Professional Esports and Anti-Corruption Violations
In September 2020, Tan, a Singapore national, allegedly promised financial gratification to Chung, another Singapore national, as an inducement to fix the outcome of a professional esports match played between two teams, one of which Chung was a member. The gratification was in the form of partial winnings from bets placed on the outcome of the match through an online gambling site. For their actions, the Corrupt Practices Investigations Bureau charged Tan and Chung, respectively, with giving and receiving gratification in connection with an act of private sector corruption, pursuant to Singapore’s Prevention of Corruption Act.
That Singapore has a zero-tolerance position on corruption is widely known. This case, while demonstrating that position, also highlights how the developing esports sector in Asia can intersect with acts of corruption and organised crime. Tan’s promise to Chung of illegal gratification, in exchange for Chung losing the esports match in which he was due to participate, is similar – albeit on a smaller scale – to the activities of criminal betting syndicates in professional esports competitions in other developed countries. A recent prominent example is the incidence of match-fixing in professional Counter-Strike tournaments in the United States, investigated by the U.S. Federal Bureau of Investigation in 2021. The risk of similar corrupt activity in the esports sector in Asia is likely to increase in line with the sector itself. Revenue in the esports market in Asia is expected to reach approximately US$ 620 million in 2022, and to grow at 9% per year to US$ 970 million by 2027.
Regulation on Online Gambling
The above ongoing court case is also notable in intersecting with the changing regulatory landscape in Singapore with respect to online gambling. In addition to anti-corruption violations, Tan and Chung were charged with violating the Remote Gambling Act (“RGA”), for using an online gambling service that had not been authorised by the Singapore government.
All gambling-related legislation, including the RGA, has now been consolidated into the Gambling Regulatory Authority of Singapore Act and the Gambling Control Act of Singapore, both of which took effect in August 2022. The new legislation amends the definition of gambling to render it technology-neutral, to cover both existing and emerging gambling products. Thus, the Gambling Regulatory Authority, the single authority established to regulate all forms of gambling, will regulate all traditional gambling activities, such as lotteries, gaming machines and gambling operations, including “remote” or online gambling. But it will also regulate novel and lower-risk gambling products, including online games with gambling elements and “mystery boxes.”
This holistic, risk-adjusted approach appears a constructive response to ongoing technological developments, which have facilitated the ubiquity of online gambling, and the emergence of new variants of gambling, such as bets on the outcome of professional esports tournaments. It also offers a useful regulatory precedent for other Asian jurisdictions, as online gambling continues its burgeoning growth in the region.
As described above, the professional esports industry may involve acts of corruption and organised crime. Separately, in the closely related sector of online gambling, the laws in Asia continue to evolve. If you require advice relating to the laws in either of these areas and their implications for your business, please reach out to our team at Hogan Lovells.
Authored by Han Liang Lie, Crystal Lim.