A law dated October 7, 2016 has implemented in France a legal framework for video games tournaments which were not previously specifically regulated, so that they were deemed falling within the general prohibition of paid-for lotteries.
1. Background : a general prohibition of paid-for lotteries applicable to video games tournaments
Section L322-1 of the French Interior Security Code prohibits the public offer, upon payment (or with any other form of financial contribution), of games based on chance which create the hope of a gain .
Further, pursuant to Section L322-2-1 of this Code, this prohibition covers games based on the skills of the players. The financial contribution is deemed existing when the organizer imposes a financial contribution and so, irrespective of the fact that such a contribution is reimbursed, at a later stage, by the organizer.
In a report issued in March 2016 at the request of the French government and addressing e-sport/videos games competitions issues, the following principles have been reiterated, based on the aforementioned rules :
- the criterion of the “payment”/financial contribution is widely assessed, so that communication connection costs (telephone, internet) are per se a financial contribution;
- the criterion of the “chance” is present in video games competition, despite the fact that in certain instances, it is a small element of chance. According to the Report, this reasoning applies for most sports or board games (choice, at random, of the color of the pawns, of the side of the playground…).
This report drew the conclusion that a video games competition meets the four criteria (public offer, hope of a gain, chance and financial contribution), thus leading to the prohibition set forth in the aforementioned articles, if it is available to the public, offers gains to the winner and leads to the payment (even a small amount) of an entry fee.
This Report noted, however, that some of these events do not per se violate the French public order when the financial contribution required from the players is not excessive and does not encourage the organizer to multiply the events in order to increase its profits.
In its conclusion, the Report recommended to the French government to exclude, under certain conditions, video games tournaments from the general prohibition of the lotteries as set by Section L322-1 and seq. of the Interior Security Code.
2. The implementation of exceptions to the general prohibition of paid-for lotteries : e-sport/video games tournaments
The law of October 7, 2016 has implemented most of the March 2016 Report.
►In particular, off-line video games tournaments are allowed under certain conditions summarized below :
- The off-line video games tournaments, where the registration fees and other financial contributions borne by the players do not exceed a percentage (rate to be set by a Decree - not enacted yet) of the whole cost of the event (including the total amount of the prizes offered), are not illicit lotteries;
- If the total amount of the prizes exceeds an amount set by a Decree (not enacted yet), the organizer of the event must substantiate the existence of a mechanism/tool as listed by a Decree (not enacted yet) ensuring that all the prizes are allocated;
- The organizers must register the event with a public authority under conditions to be set by a Decree (not enacted yet);
- The entry of minors (under 18) can be made possible under conditions to be set by a Decree (not enacted yet). The entry of minors is subject to the authorization of the parent/guardian. The parent/guardian must in particular be informed of the financial issues/implications of the event.
►As regards on-line video games tournaments : when video games tournaments, or qualifying steps, do occur online, the purchase of the game to enter the competition or the internet connection fees to be paid to play, are not deemed a financial contribution (new Section L321-11 of the Interior Security Code).
►The law does also provide that the players must benefit from the legal protection of labor law and conclude an employment contract (definite term duration) with the association or the company organizing the event.
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Decrees must be enacted to implement this law, in particular as regards off-line tournaments and employment law issues.
They are planned to be enacted early in 2017, but the French government does not provide further information on the timing.
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