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The pioneering French regulation on esports

1 January 2019
The pioneering French regulation on esports

Europe's first regulation on esports could catapult France to the forefront of the esports industry. As early as 2017, France issued two decrees dealing with the regulation of competitive gaming of computer and video games. The aim here is to provide better protection for professional players and to create a clear legal framework for esports organizations and tournament organizers. Margaux Mermin and Urim Bajrami guide us through the essential French regulations and discuss current issues of esports in Austria.

The inclusion of esports – video game competitions – as an olympic sport in Paris 2024 was lately considered, but ultimately rejected by the International Olympic Committee (IOC). The IOC pointed out that "a discussion about the inclusion of esports as a medal event on the Olympic programme is premature."

Indeed, esports is a nascent, but rapidly growing industry with prizes reaching millions of euros, mega-events being organised around the world and professionalized players. In fact, the worldwide total esports revenues for 2017 were estimated at EUR 557 million. Global revenues are expected to reach EUR 1.4 billion by 2022. Germany is the European market leader, with revenues reaching EUR 51.2 million in 2017. Revenues in Germany are projected to reach EUR 129 million by 2022.

However, esports severely lacks a specific legal framework. Austria, for example, neither precisely defines esports nor regulates the conditions under which such activity may be pursued.

In contrast, France took a big step in 2016 to bring specific regulation into existence. France, where approximately 4.5 million people are spectators of esports and 850,000 are competitive gamers, is one of the first countries in the world to implement a legal framework governing the organisation of and participation in video game competitions. Such attractive regulation could also challenge the German leadership on the European market.

In France, the organisation of video game competitions previously fell within the general prohibition of lotteries. However today, video game competitions are allowed and regulated under articles 101 and 102 of the French Digital Republic Act of 7 October 2016. To implement this new law, the French Prime Minister made two decrees on 10 May 2017: one regulating the organisation of video game competitions ("Decree 871"), the other regulating the status of salaried professional players of competitive video games ("Decree 872").

The purpose of the regulation

As mentioned above, the worldwide esports market is already of a significant size. Its continuous expansion is an economic opportunity that France does not want to miss. The first attractive esports regulation in Europe may relocate the hub of esports to Paris.

The purpose of the French Digital Republic Act and the decrees promulgated thereunder is to develop the attractiveness of France for the organization of competitions and the establishment of professional teams of international calibre. The Act defines "video game competitions" (competitions de jeux vidéos) and safe-guards professional players, now benefiting from the protective provisions of the Labour Code. The general idea of the French Parliament was to provide legal security to the different actors of this growing market.

The Parliament mentioned four reasons to adopt specific regulation: - reassuring the families of players who are often young; - allowing fair conduct of the competitions; - preventing financial stakes from leading to abuses and fraud; - and, above all, protecting the players themselves.

The organisation of video game competitions under Decree 871

Decree 871 targets organizers and individuals participating in video game competitions. The text defines the maximum contribution of participants to the organisational costs of competitions and sets a declaration obligation.

Video game competitions may be organised when the total participation fees collected from players do not exceed the costs of organising the competition (including the total amount of winnings and prizes). This provision implies a reasonable contribution to the organisation's costs by competitors.

Competitions must be declared to the Central Racing and Games Service of the Ministry of the Interior (Service du ministère de l'intérieur Chargé des Courses et Jeux). The declaration may be carried out for a single competition or for several competitions for which the schedule is established in advance.

When the actual costs paid by players finally exceed the actual costs of organizing the competition, the organizer must notify the administrative authority no later than one month after the end of the competition.

Decree 871 also pursues the protection of minor players. Video game competitions offering monetary rewards are strictly prohibited for children under 12 years of age. In addition, the participation of minors under 18 years old in video game competitions is subject to authorisation by their parents or legal representatives. Furthermore, only a part of the remuneration received by minors under 16 years old may be left at the disposal of their parents. The remaining amount, which constitutes the savings, is paid to the Deposits and Consignments Fund (Caisse des Dépôts et Consignation) and is managed by this fund until the child reaches the age of majority.

The status of competitive professional players under Decree 872

Decree 872 covers competitive players and their employers. The text defines the conditions for obtaining the approval now required to employ professional players and the conditions under which an employment contract may be concluded during the video game competition season.

Companies and associations have to be approved by the Minister in charge of Digital Affairs in order to employ professional players. The goal is to verify the conditions of employment of the players. The administrative authority assesses for example the weekly time spent at game practice, competition, physical training and theoretical preparation. It assesses the medical and paramedical follow-up procedures as well.

The administrative authority also evaluates the measures taken to prevent occupational risks related to the activity of competitive players (musculoskeletal disorders, psychological difficulties, etc.).

The approval is granted for three years when the conditions of employment of the players are satisfactory and when sufficiant human, material and financial resources are provided.

The French Digital Republic Act defines a "professional salaried player of competitive video games" as any person whose paid activity is the participation in video game competitions in a legally subordinate relationship with an association or company approved by the Government.

The Act outlines the requirements of employment contracts for competitive professional players, including a minimum term of twelve months and a maximum term of five years. However, there are a few exceptions under which the contract can be concluded for a different duration, including the replacement of a missing or suspended player, or to enable the contract to run at least until the end of the season.

Professional players are protected under labour law regarding security and health among other things. In addition, specific obligations are assigned to the employer. For example, the employer must guarantee equal treatment in the preparation and training of all its salaried professional players.

The competitive player's employment contract has to fulfil formal criteria in the same way as a common employment contract, but cannot contain clauses of unilateral, pure and simple termination. In the event of non-compliance with the substance and form of the employment contract as provided in the law and decree, it may be reclassified as a permanent contract. In addition, the employer is exposed to a fine of EUR 3,750.

A company or association benefiting from the approval described above may employ minors under 16 years of age, provided that it has received authorisation from the Commission for Children performing Shows (Commission des enfants du spectacle), for each of the minors concerned.

In this case, all the obligations and restrictions applicable to employed minors of 16 years old as described in Articles L. 7124-1 to L. 7124-35 of the Labour Code must be respected, in particular:

- the limitations in terms of working time and hours; - the restrictions in terms of the difficulty of the work; - the obligation to place part of the child's salary in escrow, which will be maintained until the child reaches the age of majority.

The Commission for Children performing Shows will determine the part of the remuneration that must be sequestered at the Deposits and Consignments Fund. The rest of the remuneration will be left at the disposal of the minor's legal representatives.

What’s next in Austria?

Esports in Austria has been around as a subculture for more than a decade now. However, the tides have turned and slowly but surely Austrian esports follows the global trend in becoming a mass phenomenon here as well. Especially, as of last year esports has drawn a great deal of the public's attention as huge companies (e.g. in the telecommunication sector) and ambitious tournament organizers are pouring in and making serious investments in the local tournament scene. This helps the development of the esports ecosystem in Austria.

From a legal perspective esports raises several interdisciplinary issues, such as event law, association law, labor law, civil law, tax law and so on. Austrian esports organizations and esports organizers are currently facing a lot of legal uncertainties (related to player contracts and labor law as well as taxation issues to name a few). In addition, minors are – from our perspective – not protected enough from (possible) exploitation by esports teams and sponsors. Furthermore, esports is far from being recognized as sports in Austria.

Hence, it remains a big question mark if the current legal framework is in place to provide for the specific needs of esports. Eventually, similar regulations to France would be much appreciated as such regulations would further enhance the professionalization of Austrian esports and establish Austria within the global esports community as a friendly environment to have esports tournaments. Austria can most certainly learn something from France.

Margaux Mermin, LL.M., Mag. Urim Bajrami

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