Do Not Let Your Dream Cloud Your Judgement, Esports Players Be Aware of Contractual Traps

This article was first published on enanyang.my which can be accessed here on 8 January 2024

Translated by Tee Jae Ei

In an era where almost all young people play games, the gaming industry is thriving around the world, and becoming a professional esports player has become a dream profession for many teenagers. When the opportunity to achieve your dreams appears right in front of you, what should you be mindful of before signing your name on the contract? This week, we have a lawyer, named Mr Richard Wee, who specialises in Sports and ESports-related legal matters to share some tips on this topic!

With the booming growth of the gaming industry, there are more local talents that now have the opportunity to showcase their talents and skills in the field of Esports, and are discovered and invited to join both the domestic and international professional Esports team. 

Mr Richard Wee, the founder of Richard Wee Chambers, cautions against the excitement of becoming a professional Esports player to cloud our judgement. Before signing any contracts, it is advisable to do a background check on the team that we wish to join and also, review the terms set in the contract. 

He pointed out that contracts are often the source of disputes, and many issues stem from unfair contract terms. However, given that most Esports players are relatively young (with a trend of Esports players getting younger in age) and eager to become professional Esports players, they often hastily sign contracts without fully understanding the contractual terms, thus neglecting their rights and obligations under the contract.

Later, when players attempt to terminate the contract or do something beyond the scope of the contract, then they may encounter some problems. 

“If you want to join a team, you must understand how to leave the team, that is, how to terminate the contract, and whether you have the right to terminate the contract”

Pay attention to problematic clauses

Here are some things to keep in mind when reviewing terms of contract: 

Term: The Esports industry, much like football, has seasons of matches. If the period of contract is too long, it can lead to players being trapped in the team, unable to freely transfer or seek other better development opportunities.

Termination terms: Some contracts have set high liquidated damages terms or other restrictive terms, making it difficult for players to pay the termination costs or fulfil the tedious termination conditions even if they wish to leave the team.

Salary, benefits, and profit/bonus sharing: For example, how will the profit be shared when an esports player is invited by an advertiser to endorse a product? For example, how will the income from game streaming be shared between Esports players and the organisers?

Other restrictive terms: For example, requiring players to participate in commercial activities, specifying duration of live streaming, the use of image rights, and regulations on in-game playing strategies etc. These will restrict the player’s personal freedom and development to a certain extent. Therefore, you should understand these contractual terms before signing the contract.

When you encounter disputes, consult with a lawyer first 

Besides the popular and high-income Esports players, there are numerous participants in the Esports industry and not everyone enjoys the same high earnings as the famous Esports players. If the competition organiser or team fails to pay wages or bonuses, it will have an adverse impact on various individuals, such as the players, commentators, live streamers, cosplayers, and referees.

In situations where there are still many grey areas in terms of regulations and supervision, how can disputes be resolved? Mr Richard Wee said that there are different solutions for different situations, and it is difficult to generalise it. Generally, he suggests that:

1. The parties should first consult a lawyer for advice to make sure that they have a valid claim.

“We tell everyone that they need to see a lawyer first. Everyone says, ‘Of course you say that, you want to make money’. But when they really get into trouble and come to us, they have to pay more money”

2. After verifying that the problem does exist, the lawyer may recommend sending a lawyer’s letter. Sometimes just the act of sending the lawyer’s letter is enough to deter the other party and resolve the problem.

3. If the situation is serious and the other party remains indifferent to the lawyer’s letter (or is unable to pay compensation), then the involved parties may need to decide whether to proceed with legal action or drop the matter. After all, going to court involves significant expenses, which may not necessarily be affordable for everyone. 

In the past few years, Mr Richard Wee and his team have been providing free legal advice and assistance, such as drafting letters of demand etc, to help and assist individuals in the Esports community with lower incomes who have encountered legal problems. Additionally, the Bar Council in each state’s branches, also provides free legal aid to persons with incomes below two-thousand ringgit (RM2,000.00). He also suggests that the victims should form a group to pool their collective strength to defend their rights or hire a lawyer.

If the parties chose to resolve the disputes through legal proceedings, the judge will handle the case based on the nature of the dispute. For example, a player who gets injured due to negligence during a competition can file a lawsuit against the organiser under tort law; if both parties sign a contract but one of the parties failed to fulfil their contractual obligations, lawsuit can be filed under contract law; if a shareholder of an Esports company failed to comply with the terms under the investment agreement, and damaged the company’s interests, this will be corporate disputes and at the same time, may also involve breach of contract.

Disputes often involves contract and competitions

In Mr Richard Wee and his team’s experience, most disputes are related to contracts and competitions (from the equipment regulations, how referees interpret the rules, to contracts and more).

For instance, during the 2018 Southeast Asia Cup of “Mobile Legends: Bang Bang” in Indonesia, the Malaysian team AirAsia Saiyan found themselves in a tie with their opponent in one of the games, and both sides thought they had won the competition. Later, it was revealed that the organiser had signed different contracts with different teams, and it caused AirAsia Saiyan to withdraw from the competition in anger.

Of course, these are all old stories. Mr Richard Wee said that since then, Esports competitions have developed to be more professional and sophisticated in terms of the way that they organise competitions.

He also reminds readers not to jump to conclusions, and not to assume that in cases of dispute, the organisers or professional teams are always at fault. Sometimes it can be quite the opposite, wherein the players or other participants are actually the ones in the wrong.

Malaysia still does not have specific regulations specifically for Esports

Mr Richard Wee pointed out that Malaysia currently does not have any specific laws or regulations for Esports. The only official document that is related to Esports is the National Esports Development Guidelines (“NESDEG”) released earlier by the Youth and Sports Minister Yeo Bee Yin. Additionally, former Youth and Sports Minister, Syed Saddiq, had also drafted the National Esports Blueprint in 2019, however, these are all mere guidelines.

Despite this, Esports is still considered as a sport and thus, is subject to relevant laws such as the Sports Development Act. However, these laws mainly cover aspects related to sports organisations, events, and facilities.

In terms of regulatory bodies, traditional sports such as football and badminton have multiple unified and multi-level regulatory bodies. For instance, badminton is governed by the Badminton Association of Malaysia (“BAM”), the Badminton Asia Confederation (“BAC”), and the Badminton World Federation (“BWF”). They are responsible for setting rules, organising competitions, and overseeing players.

Regulatory bodies are yet to be established

The Esports industry does not have a unified regulatory body (although there are multiple international organisations that claim to have such status). The games that can be listed as Esports events are Dota 2, Mobile Legends: Bang Bang, League of Legends, and Arena of Valor and more. They are all launched and controlled by different companies (ie the game publishers) with ownership over intellectual property, competitions, game broadcasting rights, and so on. In other words, the companies have absolute decision-making power.

Although Malaysia has the Malaysian Esports Federation (“MESF”), MESF does not have the power to regulate the games or the players directly. All event organisers must comply with the rules set by the game publishers. MESF’s role primarily involves reviewing the background of the organiser and ensuring the competitions complies with the law, which includes preventing situations where the winners do not receive the prize.

In terms of game rules, the game rules of each Esports game (such as winning conditions, number of participants, match time, and reward and punishment mechanisms) are set by the game publisher. Even the same Esports game can have different rules in different competitions.

“Human rights lawyer” Mr Richard Wee, from Sports to Esports

At different stages of his career, Mr Richard Wee has had different professional “personas”. He started practising law in 1998, and was active in the litigation front in the early years of his career. From 2005 to 2012, he handled many human rights-related cases, earning him the label of a “human rights lawyer”. After 2012, he began to dabble in sports and Esports-related legal affairs, which laid the foundation for his current new professional persona: sports and esports lawyer.

Mr Richard Wee said that entering the field of sports was purely by chance. Due to his passion for sports and frequent viewing of various sports events, he is quite familiar with the rules. Therefore, when clients engaged him to handle sports related legal matters, it was relatively easy for him. He has helped companies in drafting their contractual agreements and has also participated in the renaming of Axiata Arena (formerly known as Stadium Tertutup) etc.

Knowing Esports through playing games

In 2015, Mr Richard Wee noticed the existence of Esports while reading international news. Like most people, he did not understand what Esports was at the beginning, but his curiosity drove him into further research and exploration on Esports. In order to have a better understanding of the complex operating mechanisms of this field and rules of the virtual world, he personally downloaded and played the games that are often listed as Esports events, such as Dota 2, Mobile Legends: Bang Bang, and others.

He spent two years building a team and became one of the earliest lawyers in Malaysia to provide legal services related to Esports, which includes drafting corporate contracts and players’ transactions.

At the same time, he had participated in the drafting of the 2019 National Esports Blueprint, and was also appointed to be part of the expert advisory group by the Youth and Sports Ministry in 2020.

[Malaysia’s Gaming/ Esports Data]
  • According to the Malaysian Digital Economy Corporation (“MDEC”), Esports is growing rapidly in Malaysia. As of the end of last year, Malaysia’s total population has exceeded 32 million, and the number of registered gamers has reached a staggering number of 14 million!
  • Malaysia ranks 21st in the global game revenue chart with a total revenue of US$633 million (approximately RM2.96 billion).
  • The Malaysian Investment Development Authority (“MIDA”) stated that the video game industry had contributed RM1 billion to Malaysia’s revenue in 2018. MIDA predicts that the contribution figure will expand at a compound annual growth rate of 10.9% between 2018 and 2023, and the market is expected to reach US$168 million (approximately RM78.6 million) by the end of 2023.

Published on 24 January 2024

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