Part 1: Level up - corruption and self-governance in Esports
Posted in eSports
Authors: Alexander Field and Mark Bosnic
First emerging in the 1970s, video games have evolved from being a niche pastime to a global sensation. The video game industry eclipses the value of the music and film industries combined and video game publishers have become global behemoths. The rise of video games has brought with it the phenomenon of ‘esports’: the competitive playing and spectating of video games. The popularity of esports has been explosive, helped along by increasing global access to fast and cheap internet streaming and platforms such as YouTube and Twitch. Whether it be vintage games such as Pac-Man or Tetris or any of the more modern games like CS:GO or Fortnite, gamers now have the opportunity to view or participate in competitions from all around the world.
Esports’ rising popularity has also led to an increase in capital investment in the sport, tournament prize pools have reached $100 million, and recent years have seen increasing amounts of money gambled on the outcome of esports competitions. The rise of gambling on esports and its growing popularity has led to increasing apprehension amongst gaming regulators, governments and sponsors regarding the integrity and governance of gambling in esports.
This issue was highlighted by recent arrests made by Victorian police. The arrests were reportedly in relation to alleged match-fixing of games by an amateur team of CS:GO players. This incident represented the first major Australian investigation into corruption in esports, and this article will consider some of the regulatory and governmental responses to corruption in esports, and how the industry in Australia has begun to regulate itself.
One of the difficulties with esports is that, much like traditional sport, each code or game requires its own rules and regulations. However, unlike traditional sports which have professional bodies that provide regulation, discipline, and governance (such as FIFA and the NBA), esports are still in their infancy and do not have governing bodies (or if they do, these bodies are themselves also nascent and inexperienced). This issue is exacerbated by esports’ rapid rate of growth and the decentralised nature of their spectatorship. Further, unlike traditional sport, the extent to which an esport can be governed and a regulator can take action depends on the extent to which the game publisher, as the underlying owner of the IP rights to the game itself, allows them to do so, and how the publisher allows others to exploit the rights in their game. These factors together have made it difficult to regulate gambling and corruption in esports. However, this does not mean that governments and the industry itself have not begun to implement regulations in response to corruption and match-fixing.
Part 1 of this blog discusses how the esports community is attempting to self-regulate its members to improve integrity. Part 2 reviews how the Australian government is starting to play a role in response to corruption in esports.
There are two common approaches to self-governance in esports, each with varying levels of success. The first model requires the owner of the IP to be solely responsible for the competition’s governance. This includes the establishment of rules, regulations and disciplinary procedures, determining how the IP is used and supporting player welfare. The second model involves the owner of the IP licensing the rights to organise leagues and competitions to event organisers. The level of autonomy and consistency between the leagues is dependent on agreements between the IP owners and event organisers. Although this model might be more flexible and less burdensome for IP owners, it can lead to an array of different standards which can undermine the efficiency and effectiveness of gaming regulation. By increasing the number of licensees, there is a risk that event organisers will interpret and apply rules and regulations in an inconsistent manner which will likely diminish the integrity of the esport. While there are commercial benefits in expanding their brand through different licensing agreements, IP owners risk problems relating to governance and integrity being linked with their game. The lack of consistency and overarching governance issues could limit support from both players and spectators and may in turn limit the long term prospects for success of a particular game.
Riot Games (Riot), which owns the IP to League of Legends, has been identified as one of the leaders of esports governance. Riot has been applauded for its ability to standardise playing contracts, for establishing a governing body specifically to support its collegiate and high school competitors and for putting in place uniform dispute and disciplinary procedures. Although Riot’s approach to governance has been applauded, others have criticised its lack of transparency and procedural fairness in respect of the way it deals with player and team disputes. In 2016, Riot banned a team called ‘The Renegades’ from competing in the League of Legend Champions Series. Concerns grew as the owners of ‘The Renegades’ were not given an opportunity to appeal the decision, effectively giving Riot the power to make judgments without any apparent recourse. In another instance, Riot was accused of bias and conflicts of interest in the way it handled the treatment of an Australian team, ‘Tainted Minds’. Amongst other things, Riot was accused of providing a mediator who was directly affiliated with the owners of ‘Tainted Minds’. The Riot-appointed mediator, Daniel Ringland oversees Riot’s New Zealand High School league, which is owned and operated by John McRae. Although details of the mediation cannot be released due to a non-disclosure agreement being put in place, it is likely that the perception of conflict of interests around Ringland’s involvement played a role in the team’s inability to resolve the dispute. Riot was also accused of overlooking Tainted Minds’ breach of Rule 3.2 of the Oceanic Premier League Rules. In this incident, Riot allegedly gave ‘Tainted Minds’ an exemption due to the manner in which Tainted Minds attempted to reconcile with the players affected. This episode demonstrates that while some praise Riot for their governance, the ad hoc nature of self-regulation and internal enforcement can lead to outcomes that are inconsistent or unsatisfactory.
However, internal self-regulation is not the only way forward for regulating corruption in esports, governments have also begun to step in.
Part 2 of this blog looks at the role State and Federal governments are playing in response to corruption in esports.
 ‘Report of the Review of Australia’s Sports Integrity Arrangements’, pages 37, 55.
 Rule 3.2 of the Oceanic Premier League Rules states that ‘a team may have no more than 10 players on its OPL roster at any given time’. It is reported that whilst the dispute between 5 members of ‘Tainted Minds’ and the owners was occurring, ‘Tainted Minds’ were scouting and subsequently recruited gamers to replace the 5 team members