Written by Alexandre Amaral Filho and Rafael Biasi
The evolution of the video game market, supported by the development of information technologies, the advent of social media plataforms, and the creation of thematic competitive events, has produced something beyond the sale of electronic products in the entertainment market. More than just a game, the past decade has solidified the cultural expression known as E-sports[1].
What do chess, League of Legends, hockey, and the General Sports Law and sports betting have to do with E-sports? They are all important for (re)thinking old concepts in the face of technological innovations, behavioral changes, and consumption habits that have marked recent years.
This brief article will address the legal status of the concept of E-sports in Brazil, the arguments related to a critical perspective, and the impacts of the subject on the sports betting market in the country.
1. The concept of sport in Brazilian law
Article 1, paragraph 1, of the General Sports Law, No. 14,597/2023, imposes a concept related to "predominantly physical activity":
"Article 1 [...] Paragraph 1: Sport is understood to be any form of predominantly physical activity that, in an informal or organized manner, aims at recreational activities, health promotion, high sports performance, or entertainment."
If the only tool you have is a hammer, it is tempting to treat everything as if it were a nail. The problem with the legislator sticking to an outdated conception is the risk of limiting the potential for social and economic transformation that the phenomenon of E-sports offers. Therefore, the proposed legislative criticism and revision aim to create new concepts that are more suitable for contemporary reality.
2. Different cultural phenomena of a sporting nature
2.1 E-sports, mind sports, physical sports
Competitions in games like League of Legends, Counter-Strike, FIFA, among others, form a market that generates more revenue than the film and music industries combined, with a growing online audience, diverse media broadcasts, commentators, narrators, and substantial cash prizes that amount to approximately $138 billion annually (Source: Newzoo/FGV[2]).
Beyond the economic importance of electronic game competitions, the sporting nature of E-Sports must be recognized, breaking away from traditional paradigms and misunderstandings that surround the subject. The concept cannot be confined to the movement of large muscle groups or physical contact, as this aspect has long been insufficient to define sport as a cultural expression. Today, it is acknowledged that chess, checkers, poker, and backgammon are sports practices.
Despite not requiring significant apparent physical exertion, their social relevance led to the recognition of "Mind Sports"[3]. A prime example is chess, the national sport of Russia, originating in the 9th century, popularized worldwide, and whose cultural influence often produces celebrities known beyond the niche of sports enthusiasts, such as Norway's Magnus Carlsen and Russia's Garry Kasparov.
Also referred to as "mind skill games," another essential component in defining a sport and distinguishing it definitively from games of chance is the requirement for skill rather than luck in determining the outcome[4]. This perception should be combined with the insight of Larissa Jensen, for whom "sport is a socially constructed concept that is subject to mutability, meaning there is no absolute definition for the term." Similarly, José Carlos Marques concludes that sports is "nothing more than the game taken seriously."[5]
Thus, just as was done with Mind Sports, social convention constructed E-sports through the creation of electronic game competitions and their cultural and economic significance.
2.2 The "fine-tuning" of luck and skill in traditional sports and League of Legends
Speaking of the balance between luck and skill, a 2018 study conducted by the Massachusetts Institute of Technology (MIT) aimed to quantify the level of skill required to achieve a positive outcome in League of Legends (LOL). The following graph compares this E-Sport with traditional sports:
On the far left of the spectrum is the simple coin toss, which depends entirely on luck; as you move to the right, you have stock market trading, ice hockey, baseball, American football, basketball, and cycling, with the rightmost position indicating that luck plays a smaller role in determining the outcome.
The investigation revealed, through statistical analysis, that LOL, within the dynamics of a single match ("best-of-one"), has a luck-skill relationship similar to sports like baseball and American football. In a scenario where three matches are considered ("best-of-three"), the dominance of skill becomes even greater, with a luck-skill relationship similar to professional basketball. [6]
In terms of the balance between luck and skill, e-Sports like League of Legends provide spectators with a spectacle where player skill dependency is even higher than in traditional sports like hockey, baseball, and American football.
2.3 Proposed conceptualization
At the core of the sporting phenomenon, in addition to the prevalence of skill over luck, are human talents, physical and mental capabilities, whether generated by the nationality of a competitor or team, or by the admiration that enthusiasts have for a specific player or team.
Therefore, the expression "predominantly physical activity" in Article 1, paragraph 1, of the General Sports Law should be removed, allowing the playful, recreational, health-promoting (physical or mental), high-performance (physical or mental), and entertainment aspects to prevail.
3. Sports Betting and E-sports
In the original wording of Law No. 13,756/2018, it referred to "real events of sports theme" as the subject of the sports betting system. In our view, this wording allowed for bets on e-sports, since (i) until 2023, there was no exclusive concept of sport as defined by the General Sports Law, and (ii) because e-sports competitions are also "real events."
However, the wording of Provisional Measure No. 1,182/2023 further exacerbated the situation regarding e-sports and the betting market, as it linked the organization of sports-themed events to the concept created by the General Sports Law, which emphasizes predominantly physical activities:
"Article 29-A: For the purposes of this Law, events with a sports theme are considered: I - real events with a sports theme - event, competition, or act that includes sports competitions, tournaments, games, or tests with human interaction, individual or collective, excluding those involving only individuals under the age of eighteen, whose result is unknown at the time of the bet and that are promoted or organized: a) in accordance with the rules established by the national sports administration organization, as provided for in Law No. 14,597, of June 14, 2023 - General Sports Law, or its affiliated organizations; or b) by sports administration organizations located outside the Country."
By stating that real events with a sports theme must be organized by a national organization in accordance with the General Sports Law, there is a potential limitation that, in theory, removes the possibility for the e-sports sector to benefit from the significant betting market. This condition is inconsistent with successful regulatory experiences, such as in the United Kingdom, where the projected revenue from e-sports betting could reach up to $152.1 million in 2023 (Source: Statista.com, Esports Betting – United Kingdom).
It is worth noting, however, that clause "b" of Article 29-A, as it stands today, does allow for the organization of sports-themed events by foreign organizations, which provides a "loophole" for regulated betting on e-sports events organized by foreign entities. However, this falls far short of being sufficient to encompass the market potential and is also glaringly discriminatory against national athletes.
4. The Best of Both Worlds
The demand for equal treatment between sports that involve substantial physical activity and sports that are based on the exercise of mental capacities is inevitable. This is so that the concept of sport as a cultural expression, recreation, and entertainment takes center stage, through the establishment of a new legal concept that aligns with the modern era.
Given this, it seems imperative that the concept of sport as stated in Article 1, Paragraph 1 of the General Sports Law be revisited in the terms we've discussed in section 2.3. This is crucial not only due to the social harm and exclusionary effect caused by the existing concept on E-Sports, but also to enable sports betting on them. By doing so, the entire society would benefit from the blend created by the convergence of these two promising industries.
Alexandre Amaral Filho
Rafael Biasi
[1] JENSEN, Larissa. E-Sports: Profissionalização e espetacularização em competições eletrônicas. Dissertação de Mestrado em Educação Física, UFPR – Curitiba. 2017. p. 2 e p.97. [2] https://newzoo.com/products/reports/global-esports-live-streaming-market-report. [3] http://www.espn.com.br/blogs/sergioprado/118454_poker-e-reconhecido-oficialmente-como-esporte-da-mente [4] It is necessary to say, however, that E-Sports should not be confused with the concept of Mind Sports, which includes sports like chess, backgammon, poker, among others listed by the International Mind Sports Association (IMSA). This is because the institution even lists, as one of the criteria for defining Mind Sports, that this concept cannot depend on equipment from a single supplier. (This removes E-Sports from this category, as they usually are intellectual property of the game-producing company). See http://www.imsaworld.com/wp/documents/prospectus/. [5] MARQUES, José Carlos. O que é esporte? As contribuições sminais de Johan Huizinga e Roger Caillois ressignificadas por Roland Barthes. Revista Serrote. N. 3. Link: https://www.revistas.usp.br/criacaoecritica/article/view/109034/107511 [6] DOUGLAS, Cameron, HOSOI, Annete. Luck and Skill in Professional League of Legends (E-sports). MIT. 2018.