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The Halal Status of Esports: The Indonesian Perspective

In the burgeoning realm of esports, a multi-billion-dollar industry that has captivated millions globally, a
pertinent debate emerges within the Islamic community regarding the permissibility of esports under
Islamic law. This article seeks to unravel the legal intricacies surrounding the question of whether esports is
deemed halal (permissible) or haram (forbidden) through the lens of Indonesian Law and Islamic
jurisprudence. By navigating the coexistence of Indonesian legal frameworks and Islamic principles,
scrutinizing esports as both a game and a sport, and delving into the viewpoint of the influential Islamic
scholars in Indonesia, the goal is to provide a comprehensive exploration on the discourse surrounding the
halal status of esports.

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Halal Status of Esports

1. OVERVIEW OF ESPORTS UNDER INDONESIAN LAW

Under Indonesian Law, esports have been recognized as official sports.1 The same law regulates that sports in Indonesia are regulated by a parent organization, which, in the case of esports, is the Esports Federation of Indonesia (PBESI). The PBESI has accordingly enacted a regulation to govern the implementation of esports, including a stipulation that an esports game must fulfil two requirements: (i) be recognized by PBESI and (ii) be widely recognized in Indonesia.2 Thus, not every game which is commonly considered an “esports game” is necessarily considered esports under Indonesian law.

2. THE HALAL STATUS OF ESPORTS

Esports demands scrutiny under both the lenses of a game and a sport within Islamic law. The Islamic perspective posits that if esports is deemed haram under either of these classifications, it is unequivocally considered haram in its entirety. Conversely, for it to be deemed halal, it must meet the criteria of being halal both as a game and as a sport. Both criteria are tested in sections 2.1 and 2.2 respectively.

2.1 ESPORTS AS GAMES

2.1.1 Halal Aspect of Games

In considering esports as a game, Islamic law’s fundamental principle of permissibility comes to the forefront. Islam recognizes the principle of ibāhah, or permissibility, which maintains that everything is permissible unless it has been clearly declared as prohibited.3
As such, games, which are not specifically prohibited in any form, including video games,
are generally considered permissible as long as they do not lead to harm. Islam encourages
leisure and enjoyment within bounds that do not conflict with religious obligations, such as
daily prayers, and avoids engaging in elements deemed haram, such as harmful or explicit
content. So long as they fulfil these requirements, games can be considered halal.

2.1.2 Gambling Aspects

In Islamic teachings, the Quran expressly prohibits any form of gambling. The Quran unequivocally states,

“O you who believe! Intoxicants, gambling, idols, and (divination by) arrows are all evil of Satan’s handiwork. Eschew such (evil), that you may prosper.” Quran, 5:90.

This clear injunction leaves no room for interpretation, emphasizing the inherently detrimental nature of gambling. Translating these religious principles into the realm of video games, any incorporation of gambling elements raises ethical concerns within an Islamic framework. Such features in a game can result in the game being considered haram, in accordance with the Quranic prohibition on gambling. The authoritative status of the Quran in Islamic teachings means that its directives, including those against gambling, cannot be contested. To this end, certain aspects of the esports sphere, such as esports betting, would be considered haram.

This religious perspective has found resonance in Indonesian law, where gambling is explicitly forbidden. The current Indonesian Penal Code reinforces this prohibition, which shows the influence Islamic laws have had on Indonesian law.4 Moreover, the forthcoming Penal Code which will enter into force in 2026, highlights the importance of incorporating existing societal norms into legal frameworks. It explicitly states that the enforceability of laws that live on in the community (living law) remains intact even if the living law is not explicitly regulated in the Code.5

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2.2 ESPORTS AS SPORTS

2.2.1 The Halal Aspect of Sports

In considering esports as a sport, there are different considerations. Engaging in sports is actively encouraged as a means to maintain a healthy lifestyle and enhance overall wellbeing. Sports contribute to physical health, mental relaxation, and the prevention of boredom. The foundational principle in Islamic jurisprudence is that engaging in sports is generally permissible unless connected to haram activities. This means that the act of participating in sports is inherently halal, and any prohibition arises from extraneous factors associated with the specific sport or its conduct. These prohibitions are detailed below.

2.2.2 Prohibitions on Sports

While Islam encourages sports, it is equally adamant about safeguarding the well-being of the individual. A saying of the Prophet Muhammad, also known as a hadith, emphasizes the principle of avoiding harm

“There should be no harming or reciprocating harm.” Ibn Maajah, Kitaab al-Ahkaam, 2332

This saying sets the tone for the prohibitions on sports in Islam, among others. Islamic jurists have provided nuanced guidance on permissible sports, emphasizing their inherent benefits while delineating specific conditions that must be met. Sports or games lacking any religious or worldly benefit are deemed impermissible. Furthermore, if a sport carries benefits, it must adhere to strict criteria: it should not contradict Shariah principles, should avoid resemblance to practices associated with other religious communities, and must exclude impermissible acts, such as striking the face.6

Among the prohibitions on sports is the impermissibility of imitating pagan rituals due to their association with the characteristics of disbelievers. This is based on another hadith of the Prophet, which states,

“Whoever imitates a people is one of them.” Al-Albani, Irwa al-Ghalil, 2691

To illustrate, consider the Wai Kru ritual performed before Muay Thai fights. This ritual involves circling the ring, kneeling, and bowing, all to the tune of music and is rooted in pagan superstitions and beliefs. Engaging in activities like Muay Thai that require participation in such rituals would be considered haram in Islam. The association with practices that contradict Islamic principles and the involvement in ceremonies with pagan elements render these activities incompatible with the values upheld by the Islamic faith.

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2.3 ACCEPTANCE OF ESPORTS

Acknowledging the above requirements set by Islamic law, it becomes evident that most esports activities align with the prohibitions outlined and are thus halal. The avoidance of harm, adherence to religious obligations, and steering clear of practices linked to idolatry, positions esports as a responsible form of entertainment within the Islamic legal landscape. This is particularly evident when considering the burgeoning esports scene in influential Muslim nations. An example can be observed in the multi-million-dollar esports tournaments hosted in Saudi Arabia.7 The endorsement and active promotion of such events by the Saudi government signal a recognition of esports as a legitimate and culturally acceptable form of competition and entertainment.

3. ISLAMIC LAW IN INDONESIA

3.1 Positive Law in Indonesia

Understanding the intersection of Indonesian and Islamic law requires a nuanced exploration of the Indonesian legal framework. While Indonesia is a religious country, it is not an Islamic country. The Indonesian Constitution guarantees freedom of religion,8 and there are six religions which are officially recognized by the state (Islam, Christianity, Catholicism, Hinduism, Buddhism and Confucianism).9 Despite not implementing Islamic law in a manner akin to countries like Saudi Arabia or Qatar, Indonesia’s positive law is imbued with Islamic principles which were passed on as a part of societal norms.

3.2 The Islamic Influence

Numerous legal frameworks reflect the influence of Islamic principles in Indonesia’s legislative landscape. As a country with a predominantly Muslim population, there have been laws which take inspiration from Islamic principles on family, finance, and social welfare. These include laws overning marriage, religious courts, Sharia banking, charity, the implementation of the Hajj and Umrah pilgrimages, and more.10 In navigating the intersection between state affairs and Islamic principles, the Indonesian Ulema Council, or Majelis Ulama Indonesia (MUI) emerges as an influential institution.

3.3 The Standing of the Indonesian

Ulema Council Central to the influence of Islamic principles in Indonesia is the existence of the MUI. The MUI serves as the highest Islamic authority in the country, comprised of religious scholars and experts in Islamic jurisprudence. While it does not possess legislative powers, the MUI is influential regardless, as they are able to issue fatwas—religious decrees or opinions on specific matters. These fatwas are considered authoritative interpretations of Islamic law and are not legally binding in the formal sense. Regardless, they are influential to the Muslim community of Indonesia.

The MUI follows an eight-stage process in determining fatwas:

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  • 1. Problem Identification: A thorough study is conducted to understand and describe the monitored issue, addressing its socio-religious impact and legal aspects.
  • 2. Historical Examination: Past expert opinions are traced, along with studying related fatwas and seeking views from fiqh (jurisprudence) experts.
  • 3. Expert Assignment: Members of the Fatwa Commission with relevant expertise write a comprehensive analysis. For significant issues, discussions may involve multiple commissions.
  • 4. Clear Legal Cases: Sometimes the problem being asked has a clear answer in the current Islamic law. If the law is clear and there is already a precedent regarding it, then the Fatwa Commission will issue a fatwa by conveying the law as it is.
  • 5. Resolution of Differences: Any differences among sectarian scholars are discussed, seeking common ground. Specific methods are employed for reaching consensus or addressing dissent.
  • 6. Collective Ijtihad: If there’s no consensus among sects or scholars, collective reasoning (ijtihad) is employed.
  • 7. Documenting Differences: In cases of unresolved differences among the Fatwa Commission members, the fatwa is still issued, but the dissenting opinions and respective arguments are documented, emphasizing caution.
  • 8. Legal and Public Considerations: The final fatwa is determined considering the law’s legal authority and public benefit.

Once a fatwa has been determined and made public, it is considered to be morally binding to the Muslim community. As of the time of writing, only one fatwa has been made having to do with esports or esports games. This fatwa is explored in the following case study.

4. CASE STUDY: THE ACEH ULEMA COUNCIL’S FATWA

Aceh, a province in Indonesia, holds a special autonomous status within the country. Notably, it is the only Indonesian province that officially practices Sharia law. This autonomy is granted through a legal framework that allows Aceh to enact its own regulations, known as qanuns, which have the legal standing of regional regulations.11 These qanuns, while rooted in Islamic principles, operate within a carefully defined legal hierarchy and are subordinate to the Indonesian constitution and national laws.12 To become law, a qanun must be approved by both the Aceh parliament and the governor.13

Aceh also has its own Aceh Ulema Council, commonly referred to as the Aceh MPU (Majelis Permusyawaratan Ulama) separate from the Indonesian Ulema Council. Its primary mission is to offer guidance, assistance, and protection to the Muslim population of Aceh. Officially recognized by the Aceh Government, the MPU plays a crucial role in shaping the province’s legal and religious landscape by serving as a religious advisor to the regional government.14 It provides input, considerations, and suggestions based on Islamic law, contributing to the formulation of qanun that align with religious principles. Central to its influence is the MPU’s authority to issue fatwas which carry weight as considerations for regional government policies.15

In 2019, the Aceh Ulema Council issued Fatwa Number 3 of 2019 addressing concerns related to the popular esports game, PUBG (Player Unknown’s Battle Grounds), which is widely played in Indonesia. Citing four key reasons, the Council declared PUBG as haram:

  • 1. Violence and Brutality: The potential for violence and brutality in the game, with the potential to influence negative behavioural changes in users.
  • 2. Aggressive Behaviour: The risk of cultivating aggressive tendencies among players.
  • 3. Addiction: The potentially dangerous levels of addiction the game can lead to.
  • 4. Insult to Islamic Symbols: The presence of elements within the game that can be perceived as disrespectful to Islamic symbols.

The head of the Aceh Ulema Council was quoted as saying that

“Playing this game is akin to drinking wine. In the Qur’an (specifically in Al-Baqarah:219), it is mentioned that wine has benefits, but the drawbacks or evils are much greater.”

Thus, among other reasons, PUBG was declared as haram. It is important to emphasize that this fatwa is specific to the Aceh region and reflects only one perspective within the broader Islamic legal landscape. This fatwa also does not seem to be as strictly enforced as some others. The game is still accessible in Aceh to this day, and Aceh’s provincial legislature has not enacted a qanun forbidding access to PUBG or any other esports game.16

There has even been a professional PUBG player from Aceh who represented Indonesia in events such as the SEA Games and Asian Games. 17 In contrast, the Indonesian Ulema Council adopts a more lenient perspective, deeming esports games like PUBG permissible as long as they do not cause harm or damage to players and are not otherwise deemed haram.18

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5. CONCLUSION

The overarching conclusion drawn is that as long as they remain free from elements deemed haram, esports, in and of themselves, are considered halal. This is true at a baseline level as evidenced by the acceptance of esports in Muslim countries. That being said, there is still discourse on this taking place regionally. The Aceh Ulema Council’s fatwa branding games like PUBG as haram due to perceived harm is one viewpoint on it. This stands in contrast to the Indonesian Ulema Council’s broader acceptance of esports which applies for Indonesia. As far as Indonesian law is concerned, based on the Islamic authority in the country, esports is halal.

Image source: Assim al hakeem via Youtube

This article is part of the collaboration between ELN and K-Case Lawyer announced on 15 November 2023.

K-CASE Lawyer is a distinguished law firm based in Jakarta, boasting a team of experienced lawyers with over 10 years of expertise. Our firm has evolved under the guidance of dynamic legal professionals who previously excelled at prominent law firms in Indonesia. Rooted in a legacy of excellence since its inception, K-CASE Lawyer offers comprehensive litigation and corporate legal services.

Renowned for our prowess in the courtroom, our litigation team holds a wealth of experience ranging from District to Supreme Court representations. Complementing this, our corporate team navigates the intricate landscape of both national and international companies with finesse. Notably, we specialize in lifestyle and business industries, and hold unparalleled expertise in the dynamic realm of gaming and esports.

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In a recent milestone, K-CASE Lawyer achieved extraordinary recognition by securing a spot as a finalist for the prestigious 2023 South East Asia Legal Business Awards. Our nomination in the Technology, Media, and Telecommunications Law Firm of the Year category underscores our dedication to excellence and innovation in the legal field and showcases that we are one of the best in the region. We have also been shortlisted as one of the leading firms to watch in Indonesia.

  1. Article 21, Law No.11 of 2022 on Sports ↩︎
  2. Article 39(7), PBESI Regulation No. 034/PB-ESI/B/VI/2021. ↩︎
  3. Jalal al-Din al-Suyuti, al-Ashbāh wa al-Nazāir, p.60; Mohammad Hashim Kamali, The Parameters of Halal and Haram in Shariah and the Halal Industry, p.3. ↩︎
  4. Article 303, Indonesian Penal Code. ↩︎
  5. Article 2, Law No.1 of 2023 on Penal Code. ↩︎
  6. Mufti Ibrahim Desai, Al-Mahmood, 4814. ↩︎
  7. Arab News, Supremacy at stake as Gamers8: The Land of Heroes hosts $2m PUBG Global Series 2, https://www.arabnews.com/node/2353336/sport, last accessed on 10 November 2023. ↩︎
  8. Article 29, Indonesian Constitution. ↩︎
  9. Elucidation to Article 1, Decree of the President of the Republic of Indonesia No. 1/1965 on Prevention of Abuse and/or Blasphemy of Religion. ↩︎
  10. 1Among others: Law Number 1 of 1974 concerning Marriage as amended by Law Number 16 of 2019; Law Number 7 of 1989 concerning Religious Courts as latest amended by Law Number 50 of 2009; Law Number 41 of 2004 concerning Waqf; Law Number 21 of 2008 concerning Sharia Banking; Law Number 23 of 2011 concerning Zakat Management; Law Number 8 of 2019 concerning the Implementation of the Hajj and Umrah Pilgrimage; Law Number 18 of 2019 concerning Islamic Boarding Schools. ↩︎
  11. Article 13, Law of the Republic of Indonesia Number 11 of 2006 on the Government of Aceh. ↩︎
  12. Article 250, Law of the Republic of Indonesia Number 23 of 2014 on Regional Government as latest amended by Law No. 6 of 2023 on Stipulation of Government Regulation in lieu of Law Number 2 of 2022 on Job Creation to become Law. ↩︎
  13. Article 23(1) & 39(3), Law of the Republic of Indonesia Number 11 of 2006 on Government of Aceh as latest amended by Law Number 7 of 2017 concerning General Elections. ↩︎
  14. Article 4, Aceh Qanun Number 2 of 2009 on Aceh Ulema Council. ↩︎
  15. Article 5(1), Ibid. ↩︎
  16. Detik, Gubernur Aceh Heran Masih Banyak yang Main PUBG Padahal Diharamkan Ulama,
    https://news.detik.com/berita/d-5973567/gubernur-aceh-heran-masih-banyak-yang-main-pubg-padahal-diharamkan-ulama, last accessed on 13 November 2023. ↩︎
  17. Kompas, Atlet Aceh Raih Medali Emas Cabang E-sport PUBG Mobile di Ajang SEA Games Kamboja,
    https://regional.kompas.com/read/2023/05/16/140322978/atlet-aceh-raih-medali-emas-cabang-e-sport-pubg-mobile-di-ajang-sea-games last accessed on 13 November 2023. ↩︎
  18. Suara, PUBG Diharamkan Ulama Aceh, MUI Pusat: Hukumnya Boleh,
    https://www.suara.com/tekno/2019/06/24/183715/pubg-diharamkan-ulama-aceh-mui-pusat-hukumnya-boleh, last accessed on 13 November 2023. ↩︎

Authors

  • Yudistira Adipratama

    Yudistira Adipratama is the Managing Partner of K-CASE Lawyer, the first esports dedicated law firm in Indonesia. K-CASE Lawyer has worked with and provided legal consultation to various esports stakeholders in Indonesia, including game publishers, esports clubs, event organizers, streamers, game associations, government, and universities. Yudistira holds a key position in the policy-making process of the esports parent organization in Indonesia. He was involved in the drafting of Law No. 11 of 2022 on Sports, which recognizes esports as a competitive sport for the first time in Indonesian history. Yudistira is also the drafter of PBESI Regulation No. 034/PB-ESI/B/VI/2021 on the Implementation of Esports Activities in Indonesia, a policy that regulates the implementation of the esports industry ecosystem in Indonesia. His expertise in law and the esports industry also led him to be involved in the drafting of Presidential Regulation No. 19 of 2024 on the Acceleration of the Development of the National Game Industry. In addition to esports, Yudistira also has a deep understanding of sports law and actively serves as a speaker representing Indonesia at various high-level international conferences attended by representatives of the International Olympic Committee. Under his leadership, K-CASE Lawyer has supported Indonesia’s participation in various international multi-sports events, such as the 19th Asian Games in 2022, the 2023 SEA Games, and the 14th IESF World Esports Championships.

  • Mohamad Rafi Andiansyah S.H.

Gambling

Alleged Video Games Addiction Leads to Lawsuit (Updated)

In a developing legal battle reminiscent of the Colvin et al v. Roblox Corporation et al case that challenged Roblox’s alleged facilitation of illegal gambling with minors, a new lawsuit has been filed in Missouri against major players in the video game industry alleging video games addiction.

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Video Games Addiction

This lawsuit, just like Casey Dunn et al. v. Activision Blizzard et al., on which ELN reported before, accuses companies, including Epic Games, Mojang Studios, and Roblox, of designing games that create an excessive video games addiction in children, leading to serious detrimental effects on their physical, social, and mental health.

Context and Background of the Case

In a legal filing that marks a significant escalation in the scrutiny of video game companies’ practices, a lawsuit has been filed in the U.S. District Court for the Western District of Missouri, Central Division. The case, bearing the number 2:24-cv-4055, has been initiated by Carey Courtwright, representing her minor child K.C. This legal action addresses serious concerns about the design and operation of video games that allegedly lead to addiction among young players. K.C., who began engaging with video games at the tender age of six, is presented as a victim of these manipulative gaming practices.

Defendants in the Lawsuit

The defendants listed in this lawsuit are some of the most prominent names in the gaming industry:

  • Epic Games, known for Fortnite
  • Mojang Studios, the creators of Minecraft
  • Meta Platforms, the conglomerate formerly known as Facebook
  • Roblox Corporation

These companies are accused of creating and maintaining gaming environments that exploit psychological vulnerabilities in children.

Detailed Allegations of Video Games Addiction Triggers

The lawsuit articulates specific tactics employed by the defendants which are purportedly designed to foster addiction:

  • Reward Systems and Feedback Loops: Games are structured to release dopamine in response to achievements within the game, perpetuating a cycle of engagement that can lead to excessive and unhealthy gaming habits.
  • Limited Transparency and Predatory Monetization: The true costs of in-game transactions are often concealed or minimized, exploiting cognitive biases and leading players, particularly young ones, to spend money without a full appreciation of the cumulative costs.
  • Fear of Missing Out (FOMO): By introducing time-limited events and exclusive in-game items, the games tap into a player’s fear of missing out, which can compel continuous or increased expenditure to remain competitive or included in gaming communities.
  • Targeting of ‘Whales’: These companies strategically identify and exploit major spenders within their games — often referred to as “whales” — by encouraging them to spend large amounts of money through tailored incentives.
  • Lack of Parental Controls: The complaint criticizes the insufficient mechanisms provided to parents to monitor and control their children’s gaming activity effectively, which exacerbates the problem of unregulated access and expenditure.

Human Costs and Plaintiff’s Burden

The complaint vividly describes the adverse effects on K.C.’s life due to the alleged gaming addiction. These include a noticeable decline in academic performance, social withdrawal from peers and activities, and the development of physical symptoms such as pain in the hands, eyes, and back, as well as disrupted eating patterns. Moreover, K.C. has reportedly suffered from mental health issues, including depression and anxiety, which were intensified by the inability to disengage from gaming. The plaintiff, Carey Courtwright, shares the emotional and financial burden inflicted by this ordeal, emphasizing the considerable expenses accrued through medical treatments and in-game spending by K.C.

This lawsuit is part of an emerging trend where legal actions are increasingly highlighting the potential negative impacts of video games on minors. Similar to the issues raised in Colvin et al v. Roblox Corporation et al, this case underscores the urgent need for the industry to adopt more ethical practices in game design and marketing. The outcome of such lawsuits could potentially lead to stricter regulations and standards governing game development and marketing, particularly regarding the mechanisms that promote prolonged engagement and spending in games.

Entertainment Software Association’s Statement (Update)

Having read our article, the Entertainment Software Association (ESA) has provided a statement that offers a broader industry perspective. The ESA, a trade association that represents the U.S. video game industry and includes several of the defendants in the lawsuit as its members, has articulated its stance on the issues central to the lawsuit.

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The ESA emphasized its commitment to player safety and digital wellness, stating:

“Video games are among the most dynamic, widely enjoyed forms of entertainment in the world. We prioritize creating positive experiences for the entire player community and provide easy-to-use tools for players, parents, and caregivers to manage numerous aspects of gameplay.”

Moreover, the ESA addressed the claims made in the lawsuit directly, noting:

“Claims that say otherwise are not rooted in fact and ignore the reality that billions of people globally, of all ages and backgrounds, play video games in a healthy, balanced way.”

This statement underscores the ESA’s viewpoint that while the lawsuit raises important concerns about player safety and addiction, the claims do not necessarily reflect the broader reality of gaming as an activity enjoyed healthily by a vast global audience.

Conclusion

This lawsuit could set important precedents regarding the accountability of video game developers and platforms in safeguarding the well-being of their youngest and most vulnerable users. The broader implications for the industry could include a reevaluation of game design ethics, the introduction of more stringent parental controls, and a more transparent communication regarding the costs associated with in-game content. The video game industry may need to balance commercial interests with a heightened responsibility towards its user base, especially children, in light of growing legal scrutiny.

Image source: DallE3

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Carey Courtwright, individually and on behalf of K.C., a Minor v. Epic Games et al

Court: United States District Court for the Western District of Missouri, Central Division
Case No.: 2:24-cv-4055

Defendants

  1. Epic Games
    • Counsel not listed
  2. Mojang Studios
    • Counsel not listed
  3. Meta Platforms
    • Counsel not listed
  4. Roblox Corporation
    • Counsel not listed

Plaintiff

  1. Carey Courtwright (Individually and on behalf of her minor child, K.C.)
    • Counsel to Carey Courtwright:
      • Tyler W. Hudson, Eric D. Barton, and Melody R. Dickson of Wagstaff & Cartmell LLP
      • Breean “BW” Walas, Tina Bullock, and Danielle Ward Mason of Bullock Ward Mason LLC
      • Charles M. Stam of Thompson Stam PLLC

Author

  • Leonid Shmatenko

    Leonid Shmatenko is part of Eversheds Sutherlands’ data protection and technology law team. He has vast experience in regulatory and general issues in the areas of eSports and Blockchain. He advises eSports associations and clubs on all legal issues, advises and supports crypto startups in all matters from planning, preparation to execution of private and public token offerings (so-called Initial Coin Offerings or ICOs). Furthermore, Leonid Shmatenko specializes in international arbitration and has participated in several arbitration proceedings (SAC, ICC, DIS, UNCITRAL, ICSID, ad hoc) as a party representative and secretary of the tribunal. Leonid Shmatenko studied at the Heinrich Heine University in Düsseldorf and is currently pursuing a PhD in international law. After his successful first state examination (2011), he completed his legal clerkship, inter alia, at the German Embassy in Lima and within international law firms in Düsseldorf and Paris. He passed the second state examination in 2015. He is an external lecturer at the National Law University of Ukraine “Yaroslav Mudryi”, where he teaches International Investment Law. He is admitted to the Bar in Switzerland and Germany. Before joining Eversheds Sutherland, Leonid Shmatenko worked as an attorney at leading law firms in Geneva, Munich and Paris.

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Gambling

Another Roblox Litigation – An Illegal Gambling Ring for Kids?

In an era where digital platforms intertwine with daily activities, the lawsuit against Roblox Corporation has sparked significant legal and ethical debates. This case, officially cited as Colvin et al v. Roblox Corporation et al, No. 3:23-cv-04146, filed in the Northern District of California, brings to the fore critical issues surrounding gambling in video games and the responsibilities of platform providers.

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Roblox Litigation

Case Background of the Roblox Litigation

Roblox, a platform that combines gaming with social networking, has been accused of facilitating illegal gambling activities targeted at minors through its virtual currency, Robux. Plaintiffs Rachelle Colvin and Danielle Sass allege that Roblox’s system enabled minors to engage in gambling via third-party sites that were intricately linked to the Roblox platform, thus breaching the Racketeer Influenced and Corrupt Organizations Act (RICO) and other pertinent statutes​​. This is just one of many cases against Roblox.

Specific Allegations Against Roblox

  1. Misleading Representations: Roblox’s terms of service claim that it does not allow activities involving simulated gambling using Robux. However, the lawsuit asserts that Roblox has misled consumers, particularly parents, about the safety and appropriateness of its platform for children​​.
  2. Facilitation of Gambling: Despite these terms, Roblox is accused of actively facilitating and profiting from gambling activities by tracking and recording the flow of Robux used for gambling on third-party sites, thereby enabling this ecosystem​​.
  3. Profit from Illegal Activities: It is alleged that Roblox profits significantly from these transactions by charging a transaction fee, including when Robux are converted back into real currency by these gambling entities, effectively receiving a cut from the illegal use of its platform​​.

Claims Made in the Roblox Litigation

The lawsuit brings multiple claims under both federal and state laws, including violations of the RICO, the California Unfair Competition Act (UCL)1, and for negligence, among others. These claims focus on the creation and maintenance of an illegal gambling operation, misleading business practices, and the unjust enrichment of Roblox at the expense of its users​​.

Relief Sought

The plaintiffs seek monetary damages, restitution for the losses incurred by the minor users and their guardians, and injunctive relief to prevent further illegal gambling operations. They also demand a jury trial to adjudicate these claims​​.

The Motion to Dismiss

On 26 and 28 March 2024, the court partially granted Roblox’s motion to dismiss. The court dismissed the RICO claims which was significant. The court held that the plaintiffs failed to demonstrate that Roblox was engaged in a “qualifying enterprise” under RICO, as they could not show a common purpose or concerted action beyond regular business operations. The court’s findings demonstrate a challenge plaintiffs usually face when applying traditional legal frameworks like RICO to the fluid, expansive, and often nebulous operations of digital platforms, which are designed to maximize user engagement and revenue through complex, layered interactions that may not neatly fit into existing legal categories.

Claims Advancement

However, the advancement of claims under the UCL and for negligence opens substantial grounds for legal debate and analysis. The UCL’s broad scope, aimed at combating unlawful, unfair, or fraudulent business acts or practices, provides a robust framework for addressing alleged misconduct in digital settings. The court’s decision to let these claims proceed suggests a recognition of potential oversight and management failures by Roblox in preventing the use of its platform for gambling activities, especially those involving minors.

The negligence claims hinge on whether Roblox failed to exercise reasonable care to avoid foreseeable harm to its users, particularly children, who might be drawn into gambling with real-world economic consequences.

Unjust Enrichment

The court also allowed the unjust enrichment claim to proceed. By allowing this claim to proceed, the judge recognized that the compensation sought by the plaintiffs might not be covered fully by direct monetary damages. This decision emphasizes the need to consider a broader economic context of transactions on platforms like Roblox, where the company’s revenue model directly benefits from the engagement and expenditures of its users, including those activities that skirt or cross legal boundaries.

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Implications for Digital Currency and Platform Liability

This litigation spotlights the need for stricter regulatory scrutiny of digital currencies like Robux or gambling aspects in video games in general. As these currencies blur the lines between virtual assets and real-world value, the potential for misuse increases, necessitating clearer regulations and standards. This case could prompt lawmakers and regulators to examine more closely how digital currencies are managed on platforms, especially those accessible to minors.

The case also raises critical questions about the duty of platforms to protect users from harm. The allegations suggest that Roblox could and should have done more to prevent its platform from being used for gambling.

Conclusion

Colvin et al v. Roblox Corporation et al is an interesting case at the intersection of technology, law, and ethics, offering a crucial legal precedent for digital platform governance. As the case progresses, it will provide valuable insights into how digital platforms can be held accountable for the activities they enable and profit from.

This case will likely have far-reaching implications for legal practices, platform operations, and the legislative landscape governing digital interactions and economies, making it a critical watchpoint for legal professionals and platform operators alike.

Colvin et al v. Roblox Corporation et al

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Court: United States District Court, Northern District of California
Case No.: 3:23-cv-04146

Defendant Roblox Corporation

  • Counsel to Roblox Corporation: Cooley LLP
    • Kyle Wong
    • Robby Lee Ray Saldana, Washington, DC
    • Tiana A. Demas, Chicago, IL

Defendant RBLXWild Entertainment LLC

  • Counsel not listed

Defendant Satozuki Limited B.V.

  • Counsel not listed

Defendant Studs Entertainment Ltd.

  • Counsel not listed

Plaintiffs Rachelle Colvin and Danielle Sass

  • Counsel to Plaintiffs: Weitz & Luxenberg, P.C.
    • Aaron Freedman, New York, NY
    • Devin Lynn Bolton, Los Angeles, CA
    • James J. Bilsborrow, New York, NY

Minor Plaintiffs G.D. and L.C.

  • Represented by the same counsel as Rachelle Colvin and Danielle Sass.
  1. Cal. Bus. & Prof. Code § 17200 et seq. ↩︎

Author

  • Leonid Shmatenko

    Leonid Shmatenko is part of Eversheds Sutherlands’ data protection and technology law team. He has vast experience in regulatory and general issues in the areas of eSports and Blockchain. He advises eSports associations and clubs on all legal issues, advises and supports crypto startups in all matters from planning, preparation to execution of private and public token offerings (so-called Initial Coin Offerings or ICOs). Furthermore, Leonid Shmatenko specializes in international arbitration and has participated in several arbitration proceedings (SAC, ICC, DIS, UNCITRAL, ICSID, ad hoc) as a party representative and secretary of the tribunal. Leonid Shmatenko studied at the Heinrich Heine University in Düsseldorf and is currently pursuing a PhD in international law. After his successful first state examination (2011), he completed his legal clerkship, inter alia, at the German Embassy in Lima and within international law firms in Düsseldorf and Paris. He passed the second state examination in 2015. He is an external lecturer at the National Law University of Ukraine “Yaroslav Mudryi”, where he teaches International Investment Law. He is admitted to the Bar in Switzerland and Germany. Before joining Eversheds Sutherland, Leonid Shmatenko worked as an attorney at leading law firms in Geneva, Munich and Paris.

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The Legality of Esports Betting Across 7 Jurisdictions

The world of esports has seen exponential growth over the past decade, not only in terms of audience size but also in the complexity and scale of its betting industry. Esports betting, the act of wagering on the outcome of competitive video gaming events, has become a significant part of the global betting market. However, the legality of esports betting varies widely across different jurisdictions, reflecting a patchwork of regulations that can be challenging for both operators and bettors to navigate. This article explores the legal landscape of esports betting across various regions, highlighting the diversity of regulatory approaches.

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Esports Gambling in 7 Jurisdictions

Esports Betting in the United Kingdom

In the UK, esports betting is regulated under the Gambling Act 2005, which provides a legal framework for all forms of gambling, including sports betting, casino games, and lotteries. The UK Gambling Commission (UKGC) is responsible for licensing and regulating gambling operators. Esports betting is treated similarly to traditional sports betting, and operators offering esports betting must obtain a license from the UKGC. The Act ensures that gambling is conducted fairly and transparently, protecting children and vulnerable individuals from being harmed or exploited by gambling.

Esports Betting in the United States

The legality of esports betting in the USA varies by state, following the Supreme Court’s decision in Murphy v. National Collegiate Athletic Association in 2018, which struck down the federal ban on sports betting. This decision allowed states to legalize and regulate sports betting, including esports betting, at their discretion.

  • Allowed States: Nevada, New Jersey, and Pennsylvania are among the states that have explicitly legalized and regulated esports betting. These states have established regulatory frameworks that include esports within their sports betting legislation.
  • Restricted States: In contrast, states like Utah and Hawaii maintain strict anti-gambling laws that extend to esports betting, with no legal sports betting operations.

The regulatory landscape is complex and rapidly changing, with other states considering or in the process of legalizing esports betting.

Esports Betting in Germany

Germany’s esports betting scene is regulated under the State Treaty on Gambling 2021 (Glücksspielstaatsvertrag 2021), which came into effect on 1 July 2021. This treaty allows for the licensing of sports betting, including esports, under strict regulatory conditions aimed at ensuring player protection, preventing addiction, and combating fraud. Operators must obtain a license from the Regional Council of Darmstadt to offer esports betting legally.

Esports Betting in France

In France, esports betting is regulated by the French Gambling Authority (Autorité Nationale des Jeux, ANJ), which oversees all forms of gambling. The legal framework for esports betting is provided by the Digital Republic Act (Loi pour une République numérique) of 2016, which recognizes esports and allows for regulated betting on esports events. Operators must secure a license from the ANJ to offer esports betting services legally.

Esports Betting in Canada

Canada’s approach to esports betting has been evolving, particularly with the passage of Bill C-218, the Safe and Regulated Sports Betting Act, in June 2021. This legislation amended the Criminal Code to allow for single-event sports betting, including esports, across the country. Each province and territory has the authority to regulate and license sports betting within its jurisdiction. For example, Ontario has established the Alcohol and Gaming Commission of Ontario (AGCO) as its regulatory body for sports and esports betting.

Esports Betting in Australia

In Australia, esports betting is regulated under the Interactive Gambling Act 2001 (IGA). The IGA prohibits online gambling services from being provided to customers in Australia, with certain exceptions such as sports betting. Esports betting is permitted as long as it is offered by a licensed operator and bets are placed before the start of the event. The Australian Communications and Media Authority (ACMA) oversees the enforcement of the IGA and works to protect Australians from illegal online gambling operations.

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Esports Betting in South Korea

South Korea has a unique stance on esports betting. The country is known for its vibrant esports scene, but gambling, including esports betting, is heavily regulated and mostly illegal with few exceptions. The Sports Promotion Betting Tickets (SPOTO) issued by the Korea Sports Promotion Foundation (KSPF) is one of the legal avenues for sports betting, including a limited form of esports betting. However, the scope is quite restricted, focusing primarily on traditional sports.

Conclusion

The legal landscape for esports betting is diverse and rapidly evolving. While some countries have established clear regulations that allow for legal betting on esports events, others are still navigating the complexities of this new form of gambling. For stakeholders in the esports betting industry, staying informed about the legal status in different jurisdictions is crucial to operating within the bounds of the law and ensuring the integrity of esports competitions. As the popularity of esports continues to rise, it is likely that more countries will develop and refine their legal frameworks to accommodate this growing market.

Author

  • Leonid Shmatenko

    Leonid Shmatenko is part of Eversheds Sutherlands’ data protection and technology law team. He has vast experience in regulatory and general issues in the areas of eSports and Blockchain. He advises eSports associations and clubs on all legal issues, advises and supports crypto startups in all matters from planning, preparation to execution of private and public token offerings (so-called Initial Coin Offerings or ICOs). Furthermore, Leonid Shmatenko specializes in international arbitration and has participated in several arbitration proceedings (SAC, ICC, DIS, UNCITRAL, ICSID, ad hoc) as a party representative and secretary of the tribunal. Leonid Shmatenko studied at the Heinrich Heine University in Düsseldorf and is currently pursuing a PhD in international law. After his successful first state examination (2011), he completed his legal clerkship, inter alia, at the German Embassy in Lima and within international law firms in Düsseldorf and Paris. He passed the second state examination in 2015. He is an external lecturer at the National Law University of Ukraine “Yaroslav Mudryi”, where he teaches International Investment Law. He is admitted to the Bar in Switzerland and Germany. Before joining Eversheds Sutherland, Leonid Shmatenko worked as an attorney at leading law firms in Geneva, Munich and Paris.

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