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May 13, 2020

Legal Framework of Esports And Wagering

Innovation & Fintech
Reading Time: 4 minutes

A.          INTRODUCTION

As the rapidly increasing development of the esports ecosystem in our country requires regulating many areas, one of those is the “wagering” industry. As the Covid-19 epidemic, which has a global and domestic impact, has been found to be an accelerating factor in betting on esports games, the importance of regulating the relationship between esports and wagering and the legal structure has once again emerged. While it is possible to place legal bets for esports competitions in various countries, illegal bets are observed in a much wider range. Before proceeding with the examination of the legal framework, it is crucial to mention common wagers and their types placed on esports competitions.

When the types of wager placed on esports competitions are examined, it will be seen that there is a high level of diversity. The most commonly placed wagers on esports are Outright Bets, which are placed for the entire season or the entire tournament, Match Bets, which are placed for the end of the game, Handicap Bets, Fantasy Bets and Skin Bets. When the industrial analysis is conducted for these betting types, the least preferred type of betting in our country is fantasy bets, and the most popular type of betting is the bets placed regarding the results of esports competitions, even though the latter do not have a legal basis yet. Skin bets are becoming increasingly popular due to promotions such as an advertisement or gift codes promoted by broadcasters streaming from abroad.

According to market researches, the number of bets placed for the major esports organizations in 2016 was found to be more than $ 5.5 billion. According to the research; this amount is estimated to be around 12.9 billion dollars in 2020, with an increased rate of more than 100%. Bearing in mind the year of the research is conducted and that the Covid-19 epidemic increased interest in esports ecosystem, these figures are considered to be much more than market estimates. Furthermore, it is estimated that the number of people placing bets on esports events is around 6.5 million. [1]

It is seen that the bets placed in esports competitions in the wagering industry are focused on four key games. League of Legends with 38%, Counter Strike: Global Offensive with 29%, Dota 2 with 18%, and Starcraft 2 with 7% meet the 92% of the total amount of bets on esports competitions. In the remaining 8%, there are games like Rocket League, World of Warcraft, Call of Duty.

In this article, the legal status of sports wagering in our country and whether esports games are legally suitable for wagering and the applications of esports wagering in other countries will be mentioned.

B.          SPORTS WAGERING IN TURKEY

Before mentioning the relation between esports and betting industry, the legal basis of bets placed on sports games in our country should be mentioned. Fixed-probability betting and joint betting on sports competitions are conducted by the Sports Toto Organization Directorate by the model of providing private sector legal entities main dealerships and granting them shares from the revenue with private law contracts regarding the services.

Although there are more than one legal wagering platforms in our country, what kind of sports competitions will be wagered are determined following the Fixed-Probability Wagering (Iddaa) Game Plan (“Game Plan”) by the Sports Toto Organization Directorate in accordance with the Regulation on Fixed Probability and Joint Wagering Games Based on Sports Competitions, Therefore, to place legal bets on esports games in our country, the esports area should be included in the Game Plan, which is defined in the relevant regulation as “the plan that includes the procedures and principles, prize information and other determinant matters related to playing each fixed-probability and joint wagering game”. After the Sports Toto Organization Directorate includes esports competitions in the Game Plan and the licenced private legal entities by providing the opportunity for wagering, it will be possible to bet legally on esports competitions

C.          SPORTS WAGERING IN THE WORLD

The issue of betting on sports events and legal betting regulations varies a lot between the countries. Examination of esports wagering in the USA and European countries is important in terms of a  possible regulation on esports wagering in our country.

When we look into the relevant legislation in the United States, one of the key legislative pieces is the Professional and Amateur Sports Protection Act (“PASPA”). PASPA, which came into force in 1991, is a legislation that prohibits online betting on sports competitions within the country. The oppositions were raised by many federal states in the process and the American Supreme Court announced that the relevant law was unconstitutional in May 2018, enabling wagering on sports competitions. Therefore, betting on esports competitions were made possible through the legal regulations to be made by the federal states. Many states in the United States allow betting on esports events, the most current example is Nevada. There are differences between federal regulations. In some states, betting on esports games is completely prohibited, whereas, in Virginia, it is allowed to place bets when all players in esports events are 18 years of age or older.

When the situation in the European countries is evaluated, it is seen that in the United Kingdom, wagering on esports competitions is possible through private legal entities who have completed the necessary license obligations to perform this activity. France has a law that regulates esports contracts, and the national chance games committee established in the country has already started working on online betting sites for esports competitions.

D.          CONCLUSION

Considering the growth rate of the esports ecosystem, it cannot be expected to not to establish a relationship with the wagering industry, and, predictably, this relationship will continue with an increasing momentum considering the economic volume of both sectors. However, due to the unique characteristics of esports and the presence of many actors in the industry, the regulations must be prepared clearly. At this point, it is very important to regulate the precautions and sanctions against match-fixing or cheating. In terms of determining tournaments or leagues that can be wagered, only the tournaments or leagues approved by the Federation may be taken into consideration. It is very important to regulate skin betting, which is an issue that all countries take precautions against. Besides, ensuring that the persons who will bet on esports events are over 18 (eighteen) years old will provide a more accurate development of esports wagering.

[1] Esports Betting the Past and Future, September 2017, Stephen Crystal Esq. & Jeremy Smith

Innovation & Fintech
Kılınç Law & Consulting's Innovation & Fintech department represents established companies with regards to their digital endeavors

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