The Legal Matrix of Professional Esports Player Contracts in Indian Gaming Industry

Introduction:

The advancement in Internet and penetration rate has positively boomed the E-Sports sector of India. It has been estimated to reach the market valuation of 1100 crore by the financial year 2025.[1] This is the only sector where average age of players is around 14-20 years. It is highly dynamic and versatile sector where various professionals and amateur people are engaging. In the same way in which casters and commentators were used to accommodate in traditional sports, in e-sports sector also the producers, editors are having different event managers, social media managers, players and game testers etc. [2] As there is no specific legislation regarding e-sports, most of the work is contract oriented. The E-Sports organization usually signs an E-Sport player a contract for contractual stability this is known as E-Sports player contract. These are used as the set of rules and regulations for maintaining the integrity of the e-sports. This blog will discuss about the legal matrix governing the e-sports player contract of the Indian gaming industry and how the

E- Sports & E-Sports Player Contract:

E-Sports have been officially recognized by the Commonwealth games, the International Olympic Committee, and Olympic Council of Asia. The worldwide market is of $3 Billion with millennial and Gen-Z population as core engagers. In India only since 2020 around $438 million have been invested by the venture capitalists this shows the importance and need of the some specific legislation controlling this booming industry so that there is no labour exploitation nor any violation of natural laws[3]. Even though Mr. Shashi Tharoor tried for giving the statutory framework to this sector through his private member bill “Sports (Online Gaming and Prevention of Fraud) Bill 2019, but no steps were taken by government regarding such legislation. However, we have a Non-Profit Organization named Electronic Sports Federation of India which was established in pursuant to Subsection (2) of Section 7 of the Companies Act, 2013[4] and Rule 8 of the Companies (Incorporation) Rules, 2014. It is a full member of International Esports Federation (IESF), Global Esports Federation (GEF) and Asian Esports Federation (AESF). The main object of the organization is to promote the e-sports in India and develop the infrastructure with sole in charge for enforcing the rules in cooperation with the State Esports Association[5].

E-Sports Player contract provides clear details about the business relationship, agreement, rights and duties of players and team/organization. It is use for preventing the misinterpretation of communication and agreement between the parties. Basically, it is form of employment contract which involves:

• (i). The details of the player who want to associate with the organization for the remuneration for giving his/her expertise.
• (ii). The organization who wants to avail the services of the player who would represent them in the gaming tournament, online live streaming in a professional manner.

These contracts are mostly identical to those of traditional sportsperson contract. The only difference is that they are regulated by the systematic framework while these are relied on the contracts for engagement in E-Sports.

Laws related to E-Sports:

While there is no specific legislation controlling the e-sports there are other legislations which controls them indirectly.

a). Public Gambling Act, 1867:

The legislation governing the gambling in India is Public Gambling Act, 1867. Gambling is a state subject and individual state legislate on this subject in different manner. The Section 12 of this act, exempts its applicability to games of skill, which include games containing elements of pure skill, as well as, games which are predominantly games of skill along with ancillary elements of chance [6].

b). State Regulations:

Sikkim and Nagaland are the states which provide license specifically for online gaming. The Sikkim Online Gaming (Regulation) Rules, 2009 [7] lists different sports which can be procured from state government after license. Similarly, the Nagaland Prohibition of Gambling and Promotion of Online Games of Skill Act, 2016 [8] contemplates the issuance of online gaming license, but only for games of skill.

In Punjab and Haryana High Court in the case of Shri Varun Gumber v. Union Territory of Chandigarh & Ors., observed that playing fantasy sports games required the same level of skill, judgement and discretion as in horse racing. Similarly, the Bombay High Court in Gurdeep Singh.

Key Clause in E-Sports Player Contract:

As the contract is the sole document which is going to control the commercial relationship between the parties the importance of clear agreement rises. The clauses which should be kept in the right manner are as followed:

1. Definition Clause

The definition clause therefore is a critical element in any legal relationship including this e-sports agreements. Its role is to give accurate meanings to these terms or names that are used all over the document. This is so since by putting it to end such influences, it will enhance the ideal of certainty for each and every party involved since there is no room for any bias towards any party’s intended meanings in future.

2. Player Service Clause

This clause defines the obligations that a player is supposed to deliver at the time of execution of contract. This includes online competitions and leagues in addition to e-sports marketing and production, working in social media including playing a part in developing content for platforms such as YouTube as well as being involved in promotional work. It may also include the overall number of hours a player should spend on such activities to avoid misunderstandings on the player’s workload.

3. Player Obligation Clause

Here are the responsibilities of the player as explained in this clause of duties that the player is supposed to perform. These are for example engaging in tournaments that the team chose, using team products during events and tr training activities that the team of chosen by the team. Moreover, the player may be in an agreement with the team and its sponsors for performing different promotions for the sponsors. This is important to avoid conflict of some sort or exploitation and makes sure that the player sticks to expectations of the team.

4. Player Restrictions Clause

This clause gives the management constraints on the player to minimize instances of crossovers and maintaining order in the teams. Players have the duty of standing for a specific team only and cannot compete in any event without the consent of the team. In addition, players are deprived of the right to state anything that may be in any way an advertisement or promote the competitors or their sponsors. The requirements of the team’s code of conduct must be strictly followed with fines as a penalty for their violation [9].

5. Non-Disparagement Clause

This clause ensures that no players make defamatory comments, and this helps in maintaining high standard of the entire team and its sponsors. Any such comments – oral or in writing – could lead to legal action or sanctions or financial penalties. The presence of this clause also supports the fact of integrity in the selection of a competent team to reduce possible conflicts between players and management.

6. Remuneration and Allowances Clause

The remuneration clause stipulates the amount of money, monetary benefits, which the player is to be paid. This involves details of the current monthly salaries and wages and other related perimeters such as allowances for travel and accommodation and or and performance incentives. It also describes whether the team will cover extra costs like the high-tech equipment needed for gaming.

7. Image Rights Clause

This provision enables a team to portray the image of a certain player which is relevant bearing in mind players are the faces of the teams in e-sports. This also includes their actual name, voice, alias they use for gaming such as their gamer tag and an image of their character within the game. depending on the performer’s popularity, extra payment for the rights to use an image may be discussed.

8. Revenue Sharing Clause

This clause regulates sharing of revenues earned by the team. For merchandise, players are normally paid percentages of their earnings from merchandise, prize money, sponsor, and live telecast. The use of sub-ordinate clauses may be described on how amount of money is split or Arrangement of revenue split where for instance player related revenue like prize money takes a greater proportion while team generated revenue has a lesser portion.

Legal Challenges to E-Sports Player Contract:

1. Age

This is one of the big problems in the e-sports industry, and it’s all about the age of the players. It was ascertained that the basic age for the e-sports players is in their early teenager with average age of 15-17 years. This raises a legal question in India as according to the Indian Contract Act of 1872, minors, those below the age of 18 cannot legally ratify contracts. Therefore, any agree and executory contract that may be entered into by the minor is legally invalid. This disadvantage practically turns into an insurmountable obstacle for professional platforms interested in expanding young players’ legal and professional status [11].

2. Legal and No Governing Law

As it stands, the Indian gaming industry currently exists with no clear regulation of e-sports. The lack of such legislations governing the e-sports acts as a key reason the contracts that surround e-sports are difficult to implement thus making it a legal issue. Unable to state clearly recognized laws regarding legal issues make it hard to resolve issues such as contractual violations, player tenets, and ethical issues. This is attributed to the fact that the gaming industry is relatively young and is regularly met with considerable legal ambiguity and prospects of disasters which underlines the need to address the problems that surround this industry.

3. Terms of Employment

The last difficulty is related to the identification of the type of legal relations between the players and organizations. If players are recognized as employees, it is usually exposed to Indian employment laws such as Wages, fund, and leave related laws. That is why most of the organizations do not like to hire players as employees but rather they like to hire them as freelancers. But this practice brings writing doubts over exploitation and unfavourable treatment since there is no explicit legislation regarding e-sports in India. The absence of a clear and well-defined law makes it even worse, and organizations remain ill-informed while players remain exposed and unprotected [12].

Conclusion

The legal framework governing the e-sports is both dynamic and evolving. Even after the scope of huge growth in this sector, its lacs specific legislation which poses challenges in enforceability, age, employment etc. The E-Sports Player Contract serves as the only tool in maintaining the integrity of this sector with upholding the rights of players. However, the absence of governing laws can expose exploitation of players along with leaving the organizations vulnerable to legal issues. Fo this India, need a robust system for fair, competitive and inclusive e-sports ecosystem.

Author: Pratiksh Sharma, in case of any queries please contact/write back to us at support@ipandlegalfilings.com or IP & Legal Filing

References:

1. Pranbihanga Borpuzari, A Rs. 11 billion Opportunity, India Needs to create support structure for E-Sports: Upmanyu Mishra, The Economic Times, 21 July 2022.
2. Ashish Pherwani, The Dawn of E-Sports in India, Ernest & Young (EY), 21 July 2022, https://www.ey.com/en_in/media-entertainment/the-dawn-of-esports-in-india.
3. iPleaders, Esports Player Contract: Key Clauses and Legal Issues to Look For, available at https://blog.ipleaders.in/esports-player-contract/ (last visited Jan. 12, 2025).
4. The Companies Act, No. 18 of 2013, India Code (2013), available at https://www.indiacode.nic.in.
5. iPleaders, Draft E-Sports Player Contract: Legal Issues to Look For, available at https://blog.ipleaders.in/draft-esports-player-contract-legal-issues-look/ (last visited Jan. 12, 2025).
6. The Public Gambling Act, No. 3 of 1867, India Code (1867), available at https://www.indiacode.nic.in.
7. Sikkim Online Gaming (Regulation) Rules, 2009, India Code (2009)
8. Nagaland Prohibition of Gambling and Promotion of Online Games of Skill Act, No. 3 of 2016, India Code (2016).
9. Kılınç Law & Consulting, E-Sports Contracts, available at https://kilinclaw.com.tr/en/esports-contracts/ (last visited Jan. 12, 2025).
10. IPRMENTLAW, Minors’ Contracts in Sports: Need for Reform in India, available at https://iprmentlaw.com/2019/12/07/minors-contracts-in-sports-need-for-reform-in-india/ (last visited Jan. 12, 2025).
11. Ministry of Labour & Employment, Government of India, Labour Laws in India, available at https://labour.gov.in (last visited Jan. 12, 2025).
12. The Indian Contract Act, No. 9 of 1872, India Code (1872)