Amid the storm of a pandemic that has kept people indoors and cancelled traditional sporting events worldwide, video gaming has stepped in to help meet our enduring desire for entertainment and competition – as evidenced by burgeoning global interest in gaming and esports over the last year or so. To the casual observer or traditional sports fan, however, the decentralized landscape of the esports industry might evoke certain comparisons to the 19th century frontier expansion of the United States – the “Wild West.”

The diversity of games available and the various entities organizing esports tournaments can make it challenging to attract the attention of new viewers. As the esports industry continues to mature, could “law and order” be the catalyst it needs to catch up to traditional sports? The explosion in the popularity of mixed martial arts after athletic commissions around the world adopted a more unified set of rules for the sport suggests that the answer may be yes.

Enter Nevada as the United States’ first self-appointed sheriff. Since March 2, 2021, Nevada’s legislature has been considering Senate Bill 165, which would establish the country’s first dedicated esports regulator, the Nevada Esports Commission – a regulatory body within Nevada’s Department of Business and Industry that would have broad oversight of esports contests. While the Bill has some way to go before becoming law, it is a sign of things to come as governments, businesses and individuals seek to cash in on esports as entertainment, industry and culture.

Key features

Based on the current draft bill, the Commission’s key features would be as follows:

Composition

1. Nevada’s Governor would appoint the three members who would comprise the Commission, designating one of them as Chair to coordinate its activities. Each member would serve a four-year term. Each Chair would serve two years in that capacity.

2. The Commission must be made up of one member who has “expertise in Esports,”[1]  one member who has “expertise in information technology, specifically as it relates to hardware and software in Esports,” and one member who has “training or experience in law enforcement, specifically as it relates to cheating in Esports through cybercrime, hacking or fraud.”

3. Commission members must not promote, sponsor or have any financial interest in the promotion or sponsorship of “Esports.” Commission members also must not hold elective office in the Nevada government or legislature. Similarly, Commission members must not be an officer or official of any political party.

Participation

4. Hosts [2]  must register with the Commission and supply any information it requires before staging “Esports” with a purse[3]  of over US$1,000. Participants[4]  must do likewise before engaging in “Esports” with such a purse. Participants must also read and agree to be bound by applicable tournament rules.

Powers

5. The Commission may adopt regulations as necessary for the purpose of the Bill. Those regulations must provide for the oversight of “Esports” venues, hosts and participants (for example, anti-doping measures, measures against match-fixing, and measures to avoid participant exploitation), establish enforcement procedures and maintain integrity.

Any person who violates the provisions of the Bill or regulations adopted pursuant to it will be guilty of a misdemeanor, which carries a six-month prison sentence, US$1,000 fine or both.

Digital and analogue

At present, the Commission’s closest domestic analogue would be the US eSports Federation, a not-for-profit, private organization. Government-mandated esports organizations, such as the Korea e-Sports Association and the Thailand E-Sports Federation, exist but only abroad.

However, the Commission’s real inspiration may derive from a more traditional source – the 80-year-old Nevada Athletic Commission. In February 2021, Nevada State Senator Ben Kieckhefer, who introduced the Bill to the Nevada legislature, told the Las Vegas Review-Journal that the Nevada Athletic Commission’s “success stories” with mixed martial arts demonstrated the value of “a friendly regulatory agency … to help them succeed and provide them greater stability and security.” The outlet added that “[a] similar blueprint for esports could ensure “clean and fair” competitions and, in turn, bolster viewership and revenue opportunities for the state’s licensing groups.”

Certainly, while the Bill’s Preamble refers to esports as a “rapidly emerging business and a new form of entertainment and competition”, it also mentions things that have been around for much longer. They include Nevada’s status as “the entertainment capital of the world” and its “expertise in gaming and other forms of entertainment.” The Bill thus represents an alignment of interests new and old. As the Bill itself states, “[t]here is a natural fit between Nevada and Esports that can promote both the growth of the Esports industry and tourism in Nevada.”

Wider implications

As mentioned above, the Bill has some way to go before becoming law. Moreover, if the legal history of the Nevada Athletic Commission is anything to go by, further bills, subsidiary legislation and legal proceedings will follow that develop Nevada and the wider United States’ regulatory framework in response to the changing esports landscape. At present, it is unclear how the Commission would address match-fixing, substance abuse or a cyber-attack during an event, among other issues. In this sense, the Bill would achieve little in the short term to adjust the perception of some of the esports industry as a Wild West frontier or to make it easier for video game publishers, existing esports leagues, tournament organizers or potential hosts and participants to plan for the future.

Regardless of whether Nevada’s Commission, or like-minded bodies, come into existence in the near future, industry stakeholders should remain prepared to quickly adapt to ever-changing regulatory schemes throughout the world as they develop new products and features and explore new collaborations and revenue streams.

Authored by Jonathan Hew and John Fraczek

[1] The Bill defines “Esports” as “a contest of multiple players using video games.” For the purpose of this post, we use “Esports” to refer to this specific definition of the concept only. We use “esports” to refer to the idea of esports at-large.

[2] Defined as “any person who produces or stages Esports.”

[3] Defined as “a financial guarantee or any other remuneration for which participants engage in Esports.”

[4] Defined as “any person who engages in Esports for remuneration.”