code, 2011, MYAS together with the Sports Authority of India has been given the responsibility of managing and recognising different national sports federations (NSFs) for the development of different sporting disciplines in the country. In the sphere of eSports, there are a few emerging organisations such as the eSports Development Association of India (EDAI) and Electronic Sports Federation of India (ESFI), which have been focusing on the promotion of eSports. However, no such organisation has yet been recognised as a ‘Federation’ by the MYAS.

At the international level, International Esports Federation has 104 member nations, and its primary objective is to achieve recognition of eSports globally. However, with numerous member nations, it lacks the representative character required for the upliftment of this industry. World Esports Association, jointly with ESL, and Global Esports Federation, jointly with Tencent, have proved futile in gaining recognition as a regulatory body amongst the eSports enthusiasts.

Although, eSport is in a burgeoning stage in India yet unbridled growth can be detrimental to the activity in future. Therefore, a recognised regulatory authority to deal solely with eSports is the need of the hour.

1.         Global streaming of virtual sports

A typical challenge of eSports is that it pervades beyond all national boundaries and mere domestic regulations may not be enough to govern the entire sector. Moreover, a wide reach vests into the gamer of eSports platform to influence the masses. This platform has often been under-utilised or utilised for personal agenda. The fact that the majority of the audience is constituted of the youth, is a matter of urgent international concern.

It is necessary that a designated regulatory body be formed at the international level to govern eSports in a systematic manner. A proper code of conduct is also to be formulated to regulate the participant’s behaviour and activities while on the eSports platform.

The world of the internet has turned our existence upside down. It has modernized our networks, to the extent that it is now our ideal medium of communication even across borders. Therefore, the regulatory codes and bodies could keep the restrictions on the free right of people to not misuse the power of the internet in the world of eSports.

1.         No standard guidelines for broadcasting

Currently, eSports can be streamed freely without many regulatory constraints and the content reaches the audience uncensored irrespective of their age. Unlike movies or television content, there is no certification required regarding the streaming within different age groups. Further, eSports can depict lifelike animation including violence, obscenity etc. which might not be suitable for a young age audience.

Therefore, there is a dire need for a strict regulatory mechanism to be implemented on the streaming platforms as well as the streamers. A system of certification by an internationally recognised regulatory body may also be introduced as to which eSport may be streamed freely. A parental guidance warning should be displayed at all times for inappropriate content.

1.         Contractual Governance

Most of the rights and obligations of the participants, organisers etc. are contractually derived thereby resulting in a lack of uniformity. It could be a tedious process to review each contract individually when global tournaments are organised regularly. In addition to this, there is absolutely no restriction on the age groups of people participating in such tournaments. Further, since the eSports industry is solely managed by private players without any regulations, it is often witnessed that such contracts often bind the participants with harsh contractual obligations.

Therefore, it is suggested that a global organisation must be recognised to enumerate uniform monitoring guidelines in order to protect the interest of each party and curb oppressive clauses in such contracts by formulation of certain basic standards.

1.         M&A and Esports

With the advent of eSports gaming and the internet together, various new start-ups are emerging and exploring the eSports industry. As a result, many transactions pertaining to mergers and acquisitions are happening in the sector of eSports. The most recent example is the acquisition of GamingMonk by the Mobile Premier League (“MPL”) wherein MPL acquired the complete team of GamingMonk for an undisclosed price.

A recent study on eSports showed that the Esports sector has already reached greater heights in India in a very short span of time and the future underlying interest of youth in eSports has projected the growth of this untapped market to reach billion dollars in the upcoming years. Therefore, with the development in the eSports sector, transactions pertaining to mergers and acquisitions are bound to happen.

FREQUENTLY ASKED QUESTIONS

1.         Is there any organisation for eSports in India?

There are organisations like the ‘Esports Players Welfare Association (EPFA)’ which is a non-profit organisation and aims to safeguard the rights of the players. Further ‘Esports Federation of India (ESFI)’ aims to represent the activity in India besides regulating the same. They also envisage providing infrastructural facilities and training to sports enthusiasts. To promote eSports they aim to establish academies providing computer education. Similarly, the All India Gaming Federation (AIGF) is another such organisation. However, these institutions are yet in their nascent stage and have not achieved the status of being the regulatory body in this field.

1.         Are there any organisations governing eSports globally?

The International Esports Federation (IESF) is a South Korean organisation with the aim to acquire official recognition for eSports and organises tournaments at the international level. Global eSports is another organisation that provides training besides owning teams in global eSports events. However, no such organisations have yet been able to achieve global recognition and popularity at the international level.

1.         Has any country recognised Esports formally?

Some countries have realised the potential of eSports and have accorded recognition to the same. The United States has started rolling out athlete visas for professional eSports gamers. In South Korea, the ‘Korea Esports Association’ has been accorded recognition by the Korean Sport and Olympic Committee, i.e., their national sports regulator. It cannot be denied that eSports is gaining international attention and recognition steadily.

1.         Are there any actions undertaken by the Indian government to regulate Esports?

Currently, there is no particular legal framework governing eSports in India. Given its nascent stage, it could take some time before the nuances are completely comprehended. Former Sports Minister, Mr. Kiren Rijiju, during a discussion in the Parliament on 04 February 2021, acknowledged the developments made in the eSports sector in the country. Further, the NITI Aayog recently came out with the ‘Guiding Principles For the Uniform-National Level Regulation of Online Fantasy Sports Platforms In India’ as a draft discussion paper. Such developments indicate the intent of the government to recognise and regulate the digital platforms, particularly focusing on eSports.

1.         What are the potential expectations from eSports?

According to KPMG reports, by the year 2023, the revenue from the online gaming market may reach Rs. 11,880 Crores. Several developed nations have already accorded recognition to eSports. Additionally, it is probable that eSports be included in the prestigious Olympics and Asian Games. The meteoric rise of the sport does predict a bright prospect.

CONCLUSION

The impact of covid-19 has increased in the uprising interest of people towards eSports and also in the increase of transactions pertaining to mergers and acquisitions in the eSports sector. In the event of any transaction in eSports, the parties are required to conduct due diligence to identify the underlying issues with the licenses and other related matters.

eSports is a recent craze and regulating the sector completely could be challenging and inadequate knowledge sector at the moment the way forward might be to acknowledge eSports as a sport and establish a broad regulatory framework to govern the same as remarked by Lokesh Suji, Director ESFI.

[1] https://dictionary.cambridge.org/dictionary/english/e-sports

[2] https://www.oxfordlearnersdictionaries.com/definition/english/betting

[3] (2016) 8 SCC 535

Contributed by:

Ms. Disha Toshniwal (Sr. Associate, Ahlawat & Associates)

Mr. Sarthak Chawla (Associate, Ahlawat & Associates)