Abstract
I. Introduction
In 2020, esports were announced as an official competition category for the 19th Asian Games Hangzhou 2022. This was regarded by the esports community as a monumental achievement.
Previously, people often stereotyped esports as a means of entertainment, not a form either of sport or of professional activity. But with the progress the esports community has made, it is impossible to deny the fact that high-level participation in such type of events has gained gradual recognition as a legitimate profession.
Furthermore, the development of the esports industry has entered a fast-lane phase. According to the 2020 China Game Industry Annual Report, the annual revenue of China's entire digital games industry during the COVID-19 pandemic reached RMB 278.6 billion 1 (about US$42.64 billion 2 ). This only solidifies the position of the esports industry as one with high potential, that can not only generate high revenue, but also boost the country's economic growth. In view of all the benefits derived from esports, it is important to explore the legal aspects of the industry. This has become increasingly complicated as the industry develops.
In this article, we outline a legal analysis of the issues arising from this type of activity, including esports competitions, and the compliance requirements of game publishers, tournament operators, esports clubs, and content distributors. After that, we summarize and propose recommendations for the regulation of the esports industry by the authorities in mainland China, and by the authorities in the Macau special administrative region (SAR). We do so in four parts:
Part one begins with a brief introduction to esports. Part two introduces the definition of esports and tracks the growth of the esports industry in China. Part three introduces the legal issues presented to game publishers, tournament operators, esports clubs, and content distributors. Part four considers the practice of foreign countries regarding esports regulation, and proposes measures for the Macau government that aim to preserve the economic benefits of the esports industry while curbing potential harm arising from esports tournaments.
II. Definition and Development of Esports in China
Esports are based on video games, and, in that sense, people tend to confuse esports activity, video games, and online games. Esports are a competitive field, in which an unspecified number of players participate, as a team or individually. The tournaments are organized either by the game-producing entities or by esports companies, using the medium of multiplayer online battle arena (MOBA) games.
The key difference between standard video games that offer stimulating experiences and esports tournaments is that the latter place more emphasis on the competitive aspect. Additionally, the rules for esports tournaments might typically be updated regularly, and prizes are typically more extravagant than those for tournaments involving standard video games. A difference from regular sports is that in esports, contest winners are often decided quickly.
Another contrast between standard video games and esports tournaments is that the latter can be characterized as “restrictive.” As a sporting event, esports play must be strictly bound by game time, rounds, and rules.
The roots of esports in China go back as far as 1998, when games such as “StarCraft” and “Counter-Strike” entered the Chinese market. In 2005, the first Chinese international esports team, World Elite (WE), was founded. 3 In 2009, the World Cyber Games, an esports event, was held in Chengdu, Sichuan Province.
Starting in 2011, esports slowly transitioned from a local area network (LAN)-based activity to an online multiplayer one. At that time, “StarCraft 2” and “League of Legends” became available in China. 4 An esports club league was established in the same year.
From 2013 to 2017, the esports industry boomed, and the General Administration of Sport of China established an esports national team. At the same time, private capital began to pay attention to esports tournaments, and esports content distributors—such as live-broadcast platforms and third-party event operating companies—started to boom, helping the spread of esports.
As a consequence of such growth, Chinese clubs won the League of Legends World Championship in 2018 (8th series) and in 2019 (9th series). 5 The regular holding of events by the League of Legends Pro League (LPL) and King Pro League (KPL)—two top-level leagues in China—has further spread the influence of esports to younger generations in China.
III. The Legal Status of the Esports Industry in the Macau SAR and Mainland China
During the COVID-19 pandemic, the strong financial performance recorded by esports tournaments attracted fresh attention, with hotspots of activity in various provinces and cities in mainland China.
In Shanghai, “Several Policies and Measures for Fully Controlling the Epidemic Situation and Supporting the Smooth and Healthy Development of Service Enterprises,” 6 released in February 2020, were seen as an example of official acknowledgement of the esports industry. The policies and measures facilitated the holding of the 2020 League of Legends Global Finals in China, demonstrating the country's ability to host such events safely, and creating further opportunities for other tournaments to take place in China, despite the pandemic.
The presentation in the Chinese capital in April 2020 of “Beijing's Medium- and Long-Term Plan for Promoting the Construction of the National Cultural Center (2019–2035)” 7 clearly stated that Beijing should develop an esports organization to focus on hosting events in that city. These were to include competitive events and public exhibitions on esports, among other things. Clubs were also to be created.
In Hainan Province, in June 2019, the local authorities issued a policy document titled “Six Principles of Hainan.” 8 These included that Hainan would provide supporting policies for the esports industry in six areas: funding; talent development; clarification on rates of applicable taxes on the industry; visa exemption for overseas players; streamlining of relevant official procedures; and creation of a one-stop service to support the industry. It was also proposed in the document that Hainan International Esports Port would actively explore a new development model for esports, turning them into a vehicle to promote China's “Go Global” strategy. 9
Simultaneously to Hainan's initiative, the provinces of Jilin, Heilongjiang, and Hebei promulgated similar policies to support their own esports industries. The increasing support for esports in various mainland provinces has helped esports become a lucrative business in China.
Regarding the development of esports in the Macau SAR, the government officially has discussed the topic, and it has worked with the private sector to promote esports tourism in the city. This segment was included in the “Macau Cultural Industry Development Policy Framework,” published in 2014, which divided Macau's cultural industry sector into several parts: “creative design”; “cultural exhibitions and shows”; “art collecting”; and “digital media.” 10 “Digital media” included “any services linked to the provision of information via the Internet or via other digital channels,” including the development of digital games.
The Macau government's main support for the development of esports companies is via financial aid through the Cultural Industry Fund.
Regardless of how good the public policies being adopted are, the corresponding legal systems in mainland China and Macau have not kept pace with esports development. For instance, the copyright of live broadcasting of individual game screens is currently not specifically covered by copyright laws. However, there is, to a certain extent, legal protection under antitrust legislation.
In Shanghai Yaoyu Culture Media Co., Ltd. (Yaoyu Company”) v. Guangzhou Douyu Network Technology Co., Ltd. (Referred to as “Douyu Company”), 11 the content displayed on an individual game screen was assessed on whether it was under the protection of a “copyrighted work.” The court ruled that such content was not a “copyrighted work.” Despite the initial negative evaluation by the judiciary, the Guangdong Higher People's Court issued the Guidelines for Trial of Intellectual Property Cases in the Field of Online Games (Trial), which stipulate that “in the case of long-running dynamic pictures of online games,” the work “should be protected if it meets the constitutive requirements of a work created by a method similar to film-making.” 12 However, these guidelines are not binding regulatory documents; they are only limited to guidelines for intellectual property cases in Guangdong Province, and were only made for reference. In judicial practice, there are obvious difficulties in the protection of the live-broadcast (including rebroadcast) rights regarding the content on a game screen.
In Macau, the ways of protecting the copyright of the content on an individual game screen mainly encompass the overall protection mode recognized under the definition of “audiovisual works.” But due to lack of case precedent in Macau, no conclusion can be drawn regarding this matter.
To analyze the legal obstacles regarding esports tournaments, it is necessary to divide the subject into four categories, concerning: game developers; tournament operators; esports clubs; and content distributors.
A. Game developers
Currently, the Macau SAR does not enforce any regulation on game developers. They are generally defined and protected as enterprises or entrepreneurs within the Macau Commercial Code.
Mainland China enforces several regulations on the publishing of video games: all games published in mainland China (mobile or otherwise) must go through a licensing and approval process with the National Press and Publication Administration (NPPA), the successor body to the State Administration of Press, Publication, Radio, Film and Television (SAPPRFT). 13
In addition, the “Measures for the Administration of Cyber Performance Business Operations,” 14 issued by China's Ministry of Culture, reiterate that games used for live esports must meet the aforementioned “one certificate and one filing” legal requirement. In 2007 and 2011, SAPPRFT issued notices 15
Later, in November 2019, SAPPRFT released a notice 16 requiring online game businesses to restrict access to games during weekday evenings and to impose spending limits on in-app purchases, for people aged under 18, once again noting that a real-age account verification system should be implemented to enforce the restrictions on people aged under 18. 17
Thus, it seems that games for esports tournaments, regardless of origin, must meet the compliance requirements for the filing procedure and real-age account verification.
Moreover, some factors might lead to a mobile game license application being rejected in mainland China: e.g., content themes involving either fascism, glorification of war, violence, or criminal activities.
In conclusion, esports games in mainland China are heavily regulated by the government. Any attempt to publish a game must conform with the standards of the central authorities. A problem that may arise due to these regulations is the lack of variety in games that are available for people to play. On the other hand, these regulations can also be seen to protect young people from harm such as addiction, and to ensure there is no violent content that could lead to copycat behavior by users. In any case, regulation is a work in progress.
B. Tournament operators
A major issue that arises from the lack of esports regulations is cheating. Most professional esports players were in the past competing on computers that were often highly isolated on a local network, with extra USB ports disabled, and had specifically tailored hard drives supplied by the tournament organizers.
However, due to personal preference and sponsorship opportunities, players have increasingly been allowed to supply their mice and keyboards when taking part in esports tournaments. To provide an example: Peru's Thunder Predator Dota 2 team was ignominiously dismissed from the qualifiers for Valve's International 8 tournament in 2018, 18 which involved a total prize pool of well over US$20 million. The issue in that case was the use of a programmable mouse by the team's “carry” player, Atun, which the qualifying-round organizers deemed had given him an unfair advantage over fellow competitors.
Beyond unauthorized tools or bugs, a second form of cheating in esports is the use of drugs such as Adderall. Just as traditional sports athletes may resort to the use of performance-enhancing drugs to prolong their careers, esports athletes may resort to the use of performance-enhancing drugs that allow them to stay competitive beyond the relatively short career length associated with this type of activity.
Another legal issue for tournament operators is franchising. According to Article 679 of the Macau Commercial Code, a franchise contract means that one party has the right to use the other party's corporate image, proprietary technology, and technical guidance, in a certain geographical area and during a fixed period of time, to produce and/or sell certain products or services. Under a franchise contract, the proprietary party is entitled to supervise the use of its corporate image, technology, and proprietary resources by the other party; the proprietary party is also entitled to direct or indirect returns from the relationship established by the franchise contract.
In mainland China, there are two forms of franchising: one is via government authorization; the other is via private-business-owner authorization. In the esports industry, buying an esports team means acquiring a franchise for a particular esports league, covering a specific market area.
The owners of China's King Pro League (KPL) and League of Legends Pro League (LPL) have also implemented a franchise model. Moreover, video game developers Blizzard Entertainment and Riot Games have implemented franchising in their respective leagues: the Overwatch League (OWL); and in North America, the League of Legends Championship Series (LCS). 19
The traditional professional sports league known as the National Basketball Association (NBA), in North America, is arguably the archetype of the sports franchise model, providing a foundation for the market value of the teams within its roster. The addressable market of each team—in terms of appeal to consumers—is geographically close to the markets of other teams in the league. While large cities such as New York or Los Angeles might have two professional teams participating, other cities typically have only one team. Such a setup can guarantee the interests of investors because they have either a territorial monopoly, or at the least they are part of a citywide duopoly, giving them exclusive, or near-exclusive access, to scarce resources. Sports fans in the U.S. are typically territorial in their support for sports franchise teams: support may end if the team owner decides to move the franchise to another city.
For esports, the use of a franchise model in order to create a competitive league could enable experienced investors to participate in the league on a long-term basis, and eliminate or reduce uncertainty in relation to funding.
A franchise system for esports could also create stability in relation to commercial sponsorship, as it would be easier for commercial sponsors to commit to something longer term, rather than short term. Typically, in the past, only the top esports teams could achieve such funding continuity. In a non-franchise setup, if teams face relegation from an elite level, it might lead to a significant decline in the value of sponsorship.
Some scholars may question whether the franchise system can guarantee the investor or investors in a team access to future rights 20 regarding development plans by the league's tournament operator. From the viewpoint of the authors of this article, there is no explicit law regulating this question. In any case, the high level of franchise fees that can be associated with a franchise system could lead some teams within a league not being able to make ends meet. In that scenario, the attractiveness of participating in such a franchised league could be greatly reduced.
C. Esports clubs
So far, there is no legal regulation regarding an esports club's incorporation in mainland China. There are no specific qualifications or administrative licensing matters for those individuals or groups wishing to participate in tournaments, or to fund an esports team. But in the actual operation of clubs, there are still many obstacles that are either legal or ethical. These include, for example: a general prohibition on employment of underaged players; the risk that lengthy periods of training—that might be deemed unreasonable and interfere with the player's performance in their existing job or profession—might be considered unacceptable; and the risk of team-hopping by esports players.
1. Employment of underage esports players
In the PUBG China Pro Invitational (PCPI) Esports tournament, Linshu, a young and underage player, attracted much attention at the time the information regarding his identity was verified, i.e., as of December 31, 2020. At the time, he was two months short of his eighteenth birthday.
In some scenarios, esports players may have formed links with esports clubs at the age of 16. According to Article 61, introduced on June 1, 2021, of the PRC Law on the Protection of Minors, no organization or individual is allowed to recruit a child under the age of 16, unless it has been permitted specifically under other national rules. According to the relevant national regulations, if any organization or individual recruits a young person aged 16 or 17, they should abide by national regulations regarding type of work, working hours, the intensity of such labor, and protective measures, and shall not arrange for the young person to engage either in heavy, environmentally hazardous, harmful, or other form of dangerous work that might risk harming either the physical or mental health of the person.
If an esports club hires adult players via labor contracts or outsourcing, such steps might need to meet the requirements of Article 61. This is because there are some esports tournaments that have youth camps that require participants to be within the ages of 16 to 20. These camps are usually on a labor contract or outsourced basis, and contain both minors and adults: the latter should then be able to receive the same protection as minors during the whole period of the youth camp. 21
Esports clubs are often desperate for their players to become champions in a tournament. They may organize things so their players train all night for a chance at a gold medal. In terms of overall intensity, esports “work” is minor relative to general technical work, but esports training, if pursued over a long time and at high intensity, can result in an individual experiencing physical weakness, and can be seriously hazardous to a player's health. Contrary to the legislative aim of the national Law on Protection of Minors, there is some legal risk attached to those esports clubs in terms of their corporate behavior.
2. Occupational health and safety problems for esports players
The age of professional esports players in China is generally in the range of 18 to 35 years. Despite their youth, these players are often subject to toxic work environments that encourage staying up late to practice, being sedentary, and engaging in irregular eating habits. Such behavior may trigger physical discomfort and mental problems that plague the people concerned, in varying degrees.
From a legal standpoint, there is no clear-cut way to solve this issue, because it involves the contract between the club and the esports players concerned. Mainland China and the Macau SAR have, respectively, multiple labor regulatory regimes designed to protect employees. But are the esports players in fact employees of clubs/teams under the respective labor law of their home jurisdiction? In some legal cases, it has been held that clubs and players have mostly entered brokerage contracts, rather than labor contracts. 22
A brokerage contract is a unilateral contract, in which the client's offer is interpreted as a promise to pay a commission to the broker, while the broker provides the client relevant support and is able and willing to purchase property on the terms of the client, as the consideration. Some scholars may explain that a brokerage contract, in the context of esports, is not the same as a labor contract, because of the different dynamics in terms of the legal relationship between the clubs and the players.
If the club does not sign a labor contract with the esports player, it does not need to be responsible for any occupational disease suffered by the player, because it is not subject to labor law. Still, esports players must strictly abide by the club's training regulations when they are under contract with the club. The situation shows already a loophole in the regulation of this emerging field, as the existing legal framework cannot be successfully adapted to the development of the esports industry.
A possible solution to the issue of occupational health and safety of esports players may be to create exclusive contracts—covering all aspects regarding the right to rest, welfare, social security, and work-related-injury medical care—between esports clubs and players, so that esports players can be covered by the protection offered under contract law.
3. Team-hopping problems of esports players
A team-hopping legal case related to the esports industry, and one with the highest liquidated damages, occurred in mainland China. On December 30, 2019, the Higher People's Court of Hubei Province ruled on the team-hopping case of Wei Zhen, and decided that the act of switching teams during the contract period was a fundamental breach of contract. According to the court, the verdict on Wei Zhen was that the player was required to pay RMB 85.22 million to the plaintiff, Wuhan Yuxing Tianxia Culture Media Co. Ltd. The problem of esports players' team-hopping had not previously been a high-profile issue in terms of public discussion. But once the verdict was publicly disclosed, it surprised many that the cost of team-hopping among esports players could be so high, were breach of contract to be found.
Presently, there is no legal protection or restriction on the salary of esports players. The only regulations regarding this issue were enforced by Tencent, during the LPL's 2017 season, where the minimum monthly salary for each official player and coach in the 2017 spring period was set at RMB 5,000. The contract stipulated the following: “If the team has not paid a player's salary for more than three months, the player can terminate the contract with the team through the League.”
In addition, the LPL competition also stipulates the proportion of fines that a team can levy on players and coaches. In any case, the team's fines on players and coaches shall not cause the monthly wages of players or coaches to be lower than 80 percent of the aforementioned minimum wage.
Besides the basic salary for each player, the player union is allocated 35 percent of the total income of the league, so in the event the income of all players in the league is below 35 percent of the total income of the league, the player union can directly cover the shortfall via the 35 percent of league income allocated to it. But if the players' total collective income exceeds 35 percent of the league's total income, the players will be able to retain the excess income.
Despite having the ability to provide the players with some protection, there are still problems regarding this system. For example, in the case of high transfer fees or liquidated damages, what should be the compensation standard? If the esports player lacks a basic understanding of the contract, will the contract signed with the club cause a misunderstanding and lead to false expressions of intent? The basic rights of players cannot be guaranteed if, at the time of signing contracts with clubs or brokers, individuals are ignorant about the contract's legal effect, thus, creating higher probability of the player being exploited.
4. The problem of doping among esports players
Just as with contests in traditional sports, esports contests are highly competitive, and require high levels of mental and physical input. The level of both can be influenced by stimulant drugs.
An article titled “Esports: Doping Is Rampant, Industry Insider Claims” was first published on the website of New Scientist magazine. The article quoted a blog post by Bjoern Franzen, an esports practitioner, commenting on doping activity in the esports field. In the original, lengthy blog post, Franzen had written that gaming firms and the media appeared to be turning a blind eye to open abuse of substances. “I have seen players pop a pill even an hour before important games either to calm them down or push themselves,” he told New Scientist. 23 Franzen further argued that some League of Legends players reportedly took a combination of three different “smart” drugs prior to contests, aiming to improve their overall performance.
The esports sector seeks to become a recognized sporting discipline. That is inseparable from the need to maintain fairness and justice in competition. Many competitions in traditional sports explicitly prohibit doping. Esports tournaments may be able to employ drug testing of participants as a solution to this, once relevant regulations are created.
D. Content distributors
Content dissemination can include Internet-based media and television broadcast media. Chinese broadcast platforms include Huya Live, DouYu Live, Weishi, TikTok, People's Esports, and Sina Weibo.
Macau does not regulate Internet-based distribution of media relating to esports events, but when the software application involved seeks to collect information on a user, the application must have a privacy protection system that complies with the local personal data protection law, and/or relevant data-storage regulations.
However, there is a different approach in mainland China. According to the “Administrative Measures for Internet Information Services,” promulgated by the State Council, any esports live-broadcast platforms carrying out operational activities (including charging users, or pursuing either e-commerce, advertising, sponsorship, or other profit-driven activities) should apply to the mainland authorities for a value-added telecommunications business license under the information service category. According to the “Measures for the Administration of Cyber Performance Business Operations,” issued by the Ministry of Culture, live commercial esports broadcasts are categorized as “network performance business activities,” and a license for culture-based network operations should be obtained. This second license for culture-based network operations is required according to the “Notice on Strengthening the Management of Online Audiovisual Program Live Service Management” issued by the former regulator, the State Administration of Press, Publication, Radio, Film, and Television of the People's Republic of China (SAPPRFT). Esports live-broadcast platforms are not allowed to use proprietary names such as either “TV station,” “radio,” or “TV” to conduct business via the Internet, unless they obtain the prior approval of the mainland authorities. In addition, according to the “Supplementary Notice on Further Improving the Management of Online Audiovisual Programs such as Online Dramas and Micro-Movies,” issued by SAPPRFT, esports live-broadcast platforms that produce esports audiovisual programs should also obtain a radio and television program production business license, and the program information filing shall be completed before the program is broadcast online.
According to the “Regulations on the Administration of Internet Live Broadcasting Services,” issued by the National Cyberspace Administration of China, those providing live esports games services shall implement a name registration system for users, and adopt identity registration based on identity documents, business licenses, etc. For registration of anchor presenters of live broadcasts, submission of telephone numbers is required, as well as documentation needed for normal user registration. In addition, esports live-broadcast platforms are also required to establish a live-broadcast content review system, to prevent illegal content, such as violence or pornography, from appearing in esports live broadcasts.
According to the “Catalogue for the Guidance of Foreign Investment Industries” and the foregoing multiple regulations, esports live-broadcast platforms serving mainland China must obtain an Internet Content Provider (ICP) license (the qualification for a company to operate business websites and mini-programs); an Internet domain registration (WWW); and an Audio Visual Servicer Provider (AVSP) authorization, among other requirements. According to existing regulation, foreign investment is banned from this sector. The regulatory requirements are related to the fact that live-broadcast platforms typically involve transactions such as rewards and gifts. Without the relevant permissions, such a service would be considered an illegal operation, which might lead to criminal liability or administrative penalties for the provider.
IV. Suggestions
Mainland China and Macau are each faced with the problems of imperfect legal frameworks, and have differing regulatory standards, as well as lax law enforcement, regarding esports. To explore possible strategies to resolve the current legal issues of esports, we will compare solutions from various countries' practices, to identify possible solutions.
A. Introduce esports laws to improve imperfect legal framework
Mainland China now has a Civil Code (effective from January 2021) and Macau has a Civil Code and a Commercial Code. On that basis, is there need for an esports law on the mainland and an esports law in Macau? Another question is what is the relationship between an esports law and a Commercial Code?
First, from a legislative perspective, the relationship between an esports law and the Macau Commercial Code/mainland Civil Code should be the same as special law and general law; in other words, the special law would prevail over general law when dealing with the same legal issues.
Second, as the Civil Code of the mainland has been recently completed, the corresponding judicial interpretations supporting regulations are still under discussion. The introduction of an esports law for esports events will help courts better understand the characteristics of esports competitions, and correctly grasp the purpose of regulation covering this sector.
Third, there has been a trend of esports laws being enacted by jurisdictions around the world. For example, France is the third-largest esports market in the European Union. In France, esports is distinguished from gambling, and that country legalizes it and simplifies visa procedures for inbound competitors. France's Digital Law not only enables legal innovation in the field of esports, but also the provisions of its Article 42 can be used as a reference for legislation in other countries. Article 42 legalizes esports by distinguishing in the Internal Security Code of Homeland Security between video-game competition and gambling. France also defines esports or “video game competition” as “a game in which at least two players or a group of players play to score or win in a video game.” In addition, video games are also covered by French tax laws in the same way as other types of games, in accordance with the second part of the General Tax Code.
Under the legal framework of the Macau SAR, gambling in casinos has been permitted by law, but online gambling, despite being foreseen in Law 16/2001, 24 is still not permitted, with no explicit law regulating it. As to sports betting, the regime foresees a concession, which, until June 5, 2021, was granted only to a single entity which held the exclusive for the operation of sports lottery activity: Macao SLOT Co. Ltd.
The legal framework for the operation of sports betting—currently limited to soccer and basketball—is based in the regime of instant lotteries established by Law 12/87/M, of August 17 (Instant Lottery Law), which defines instant lotteries as those in which the prizes are fully or partially fixed when the tickets are issued. Despite that fixed odds bets allowed under the sports lottery may not be seen, technically, as an operation offered to the public under the Macau Gaming Law, the fact is that it was the legal basis for the operation to start and, to a certain extent, flourish.
Through legislation in the field of esports, we may admit the legalization of bets in esports in Macau, so that market entities could operate properly under a sound legal framework without worrying about the risk of being punished by the government. A new policy with a subsequent fresh legal framework may prevent Macau residents and tourists from betting—including in esports events—in foreign legal and illegal platforms. It may also be a new source of revenue for the Region, may diversify the gaming market and, in a way, may bring to Macau other types of companies, including technological corporations in a market expected to grow in the coming years.
B. Regulation on the protection of live-broadcasting rights (live-streaming rights) of esports video games
As demonstrated earlier, due to the lack of specific protection in mainland China for the broadcasting rights of esports games, a mainland court had held that individual screens showing live games are dynamic screens, displaying the actions of multiple players of different teams participating in the game, following the rules and methods of operation of the game. The mainland court's reasoning was that the game process associated with esports was random and non-reproducible, and the result of the game was uncertain. Therefore, an individual screen showing a live game did not belong to the “work” category as defined by copyright law, and hence could not be protected by copyright law.
Although the judgment is currently considered highly controversial, it has raised the issue of whether an esports live broadcast is protected by law copyright-wise. In this regard, the Intellectual Property Law or Copyright Law provides positive protection for the rights holders. But the rights holders need to provide evidence to prove esports live-broadcast screens constitute the legal definition of a work.
Therefore, in legislation, it is recommended that the Macau SAR government should consider protection for esports in terms of the sector's live-broadcasting rights. The legal attributes of the live-broadcasting rights or the rebroadcasting rights should be regulated and protected by law. If there are no live-broadcasting rights or the right to rebroadcast, many sponsors would have doubts about the influence of esports promotion, leading to loss of a huge source of income for esports tournaments.
C. Raise the market-access threshold for esports clubs and develop a system of exclusive contracts for esports players
Current esports clubs are mostly operated in the form of companies or brokers, similar to the league-plus-club format of the NBA. However, the mechanism of transfer of teams into competitive formats is not very clear. There were some cases in Shenzhen where major clubs paid for a position to compete for a certain seat in the playoffs, 25 but this way of competing is no longer in line with the development aims of the esports sector.
In general, the management of esports league structures, and their formation, can be chaotic. It is recommended that the Macau SAR government investigate market standards, establish a unified threshold for market access in terms of joining a league, and prevent clubs attempting to pull strings if they have been initially unable to reach the playoff stage in a competition, which could break the rules of the game and cause chaos in the market.
Further, if the relationship between esports clubs and players cannot be clarified, it will be impossible to distinguish between labor relations and service relations. It is particularly important to formulate exclusive esports player contracts, to regulate the relationships between players and esports clubs/teams: the development of esports players relies heavily on contracts. When drafting the terms of such a contract, some main terms need to be considered. They include: player obligations, such as the need to participate in a competition selected by the representative team; the need, when representing a particular team, to wear team uniforms and clothing; the need to participate in a certain number of hours of training with teammates (or solo) every day; and the requirement to take part in representative-team (or sponsor) events and promotions. (Regarding training, a team might typically need 12 to 15 hours of practice per day.) 26
Regarding image rights, players should grant the team the right to use their image (including name, voice, appearance, player tag or ID, and their avatar in the game, etc.). Players can negotiate additional compensation for such rights based on their personal data and past performance.
As for termination and renewal, the compensation for early termination of the contract can be determined in the form of a buyout clause. The buyout clause quantifies the value of the player's remaining contract period based on the player's investment in the team. Obligations after the termination of the agreement are usually included in such agreements, including equipment return, data deletion, and non-destructive obligations. If another team wishes to sign a player from their original team, and make such an offer binding on the player (in a scenario where a third-party team might have made a matching offer for the player), the original team can also choose to have the right of first refusal. A team might also wish to prohibit its players from contacting and negotiating with other teams during the contract period. Certain teams' contracts also include non-competitive clauses.
D. Establishment of an esports anti-fraud authority to identify and report those engaged in either match fixing, cheating, or doping
As mentioned earlier, the esports sector can face doping, cheating, and counterfeiting problems. In 2015, ESL, formerly known as the Electronic Sports League, supported the establishment of the Esports Integrity Coalition, a non-profit membership association, in an attempt to make the entire industry accept a consistent integrity plan. Although the organization's plans and goals are based on good faith, due to its status as a nongovernmental organization it is not clear that its code can be binding on the industry.
Therefore, it is recommended that the Macau SAR government establish an anti-fraud agency for esports—or to rely on such type of agency at a national or regional level, 27 under a cooperation partnership—to be responsible for identifying and reporting the use of doping and cheating in esports competitions.
Although such an organization might not have the ability to impose administrative penalties on players, its establishment, along with improvement of the corresponding esports laws, would greatly assist in promoting the development of the esports industry in the Macau SAR, and would also in likelihood be a major boost to promoting the development of specialist services—including financial services—within the Macau SAR.
V. Conclusion
Despite ongoing debate, it seems that the pace of development of esports is only likely to increase. At the same time, more jurisdictions around the world will recognize the status of esports as an official competitive activity and even create legislation related to it. Due to the ongoing impact of the COVID-19 pandemic, online communication has become indispensable. Due to this fact, and the fact that traditional sports cannot be performed in a purely online format, esports may gain vis-à-vis traditional sports in terms of popularity.
Mainland China and the Macau SAR might have a pivotal role in the global development of esports. It is foreseeable that mainland China and the Macau SAR will become a big “blue ocean” in the esports industry. It is very unlikely that any form of esports betting will be legalized in mainland China in the future. 28 However, considering the developmental needs of Macau in terms of gross domestic product (GDP), rule-making bodies must take advantage of this opportunity, by observing this industry's development, in order to formulate measures and laws that are suited to assisting the development of the esports industry locally. A new policy in relation to sports betting, which could be enlarged to sports other than soccer and basketball, and include esports, with a subsequent fresh legal framework, may prevent Macau residents and tourists from betting in foreign legal and illegal platforms. It may also be a new source of revenue for the Region, may diversify the gaming market and, in a way, may bring to Macau other types of companies, including technological corporations in a market expected to grow in the coming years, with several countries in the Asia-Pacific (APAC) region considering the legalization of esports bets. 29