BECKY’S AFFILIATED: HOW TO REMAIN LEGALLY COMPLIANT WHILE BUILDING A US-FACING ESPORTS BUSINESS WITH JEFF IFRAH

Jeff Ifrah of Ifrah PLLC is one of the leading authorities on gambling and gaming law in the United States. With eSports serving as such a hot topic in the gambling industry today, it should come as no surprise Ifrah is up to speed on the laws and opportunities surrounding this space for gaming companies.

After forming a partnership with the upcoming eSports Conference in LA, I noticed Ifrah is co-hosting a pre-conference workshopfocusing on legal frameworks and how to do business in eSports while remaining legally compliant.  I have always found Ifrah to be excellent speaker and wanted to get a preview of his thoughts on legal compliance, skin gambling and opportunities in eSports.

Skin gambling shut-down & Impact

As I discussed with Victor Martyn last week, Valve has taken action on skin gambling sites by denying them access to the Steam marketplace. Plenty of eSports professionals were concerned about the popularity of skin gambling and the negative attention it could draw from regulators and other officials.  When Valve finally issued a statement on their position towards skin gambling, I think its safe to say the risk of an industry-wide crack down significantly decreased.

“I think [skin gambling] could have drawn in regulators and it could have gotten the government involved.  It took Valve a little bit of time to actually react to it, but I think that’s OK.  I think that at this point Valve’s cease and desist letters to the 25 or so skin betting sites are going to have the intended consequence of shutting them down and I think as a result there really isn’t going to be anything for regulators or the government to do which is good”, Ifrah said.

He added, “There’s been a call for government regulation in the market, but I think that government regulation when it comes to gaming tends to be bad, so I think that its good that its shut down and now we can go back to focusing on free-to-play sites in the US without any government involvement at this point”.

Lessons learned from iGaming disasters

There are plenty of lessons the eSports industry can learn from the online gambling industry’s turbulent history in America.  Take UIGEA’s passage and Black Friday for example, also the recent developments in DFS, especially after the insider trading scandal with Draft Kings was revealed.  Understanding what happened in these cases can be of great value to US-facing eSports companies and Ifrah is an expert in all of the above.

When asked what eSports companies must do to avoid similar situations, Ifrah replied, “They have to react like Valve did. If an operator is going to have terms of service that say, ‘real money gambling is prohibited’, then they better enforce that. I’d like to see a little quicker reaction, I think everyone in the industry would have liked that”.

Legal gaming opportunities for eSports in America

At the present moment, legal gaming opportunities for eSports in America are rather limited.  Online betting on the outcome of the matches is an obvious no-no, but land-based casinos located in states where sportsbetting is legal, such as Nevada, are beginning to offer odds on eSports matches.

Ifrah outlined what other opportunities are currently available for gaming operators wishing to enter the industry.

“There are a few smaller eSports fantasy sites that do involve real money, so those would potentially fall under the DFS exemptions or the DFS laws that have been created by some of the states, so that’s an option.  Otherwise its really in-game purchases, you can monitize some of it within the game, you can run a particular game and offer the opportunity to either get a type of skin or weapon or whatever it is regarding the particular game, or you can purchase it within the game.  So that’s an aspect, but its not a very lucrative way of running an operation”, shared Ifrah.

He continued, “The more lucrative way would be what we see overseas with Bet365 and with Pinnacle and betting or wagering on the actual tournament. Right now unfortunately I think there’s a “wait and see” approach, we have to wait and see whether or not sportsbetting would actually happen.  And if that happens, obviously the eSports industry would benefit from that”.

eSports Conference 2016 and workshop

All of the above topics will be covered in depth at the eSports Conference and Ifrah’s workshop has been built to educate those wishing to start an eSports related business.  In addition to covering the land based and online gaming aspects of eSports, Ifrah will touch on KYC issues and age verification concerns.

“There are certainly issues with children playing these games even if they’re free and a lot of these sites did target minors, that’s something that could have shut down the entire industry in the US.  We obviously don’t want a federal regulator or congressperson getting a hold of that type of information because they would drive a truck through it and the consequence would be no eSports for anybody, free or not”, said Ifrah.

Bryce Blum, the General Council for UNIKRN, will be co-hosting the workshop with Ifrah, covering the entertainment aspect of eSports such as athlete, promotion and venue contracts.

The eSports Conference in Los Angeles is the premier dedicated eSports event of the year, taking place September 6-8, 2016. Ifrah’s workshop runs on September 6th and his “Lessons from the Gaming Industry” panel takes place at 11:30am on the 8th.