Fantasy eSports and the U.S. Legal Environment
Noted gaming and fantasy sports attorney Jeff Ifrah reports on five critical elements to understand before a fantasy eSports site sets up shop in the United States.
Players should be provided with straightforward terms and conditions that explain the rules of the game, the policies governing the use of the site, and any other important rules, such as an operator’s ability to terminate or suspend a player if the need arises, Ifrah suggests.
There are also privacy laws that pertain to the industry. Security breaches in the financial services and healthcare sectors frequently make the news. But privacy laws and data breaches –whether from employee negligence or hackers – affect all companies. Start-ups could be particularly vulnerable because they have limited resources and may not be focused on data security and data privacy. There are two main aspects of data privacy to consider – how to protect data and what to do if data security is breached.
There needs to be an action plan in place should a breach occur, Ifrah says.
And then there is the concern over underage players, especially when we are talking about an industry that focuses on video gaming.
In the U.S., there are particular restrictions on collecting personal information from children under 13. The Children’s Online Privacy Protection Act (COPPA) limits the personal identifying information that companies can gather on children under 13 and requires certain disclosures and parental consent. Since many kids under the age of 13 engage in online gaming, it is critical that gaming companies are aware of the children’s privacy laws.
What are legal issues that free-play eSports betting sites should be aware of?
Free-play eSports betting platforms need to be cognizant of the three elements of gambling: consideration, chance, and prize. These three elements, when present in a single activity, add up to illegal gambling under many states’ laws.
Free eSports wagering sites may attempt to remove the element of consideration by creating their own virtual currency, which users may obtain for free and cannot cash out for real money. Customers might receive virtual currency just for creating an account, and earn additional currency completing certain in-game activities. However, omitting real money from the equation does not necessarily mean that consideration is absent under some states’ laws. Some states may consider other benefits conferred by a user to satisfy the element of consideration, such as if users have to provide substantial information or devote substantial time to earn the currency.
- Aaron Goldstein, Gambling911.com
