Unlike casual gaming, esports involves professional players, structured tournaments, and often large audiences, both online and in-person, akin to traditional sports events. With its own ecosystem of leagues, sponsors, and media coverage, esports has evolved into a global phenomenon, drawing millions of viewers and offering lucrative prize pools, making it a significant force in the entertainment and sports industries.
As esports continues to expand worldwide, U.S.-based teams often bring in international players to strengthen their competitive lineups. However, managing a team with players from outside the United States involves navigating a complex legal landscape. Here we will explore some key legal frameworks and requirements that esports teams should consider when fielding teams including international players.
What You Need to Know
- Esports athletes qualify for certain visas based on their talent, just like traditional sports athletes.
- International esports athletes and esports teams need to consider the tax implications of cross-border payments.
- The Esports Olympics are set for 2025 in Saudi Arabia, and esports teams need to start thinking about how to prepare now.
1. Visa and Immigration Requirements
One of the primary legal concerns for esports teams with international members is ensuring that all players have the appropriate visa status to legally reside and compete in the United States. Non-compliance can lead to severe consequences, including player disqualification from tournaments, financial penalties, and reputational harm. The following visa options are commonly used:
- O-1 Visa: This non-immigrant visa is designed for individuals with extraordinary ability or achievement in their field, including esports. To qualify, players must demonstrate a high level of skill, recognition, and accomplishments in the esports industry. Teams should also be prepared to submit comprehensive supporting documentation, including contracts, performance metrics, and press coverage that reflects the player’s international stature. Note that renewals and extensions for O-1 visas will require the same level of proof and ongoing recognition in the field.
- P-1 Visa: The P-1 visa is intended for athletes and teams who are coming to the United States to participate in a specific event or competition. Esports teams can use this visa to bring international players for tournaments or league events. The P-1 visa requires proof of the player’s international recognition and a detailed itinerary of the events they will participate in. Teams must also ensure they have a well-documented process for tracking the player’s status and renewals, especially if the player will remain in the United States for an extended period.
- J-1 Visa: This visa is used for exchange visitors and can be applicable if the player is participating in a recognized exchange program. While less common for competitive players, it might be relevant for players involved in training programs or coaching roles. It is essential to remember that the J-1 visa comes with specific obligations, including the potential for a two-year home-country residency requirement, which may affect the player's ability to apply for other visas or remain in the United States after the program ends.
It’s worth mentioning that there may be other employment-based visa options available, depending on the specific circumstances of the player or team. Therefore, it is always best to discuss your situation with legal counsel to explore all potential options and ensure compliance with immigration laws.
2. Employment and Tax Considerations
International players who work in the United States are subject to U.S. employment and tax laws. Esports teams must comply with the following requirements:
- Employment Authorization: Ensure that players have proper work authorization under their visa category. This includes verifying that their visa status permits them to receive compensation from the team. Unauthorized employment, such as paid appearances or streams outside the scope of the visa, can lead to visa violations. The terms of employment and player contracts should be reviewed to align with visa conditions.
- Tax Withholding and Reporting: International players must comply with U.S. tax laws, which involve withholding federal and state income taxes. Teams need to manage tax reporting and ensure compliance with IRS requirements. Players may also need to file a U.S. tax return, and teams should provide the necessary documentation to facilitate this process.
3. Contractual Agreements and Compliance
Esports teams should carefully draft and review contracts with international players to ensure compliance with U.S. laws and regulations. If, for example, the team is entering into a player contract or endorsement contract with a player who is a citizen of Germany, the team needs to consider the interaction between German law and U.S. law as it relates to things like post-employment covenants of non-competition.
4. Immigration Compliance and Documentation
Esports teams should maintain accurate records and ensure compliance with immigration regulations:
- Documentation: Maintain thorough and organized records of all visa approvals, employment authorizations, I-9 forms, and travel history. It’s crucial to have documentation ready in case of audits or legal inquiries. This also ensures that both employers and employees are protected should any compliance questions arise.
- Renewals and Expirations: Set up a tracking system for visa expiration dates and work authorization renewals. Missing a renewal deadline can disrupt an employee's legal status and employment eligibility, which could lead to penalties or termination.
- Compliance Audits: Perform regular internal audits to ensure all immigration regulations and visa conditions are being met. This includes verifying that all necessary work visas are active and valid for the roles employees are performing. Make sure the job description aligns with the visa category, as misrepresentation can cause complications.
- Travel Considerations: Keep accurate records of travel in and out of the United States and ensure employees know the rules regarding re-entry and work authorization. For example, if the employee travels outside the United States during a visa renewal process, it may require additional planning to avoid complications with re-entry.
- Employer Responsibilities: Ensure your HR or legal team is aware of the requirements related to maintaining compliance with visa sponsorship, including wage requirements and any additional filings that may be necessary if an employee's role changes.
With the International Olympic Committee (IOC) recently announcing that the first Olympic Esports Games will take place in 2025 in the Kingdom of Saudi Arabia, esports teams need to start preparing. The IOC has been engaging with esports since 2018, but this is the first time that esports will be an official Olympic event. We have no information at present on what games will be included, or how many athletes will be invited to participate. In 2023, the IOC held the inaugural “Olympic Esports Week” in Singapore, where more than 100 athletes competed in 10 virtual sports. The games included there were not traditional esports titles; games of virtual archery and virtual cycling were combined with racing games like Gran Turismo. The same may hold true for the Olympic Esports Games, which may result in competitors that have no established history in esports competitions. The top esports title in the world in terms of viewership is League of Legends (Riot Games), with games like Counter-Strike: Global Offensive (CS:GO) (Valve Corp.), Dota 2 (Valve Corp.), VALORANT (Riot Games) and Mobile Legends: Bang Bang (Moonton) not far behind. Will the IOC include these games and bring together the best players in the world, as they have done for the established Summer and Winter Olympic Games? We will have to wait and see.
Conclusion
Operating an esports team with international players involves navigating a complex array of legal requirements related to visas, employment, contracts, and compliance. By understanding and addressing these legal considerations, esports teams can successfully manage their international talent and focus on achieving competitive success. Teams are advised to work with legal professionals who are experienced in immigration and employment law to ensure compliance and mitigate potential legal issues.
