Sports Vs eSports, According To A Lawyer

Sports Vs. eSports, According To A Lawyer

"You can do lots of things with a law degree," the saying goes -- although lately law students are more famous for searching in vain for jobs and accumulating crippling debt than saving the world. Somewhere in between these extremes is Bryce Blum, who may be planet Earth's most dedicated eSports attorney.

Worldwide, eSports are massively popular -- by some metrics, more popular than conventional sports -- but they're just now beginning to capitalise on their enormous audiences, which cut across geographic, class, and cultural distinctions. This has raised a number of interesting legal questions, chiefly: who gets the money, and how can we attract even more of it?

eSports have changed what it means to be a sport, gaining widespread coverage on websites like Twitch and Azubu, as well as conventional networks like ESPN2. They have also changed the face of the gaming industry, which now favours games that attract spectators over the older models that did well on sales. With spectators come speculators, and sites like Unikrn, which takes bets on eSports matches, further drive eSports towards mainstream acceptance. Advertisers from large companies are not far behind.

I met with Bryce over Skype to discuss his work at Unikrn, representing eSports stars, Adderall as a PED, energy-bar endorsement deals, and a different kind of gaming lifestyle:

So, uh, what exactly do you do?

I do eSports law. I'm a founding partner at IME Law, which represents individuals and organisations in eSports, and I work at Unikrn, a tech startup that offers betting on eSports. At IME, I represent teams, players, tournament organisers, and various other parties involved with the industry. For the players, I act kind of as their agent. I typically offer edits to their endorsement deals and contracts. I rep clients in every major title except for StarCraft II, including SMITE, HotS, fighting games, League of Legends, Dota 2, CS:Go, and Call of Duty. Organisational work tends to be more expansive.

I'm going to ask you a question whose answer isn't immediately apparent from looking at the website. What does Unikrn do?

In a broad sense, we are an eSports company. We aren't strictly a "betting company" -- in the same sense that Apple wouldn't call itself a company that makes computer hardware. The core of Unikrn's business is increasing the viewership around eSports and enhancing their engagement with eSports. There are a lot of long-term plans associated with that, encompassing both betting and non-betting offerings.

For now, though, our main business is offering betting on eSports in the same way sportsbooks do for sports. We offer fixed-odds betting on matches, as well as fixed odds on the outcome of tournaments, for League of Legends, CS: GO, and Dota 2. We're looking to offer all the kinds of bets a typical sportsbook would offer, but it's a slowly evolving process. We're mainly looking to expand in three ways: more eSports to bet on, more types of bets on these eSports, more markets where we can offer these bets.

So pretty much the same as a typical sportsbook?

Yep.

What do you do at Unikrn?

My titles at Unikrn are "Director of eSports" and "In-House Counsel." The majority of work I do is non-legal. I'm involved with business development and strategy. I'm also working to unite the industry behind certain standards. eSports as a booming industry is relatively new. We still need the back-end infrastructure.

For example, I'm spearheading the competitive-integrity initiative. As betting grows within the eSports ecosystem, it's important to be able to say that the results of the matches are legitimate. All of Unikrn's transactions are done with Tabcorp, one of the largest wagering companies in the world. They have algorithms that red-flag unusual betting activity. But the industry also has to safeguard its results against DDoSing, scripts that slow down players' computers, PED's …

PED's?

Well, there's not a lot of research into it, but anecdotally, there are plenty of people who think Adderall improves your reaction times.

How'd you get into eSports law?

I'm a gamer. When I started playing LoL, around 2010 or 2011, I became aware of the industry. It would have been hard to look at the people who made up the industry, especially the players, and not say, "These guys needs lawyers." There were cheating scandals, incidences of players not getting paid, everything.

When I graduated from law school, I wrote the first of a white-paper series, forecasting the legal future of eSports. It took a look at the legal trajectory of baseball, basketball, and football to explain what might happen to eSports. We put it up on Reddit and it blew up. I never looked back.

About how much betting business are you guys doing right now?

I can't tell you the exact numbers, but when we launched the beta, in the U.K. and Australia, we hit our target numbers incredibly quickly and just closed our Series A.

Can you win money from betting on eSports?

You can. We've had bettors who have done quite well.

What's the legality of the entire venture?

Sports betting isn't legal in the U.S., so the current product isn't available in the U.S. That being said, sports betting is legal in countries throughout the world. Our plan is to expand to those markets. We're also far into development on a non-betting product, which will be legal everywhere.

Doesn't Pinnacle already offer eSports betting?

Pinnacle does offer eSports betting, and so do a few other companies. We differ from them in two key ways. We're an eSports company; they're a massive conglomerate. We want to be deeply entrenched and be involved in things people in eSports like. There are so many fun things to do when you can really get to your audience.

On the other hand, you can look at the smaller eSports companies, many of which do get eSports, but don't have the same liquidity or licensing. We want to offer the best of both worlds.

Sports are a cultural norm -- a lot of people just watch them because everyone else is doing it. Are eSports moving in that direction?

eSports are still growing. League of Legends world championship tickets went up yesterday, and sold out in around 50 seconds. This is standard fare for a Seahawks playoff game, but people are surprised to learn it happens in LoL, CS, Dota, and other games, too. My favourite stat is that, in 2014, more people watched the LoL final than watched the NBA Finals. People spend more time on Twitch than Hulu or Netflix. There are so many more statistics that show just how much engagement there is with eSports.

League of Legends is still the most popular game, but CS: GO is growing, and there are several other incredibly popular titles.

Of course, this isn't exactly new. StarCraft used to be big in Korea, and there was Magic: the Gathering on ESPN, and CounterStrike on MTV. The viewership has always been high, but now, monetisation is finally catching up, which makes the viewership more stable, promoting more monetisation and more "established" interest. ESPN: the Magazine had an entire issue on eSports, and there were several pieces in the New York Times Magazine, as well as the VICE documentary on eSports.

There are all sorts of other indicators mainstream culture has been lagging but is now catching up. Sponsorship numbers are continuing to grow. More and more people are starting to realise that eSports can reach a key advertising demographic: relatively affluent males, ages 18 to 35. That's the holy grail for advertisers. And we all like video games already.

Wouldn't the growth of eSports be better served by catering to a broader market than just young rich dudes? I'm a Magic: the Gathering junkie, and the demographics of competitive Magic players -- 18-to-35-year-old men, pretty much exclusively -- hugely limit growth.

eSports are already catering to a broader demographic than Magic. First of all, you need to understand the worldwide audience for games. Thanks to the proliferation of smartphones and other platforms, more people are playing games than ever before. I'm not just talking about Candy Crush, but, shall we say, more nerdy games, like Clash of Clans -- even my girlfriend has a clan, and she's not your stereotypical gamer. The number of players will only go up as time goes on.

When you say we're targeting gamers, reconceive your notion of what makes a gamer. My seven-year-old cousin is a gamer. She's the target audience. Our generation is the target audience. We grew up playing video games alongside sports. Now, everyone plays video games. It's bigger than the guy that plays five hours of LoL or who goes to the card shop to play MTG every Tuesday. Sixty years from now, everyone will have grown up with video games.

How are eSports different from sports in terms of capitalisation?

The monetisation avenues for sports and eSports are different. Professional sports are franchise-based: there are a finite number of teams, who create a draft-based system, through college or minor leagues, where they can harvest new talent. They make money from stadiums, tickets, concessions, and TV rights.

eSports are different in some key ways. There are tickets and concessions, but the teams don't profit directly off them, the tournament organisers do. As for TV, we're still kind of figuring that out. It's entirely plausible Riot or ESL or some other major tournament organiser will enter into an exclusive deal with Twitch or Azubu, but the teams are unlikely to see that money. On the other hand, the teams have far less overhead than traditional sports teams. Economically, they can catch up in a bunch of different ways -- advertising, mainly. It's drastically more expensive to sponsor the Mariners than it is to sponsor a top LoL team, with comparable reach. To advertisers, eSports offer access to an unbelievably broad audience for relatively cheap.

What do eSports stars endorse?

There are two tiers of products: endemics and non-endemics. Endemics are everything from software to keyboards, mice, CPUs, energy drinks, and energy bars. But, though there's so much directly relevant stuff, it's the tip of the iceberg. A brand like McDonald's or Gatorade wants to reach anyone. eSports organisations are sponsored by Nissan, GEICO, and Coke. The smart brands will follow suit.

What would you say to people who worry eSports aren't sustainable because the games won't be around forever?

What I do know is that the growth of eSports is bigger than the individual games. One game could lose popularity and the industry's popularity would continue to skyrocket.

What I don't know is how long an individual eSport will last. Can a game live for 15 years? Traditionally, no game does, at least not at the highest level of popularity. eSports create the potential for heightened longevity, but because this ecosystem is evolving as we speak, we don't know how exactly long this will last.

What's the social aspect of your job like? Any similarities to Jerry Maguire, Scott Boras, Don King, Ace Rothstein, et al.?

It depends on which job. When I'm Bryce the lawyer at IME Law, I go to L.A. or San Francisco every month and try to make my way to parties at gaming houses or the after-parties at gaming conventions. I consider many of my clients friends. When I'm at Unikrn, I have a great time, too -- we break to play video games; the atmosphere is very collegial. But it's more like a typical tech startup.

Are there other eSports legal teams?

There are other attorneys who dub themselves eSports attorneys. They do some eSports work, I'm sure. How much, it's hard for me to say.

I'm pretty sure I'm the only person who maintains a book of business that's fully self-sustaining and devoted to eSports. Mine is an eSports-focused business: I've done hundreds of endorsement deals, and fifty-plus contracts for teams.

What's been changing lately for the industry and you?

I'm able to focus on what I really want to focus on. At my old job, there were still all the ancillary things about being at a big firm. Now I can help develop the industry. I'm no longer split-focused, which is really nice.

The industry changes all the time. More non-endemic sponsors are coming to the scene. There have been major investments in big eSports companies. MTG, a European TV company, bought a majority stake in ESL. Riot put $US30 million into Curse. Vulcun and AlphaDraft are the FanDuel and DraftKings for eSports, and they got $US5 million and $US12 million, respectively. Unikrn closed Series A with some pretty incredible investors, including Mark Cuban, and Binary Capital, which has extensive experience building major consumer brands like Snapchat, Twitter and Instagram.

Are there Fantasy eSports?

Yes. You can go bet, right here in America. They fall under the Fantasy Sports Exemption.

What is the growth of eSports doing to the rest of the games market?

Games without a secondary market are less and less popular. Companies don't put the same kind of effort into developing them that they used to. They're still out there and they still have big followings, but the buzz around the gaming industry is definitely eSports.

eSports are biggest in China and Korea. Any thoughts about relocating there?

None whatsoever. eSports are massive there, but people underestimate how big they are here and everywhere else.

CML has written for Gawker among other major websites and maintains a Twitter at @CMLisawesome.

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Comments

    Who is the idiot interviewing? Who says that eSports are only catering to young rich dudes? That's a strawman and a half. No one is saying that- no one of any importance is saying that. No one with any real power in the gaming industry is saying that. Stop saying that, Kotaku!

    However, games DO have a certain demographic. There is no denying that. So do books, and films, and TV shows. You would have to be severely naive to think that the Twilight books did not have a mainly female demographic. You would have to be a fool to think that the reason the Twilight books sold so well was not because of its female demographic. So why did the Twilight 'cater' to the female demographic? BECAUSE THEY BOUGHT IT!

      'More and more people are starting to realise that eSports can reach a key advertising demographic: relatively affluent males, ages 18 to 35. That’s the holy grail for advertisers. And we all like video games already.'

      The interviewee was the one that said it first, maybe try some basic comprehension before calling people idiots.

    I think early on esports would jump games as they fell out of favor, but look at lol, Dota 2 although still newish, Starcraft and CS:GO... I think its coming full circle by that I mean back in the early days we got insane support for a game over many years... then games like cod started showing up, which get replaced every year.

    I wouldn't be surprised to see games like dota 2/lol , starcraft, counter strike to remain popular in esports for decades to come, counter strike as a formula is already ancient and nothing comes close to it, it might see changes like a new engine or a new tittle every so often over that period but I fully expect them to remain popular.

    As I get older I might not get into new competitive games but if counter strike and starcraft are still being play competitively and remain largely the same in their inevitable new iterations I will be watching it even at 40! And I think they will cater to the younger and older demographic, just like real sports that have their young fans and old fans. The fact that Esports is so new is the reason behind its young demographic currently... imo. I personal get just as pumped for a cs final as a NRL final... Go the broncos.

    Last edited 02/09/15 9:48 am

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