![\"eSports](\"https:\/\/www.gamingtechlaw.com\/wp-content\/uploads\/2019\/01\/statistic_id490522_revenue-of-the-global-esports-market-2012-2021.png\")
<\/a>As frequently happens in fast growing markets, when the opportunity comes up, regulations are often left behind, or at least regulations are unable to keep up with the pace of the eSports market which 10 years ago was not relevant and now is the market on which everyone is investing.<\/p>\nRegulations on eSports tournaments in Italy are quite complex since they are limited by<\/p>\n
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- prize promotion regulations (the so called rules on \u201cmanifestazioni a premi<\/em><\/a>\u201d and \u201cconcorsi a premi<\/em>\u201c) which are connected to advertising and unfair commercial practices rules that led to sanctions up to \u20ac 3 million; and<\/li>\n
- gambling regulations whose sanctions for breach were recently raised to 6 years of imprisonment and a fine up to \u20ac 50,000.<\/li>\n<\/ul>\n
New opportunities are available under prize promotion regulations, but it is necessary to ensure the right setting up to avoid the breach of gambling regulations.<\/p>\n
Online international eSports tournaments get more freedom under Italian prize promotion rules<\/h2>\n
The regime for prize promotions in Italy is very complex\u00a0and applies both if they are\u00a0based on chance or skills\u00a0<\/strong>(the so called \u201cconcorsi a premi<\/em>\u201c)\u00a0and when they just award prizes in kind upon a purchase\u00a0<\/strong>(the so called \u201coperazioni a premi<\/em>\u201c), while prize promotions awarding prizes in cash are banned. Also,\u00a0it is not possible to run international prize promotions since they have to be open only to participants located in Italy<\/strong>.<\/p>\n
Therefore, Italian rules represent a major issue for eSports tournaments that are usually international competitions, especially if they are run online.\u00a0But, according to a recent interpretation of the Italian Ministry of the Economic Development,\u00a0if a foreign entity based in the European Union runs a prize promotion in Italy, it shall<\/p>\n
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- not comply with Italian prize promotion regulations and<\/li>\n
- only comply with the laws of its country of establishment under the terms of the eCommerce Directive, while Italian authorities will have jurisdiction only on consumer protection matters.<\/li>\n<\/ul>\n
This interpretation has to be read in my view only within the following limits:<\/p>\n
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- it applies only to foreign entities based in the European Union;<\/li>\n
- it applies only to online prize promotions, unless we reach the conclusion that Italian prize promotions regulations are in breach of the EU principle of freedom of services which is a valid point in my view; and<\/li>\n
- it still requires to comply with Italian consumer laws, including regulations on misleading advertising that led to the \u20ac 3 million fine previously mentioned.<\/li>\n<\/ol>\n
It should be outlined that the position above is just contained in the FAQs of the Ministry and it already happened in the past that the Ministry changed its interpretation over the years. And there is a risk that a change might occur in the coming months.\u00a0Therefore, the situation shall be carefully monitored.<\/p>\n
However, it represents a major improvement for eSports tournaments that usually occur online and are open to players located worldwide.\u00a0.<\/p>\n
Prizes in cash of eSports tournaments can raise gambling law issues<\/h2>\n
The exemption above is quite relevant also because Italian prize promotion regulations\u00a0prohibit prizes in cash<\/strong>, allowing only prizes in kind, and\u00a0preventing to charge any fee for the participation to the tournament.<\/strong>\u00a0If the exemption above applies, such restriction would not be applicable to international online eSports tournaments since they would be run under the foreign EU law of the organizer.<\/p>\n
But if there are eSports tournaments where<\/p>\n
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- players are paying in cash in order to participate to an eSports tournament;<\/li>\n
- authorities conclude that the game contains elements of chance and<\/li>\n
- players can get obtain a winning in cash or in kind with economic value,<\/li>\n<\/ul>\n
according to an arguable position of Italian courts, the game may be considered gambling.<\/p>\n
On the contrary, if the winning sits within the game and players are only allowed to pass for instance to the next stage of a tournament where they will not win anything other than the possibility to continue playing, it might be argued that that no gambling rules or prize promotions regulations apply and this is a mere social game.<\/p>\n
Online eSports tournaments with cash winnings regulated under Italian gambling rules<\/h2>\n
The scenario of the previous paragraph can be valid for offline eSports tournaments. But it\u00a0is even more complex when it comes to\u00a0online eSports tournaments that require the payment of a fee by participants and award winnings in cash<\/strong>. Indeed, even if eSports tournaments are qualified as a game of skills, Italian criminal law punishes the organization of any game that is regulated by the\u00a0Italian gambling authority<\/a>\u00a0without the required license.<\/p>\n
Games regulated under Italian gambling laws include online skill games with cash winnings, such as online poker tournaments. And indeed, skill games rules set a \u201clighter\u201d regime for the offering of games that are fully based on skills in which players can pay no more than \u20ac 20 to participate to the game.<\/p>\n
Operators would still be required to hold an Italian remote gambling license, but the regulatory obligations include some exemptions that might make the offering more attractive.<\/p>\n
eSports tournaments have major potentials, but need to deal with considerable regulatory restrictions in Italy that can be avoid through the implementation of a careful approach.<\/p>\n
- gambling regulations whose sanctions for breach were recently raised to 6 years of imprisonment and a fine up to \u20ac 50,000.<\/li>\n<\/ul>\n