Esports Oversight Groups Could Face Challenges
Esports Betting Report

Establishing Esports Oversight: The Groups, Issues, And Potential Challenges

Esports Regulatory Puzzle

As the competitive video gaming industry grows in size and popularity, so too are the number of organizations aimed at promoting integrity, player development, regulatory oversight, and fraud prevention in esports.

At least five bodies have recently launched. Some of them have the backing of tournament organizers, while others have the backing of national governments. Several have expressed the intent to operate globally in scale.

The self-stated goals of these groups range from addressing match-fixing, to developing a player’s bill of rights, to promulgating gameplay rules with the hopes that teams and leagues opt in to them.

What oversight groups exist thus far?

Some of the recently formed esports oversight groups include:

Esports Integrity Coalition (ESIC)

Launched earlier this month, this anti-fraud group has the support of companies like Intel, organizers like Esports League (ESL) and DreamHack, and esports book Unikrn. It will aim to identify and address match-fixing, in-game cheating and doping. Its chairman is yet unnamed, but its integrity commissioner is Sporting Integrity Matters director Ian Smith. 

A press release directing users to its website said that in response to a threat assessment survey it carried out in 2015 it’s developed a “Programme for acceptance and implementation,” for tournament organizers, game publishers and bookmakers.

World eSports Association (WeSA)

This player-representation effort launched in May with the support of eight of most well-known esports organizations in the world, but only one league (ESL). WeSA says its player council will, “represent, strengthen and advocate on behalf of pro gamers on a number of important topics, such as league policies, rulesets, player transfers and more.” The group will also attempt to appoint players to an executive board, and develop an arbitration court.

WeSA almost immediately became the subject of scrutiny when one of the founding organizations, FaZe Clan, left the group less than two weeks after it launched, citing concerns over what it called a lack of transparency, a lack of other American organizations in the group, and a lack of receiving a $150,000 fee it says it was owed. 

World eSports Council (WeSC)

WeSC launched in late 2015 with aspirations of organizing the investment of more than $1 billion into the infrastructure of eSports, including teams, players, venues and events. Its website says its goal is to form an overarching global governing body, and that its goal is to bring “stability to the eSports industry through organization and regulation.”

It plans to both organize its own esports tournament and develop sets of regulations to govern other tournaments via its own sanctioning committee. Its founder is Robert Kuntz, the CEO of venture capital outfit Sprocket Cafe, who says WeSC found itself in a “unique and strategic position to becoming (sic) the professional esports association for the fastest growing spectator sport in the world.” An outline of the council’s various aims can be found here.

British eSports Association (BEA)

This non-profit agency is chaired by gaming industry veteran Andy Payne. It says it will work to represent player interests at all levels of esports, develop a grassroots competitive video gaming scene in the United Kingdom, and support British professional players.

The association has the backing of a government entity and will report to the UK government’s Department of Culture, Media & Sport. The formation of this group follows that of the erstwhile United Kingdom Esports Association, which launched in 2008 as the “official regulatory body” for British esports, only to file for bankruptcy one year later amid a prize-payout scandal.

France eSports (FES)

This federation launched in April and will advise the French government on how to best regulate esports. An announcement from the French secretary of state said the group would partner with the French National Olympic and Sports Committee for all matters relating to the recognition of electronic sports.

One of the group’s first courses of action was to advocate for the removal of esports from the remit of the national gambling regulator. The group’s president, Matthieu Dallon, the CEO of technology company OXENT, said “I believe the essential point is to get eSports out of gambling regulations, and end up with easy to follow regulations.”

What challenges could these groups face?

Independent coalitions could end up facing different challenges than their government-backed counterparts, who will at least theoretically help influence and implement national esports standards.

While independent groups will likely attempt to do the same, they could be forced to overcome adversity in the form of:

A crowded, contentious space

As Esports Observer notes, professional esports exists across a fragmented climate, with different teams in different sports from different countries each facing different needs. Unlike the four major American sports leagues, where one organization (Boston Basketball Partners, LLC) owns just one team (Boston Celtics) that plays in just one league (NBA) in just one sport (basketball), there is considerable overlap in esports between teams and leagues and games.

All 16 organizations who fielded teams in this past week’s ESL One Cologne tournament, for example, also fielded those same teams in the ELEAGUE, which still has three weeks remaining in its first season. It’s proven difficult for coalitions thus far to get all major organizations across one title to even agree to agree on broad policies and procedures, let alone decide what those policies and procedures are.

Not enough stakeholders involved

According to officials affiliated with various groups who spoke to ESBR on condition of anonymity, non-governmental coalitions could find themselves boxed out of esports governance before they even start governing by virtue of launching before they’ve involved a critical mass of stakeholders.

WeSA, for example, has seven organization members: Fnatic, Natus Vincere, Virtus.Pro, mouzsports, Ninjas in Pyjamas, EnVyUs and G2 Esports. But each of those organizations’ teams compete regularly against other teams who aren’t a part of WeSA, including American organizations Liquid, Cloud9 and FaZe Clan, Nordic organization Astralis, British organization Dignitas, and the group with arguably the world’s best CS:GO team, SK Gaming.

If the association wants to promulgate player-protection standards that it says tournament organizers must adopt, it remains to be seen whether those will apply to all players and teams, or just to the teams who are members of WeSA.

Similarly, it’s unclear if tournament organizers who aren’t affiliated with WeSA (all except ESL) will refuse to recognize WeSA’s policies, rulesets and its arbitration court.

Questionable regulatory authority

The two prior concerns could inhibit the amount of legitimate authority non-governmental groups have to regulate standards and practices in esports.

For example, it’s unclear even if ESL (which backs both ESIC and WeSA) will automatically force players and teams competing in its tournaments to abide by whatever regulations ESIC and WeSA develop.

Even if it does, none of the groups appear to be recognized by any non-member leagues, organizations, players, or teams. It would therefore appear that coalitions lack the power to compel those bodies to act a certain way. Each group launched with the self-stated goals of being the globally recognized authority in their respective missions.

Despite getting to this space before other similar efforts, and despite branding themselves as authorities, that does not mean all stakeholders recognize groups as authorities. Yet.

Educating lawmakers and regulators

As government-affiliated and non-government-affiliated groups work to promote best practices across esports, both could be faced at some point with the task of working with government regulators.

As a recent U.S. Congressional hearing on daily fantasy sports illustrated, stakeholders are often required to significantly educate lawmakers and regulators before successfully engaging with them. BeSA and FES, who are positioned closest to state agencies that could implement integrity procedures, could be forced to distill the needs of a complex industry down to a set of specific policies, as FES has already done with gambling. ESIC and WeSA could be integral in educating policy makers on the broader societal aspects of esports betting.

But developing relationships with lawmakers and effecting actual legislative change takes time. With multiple esports betting scandals already occurring, the time to act to promote transparency could be sooner than later.

How is esports betting connected to preventing fraud?

Much of the fraud in the esports space—including cheating and match-fixingappears to be driven by unregulated and growing esports gambling markets. Thus, integrity and anti-fraud efforts are likely to address the growing esports gambling space, whose handle Narus Advisors and Eilers & Krejcik Gaming estimates will reach $8 billion in 2016. More than $7.4 billion of that esports betting handle will come from skin betting.

“Esports appears to be facing an alphabet soup problem on the integrity and governance front,” said Ryan Rodenberg, an associate professor of sports law analytics at Florida State University.

“With several acronym-friendly entities now emerging, it is reminiscent of tennis about 10 years ago when the ITF, ATP, and WTA all kept to themselves, before finally putting their differences aside to create a quasi-independent integrity unit after a major gambling scandal.”

Whether or not a set of independent esports coalitions eventually join forces, the groups’ formation is occurring at a time when multiple esports betting websites have admittedly perpetuated varying degrees of misrepresentation and dishonesty.

Last month, betting site CSGODiamonds admitted to giving a sponsored player the outcomes of certain dice rolls in advance, effectively ensuring that player would win skins. That player streamed extensive sessions of his own apparently successful gambling on the site to his followers, making it appear relatively easy to win. Diamonds is a website that allows users to bet skins on the outcome of variable-odds dice rolling.

Earlier this month, a YouTube account brought to light the fact that popular fellow YouTuber Tmartin did not disclose that he owned betting site CSGOLotto while he promoted it and filmed videos of himself winning on it.

It is possible that Tmartin, who also reportedly owns a small stake in WeSA-member EnVyUs, had access to the outcomes of slot-style rolls, or “hashes,” in advance of his betting as a result of owning the site. If that were the case, he would have a significant advantage over other players on the site at winning skins that he could then converted to cash.

Meanwhile, betting site CSGOWild, a coin-flip and roulette style skin betting site, abruptly left the U.S. market in late June, citing the regulatory climate around esports wagering.

How do large prize pools affect match-fixing?

Other recent betting scandals in South Korea and America have implicated players involved in match-fixing. Companies like Genius Sports help detect betting patterns that might constitute suspicious activity surrounding a match, and work with sports leagues to monitor potential match-fixing based off of this data.

“The prize pool of many competitions is dwarfed by the average wagers on any event of the tournament,” Genius Sports’ Head of Esports Moritz Maurer told Narus Advisors earlier this year.

“We see this as very problematic for competitions that have a very small or even no monetary prize pool and the participating teams are often newly formed rosters. The betting volume in comparison with the incentive to win the entire tournament is at a concerning ratio,” Maurer said. 

Meanwhile, two lawsuits seeking class-action status have been filed against Valve Corporation, the maker of Counter-Strike: Global Offensive, alleging that the company fosters an illegal gambling market that targets underage gamblers. While these lawsuits likely face significant hurdles, a recent panel of legal experts suggested that these would certainly not be the final lawsuits against esports companies.

Valve has not responded to the allegations against it, but it has taken action against match-fixing in the past. In 2015 it banned seven players from Valve-sponsored events for their role in a match-fixing scandal.

At the time it wrote that, “Professional players, their managers, and teams’ organization staff, should under no circumstances gamble on CS:GO matches, associate with high volume CS:GO gamblers, or deliver information to others that might influence their CS:GO bets.”

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Will Green
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An analyst at the intersection of gambling, entertainment, and esports, Will worked as a writer and producer at Sports Illustrated, where he covered the sports gambling and daily fantasy sports industries. His work is currently featured at SI, as well as Fortune.com, Legal Sports Report, ESBR, and many other publications.