The New Esports Regulations On Team Ownership Are Unpopular But Badly Needed

Written By Joss Wood on March 20, 2017

[toc]New regulations issued by the World Esports Association this month have not met with immediate enthusiasm.

The most controversial change is to insist that a single entity may not own multiple teams. WESA states:

“Under the Multi-Team Ownership Prohibition, no team is permitted to be completely or partially owned or controlled by a person or entity that owns or controls another esports team or organization participating at WESA sanctioned events.”

For those teams that are affected by the change, WESA says that its Executive Board may grant a period of up to 18 months for them to comply with the new rule.

Ken Hershman, executive chairman and commissioner of WESA explained:

“At WESA, we are committed to creating industry-wide standards in esports that benefit member teams, their players and the esports industry at large. These new standards and regulations will further our goal of better professionalizing esports and ensure that all of our organizations are operating on the same level playing field.”

Popular esports host and commentator Paul Chaloner tweeted the objection that many others have voiced:

RFRESH Entertainment does not see a conflict of interest

On the same day that WESA announced its new rules, RFRSH Entertainment put out its own statement referring to the issue.

RFRSH has an ownership stake in three CS:GO teams that would be affected by the ruling: Astralis, Heroic, and Godsent.

RFRSH explained that its business model was based on “establishing, developing and facilitating a number of professional CS:GO teams in selected markets.”

During this support and development phase, RFRSH says that it may, with the agreement of the teams, take part-ownership.

RFRSH points out that under its model, the players have minority ownership stakes that give them a benefit from the “financial success and/or a sale of the team.”

RFRSH sees its period of investment as a three-year program, after which its aim is to exit. Under these circumstances, it argues that this model does not create a conflict of interest that should be a concern to WESA.

“We do not see a conflict in multiple team ownership under this model, as each team is and will be its own entity, however, when the teams and brands are fully established, RFRSH will no (longer) have a controlling share or ownership of the teams, brands or orgs.”

FaZe left WESA concerned about lack of transparency

WESA is an effort by ESL and a number of top esports teams, including:

  • Fnatic
  • Natus Vincere
  • EnVyUs
  • Virtus.Pro
  • G2 Esports
  • FaZe
  • mousesports
  • Ninjas in Pyjamas.

FaZe has since left, explaining that it was concerned at the lack of transparency in how WESA was going to achieve its aims:

“It doesn’t lack big metaphors of what it could be, but it lacks transparency on how to get there and that is the main reason for why we are leaving WESA.”

WESA has a big vision

WESA published its vision statement when it launched:

“WESA’s vision is to create an authentic framework to support and amplify sustainable growth of esports, based on the shared values of fairness, transparency, and integrity and sharing that growth between the players, teams and leagues.”

At the time, Esports Betting Report made the comment that “big boy’s games need big boy’s rules.” The lack of a global governing body was a restricting force in the development of esports.

Nevertheless, global governing bodies are not easy to set up. In replying to the departure of FaZe, ESL commented:

“Creating an association such as WESA from the ground up is an immense undertaking for all involved parties and something that requires enormous commitment of time and effort. While we regret the fact that FaZe has decided to take this step and are disappointed to see them go, we understand and accept their decision to put their current focus elsewhere.”

Implementing the vision is going to be tough. ESL has been criticized for wanting to direct the organization in ways that maximize its commercial benefit.

ESL is sensitive to the criticism. But ESL needs to bring other major industry players on board. Otherwise, it is making the job of establishing WESA harder than it should be.

There is a need for integrity rules even if they are unpopular

The recent controversy over Allen Cook, an analyst with the Ad Finem Dota 2 team, highlights the esports industry’s need for global standards.

Cook placed bets on his own team in the month before it competed in a tournament, and won the bets. An immediate furor broke out when the news became public.

Cook responded saying that “these bets were placed in good faith with no ‘inside information.’”

One commentator, extremely unhappy with the situation, wrote:

“If this is allowed to happen without consequence, you kick the door open for teams and representatives to throw games on purpose in order to make a quick buck off their own “failure.” It’s happened before in every single sport you’ve ever known, which is why there are rules against anyone involved with a team being allowed to place bets.”

Esports operates in a highly charged environment. There is a need for high standards that publicly demonstrate the commitment to integrity.

If esports allows multiple-team ownership, then at some point, it will become an issue. Owners with multiple teams will see them face off in the final of a big money tournament. Whatever the result, suspicion will arise.

The new team ownership rule is painful but necessary

WESA’s new rule may not work for RFRSH, and others whose business model relies on multiple-team ownership. But it is necessary for public confidence in esports and esports betting.

The UK Gambling Commission (UKGC) position paper on esports that came out a few days ago made the regulatory view clear:

“Maintaining public confidence in the integrity of esports as an entertainment and betting event relies upon those seeking to benefit commercially from it, applying the best practice available from other sports.”

And in most professional sports there are restrictions on team ownership.

Richard Lewis, host of Turner Broadcasting’s ELEAGUE, lacks some confidence in WESA’s ability to make a real difference. However, in an interview with Dexerto, expressed his support for the WESA action:

“I’d personally like to commend WESA on taking a stance against multiple team ownership in esports, which I see as one of the biggest threats to competitive integrity in 2017 and possibly beyond.

We’ve seen time and time again entities try and control esports by simply buying up multiple desirable properties and owning multiple teams is as clear a conflict of interest as you’re going to get. It raises too many questions about crucial issues such as player transfers, fiscal propriety and, of course, the results themselves.”

The UKGC also included in its report the regret that there was no governing body for esports.

All stakeholders in this industry seem to agree that a governing body and standard integrity rules are necessary. The problems arise when the governing body attempts to govern.

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Joss Wood

Joss Wood holds an English degree from the University of Birmingham and also earned a master’s degree in organizational development from the University of Manchester. Joss has a special focus on the international online gambling market, though he also writes extensively on US regulated markets, sports betting, and esports betting.

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