Running Esports Tournaments: Prize Money, Sponsors, and Minors
Hello, I'm Noriaki Asato, Representative Attorney at LegalAgent.
More and more companies are planning esports tournaments, gaming events and tournaments featuring streamers. Once sponsors, prize money, streaming and paid tickets are involved, the range of legal issues to check expands rapidly. Situations arise in which multiple laws must be checked across the board, such as the Premiums and Representations Act, the crime of gambling and the Payment Services Act.
The Legal Nature of Prize Money
When offering prize money, check whether it constitutes "premiums" under the Premiums and Representations Act and whether it runs afoul of the crime of gambling. The Consumer Affairs Agency has expressed the view that prize money recognized, based on the actual circumstances, as "remuneration for work" in return for a player's skill or achievements does not constitute premiums. Design the tournament after sorting out its competitive nature, the selection method and the positioning of the prize money. Calling it "prize money" or holding a tournament that tests skill does not by itself take it outside the premium regulations.
On the other hand, a mechanism that uses entry fees as the source of funds and distributes prize money according to wins and losses carries the risk of being suspected of constituting gambling, even if it has a competitive element. Even with sponsorship money, nominal separation in the books is not enough, so check the source and use of the entry fees and prize money according to the actual circumstances. A mechanism cannot be judged lawful merely because the books or the flow of funds have been separated.
Licenses to Use Game Works
Running a tournament involves using many copyrighted works and similar materials, such as game screens, characters, music and logos. In addition to the game company's rights, check the rights of third parties, such as those relating to music and performers. Where a company has published guidelines for community tournaments, first comply with their conditions.
For commercial tournaments, sponsored streams or events with paid tickets, the event may fall outside the guidelines and require an individual license. It is important to check, for each title, the scope of the license, whether streaming is permitted and any cap on prize money.
Sponsorship Agreements and Managing Advertising Disclosures
In esports tournaments, sponsor exposure is a major pillar. It takes many forms, such as logos displayed on screen, mentions during the stream and social media posts.
In this case, decide in the sponsorship agreement the content of exposure, display positions, prohibited expressions and the treatment if the tournament is cancelled. In addition, when performers or streamers introduce sponsor products, check whether the disclosure makes it clear that it is an advertisement.
Participation by Minors and Parental Consent
It is not unusual for minors to participate in esports tournaments. There is a wide range of items to check, including consent to the participation terms, receipt of prize money, use of likeness and handling of personal information.
When a player under 18 agrees to participation terms or appearance conditions, the consent of the legal representative is required as a rule. There are exceptions under the Civil Code, such as acts that merely acquire a right, and consent is not uniformly required simply because the player will receive prize money. In the participation procedures, put in place identity verification and the obtaining and recording of the necessary consents, and also give consideration to safety in connection with streaming and travel. In addition, where in-game purchase campaigns are linked to the event for minors, give careful consideration from a consumer protection perspective as well.
Differences in Regulation Between Permanent Facilities and One-Off Tournaments
Apart from tournaments, where a permanent esports facility with gaming equipment has customers play games, a license for "Category 5 business" (game arcades, etc.) under the Act on Control and Improvement of Amusement Business may be required depending on the equipment and the actual nature of the business. Whether the Act applies is not determined solely by whether the facility is permanent or the event is one-off, so sort out the fee structure, equipment and business hours and check with the local police before opening.
Services Related to Esports Operations
We provide support for everything from prize money design to the use of copyrighted works, sponsorship agreements and the handling of minors through the following service.
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