Esports Washing: A New Chapter in Russian Esports with the Formation of ARKI

A Unified Front in Russian Esports

The Russian esports industry is witnessing a significant transformation and another step in esports washing as major players unite to form the Cyber Sports Infrastructure Development Association (ARKI). Spearheaded by Langame, a developer of specialized software for cyber clubs, ARKI promises to redefine the esports landscape in Russia.

Founded by Langame’s founder, Dmitry Lukin, and company head Pavel Golubev, ARKI is already gaining traction with prominent cyber club networks like Colizeum, True Gamers, and CyberX, as well as EZ Katka and F5 Cyber Sports Center, joining as members. This move signifies a united effort to bolster the industry’s growth and address the challenges it faces, including taxation and regulatory recognition.

The establishment of ARKI marks an era of proactive engagement for the industry. With 460 clubs under Colizeum, 114 arenas across Russia and CIS under True Gamers, and 220 clubs with CyberX, the association commands a significant presence in the esports sector. ARKI is not just for club networks but is open to hardware suppliers, software developers, and representatives from gaming industries and esports organizations, reflecting a comprehensive approach to industry challenges.

Navigating the Tax Jungle

One of ARKI’s primary goals is to advocate for the inclusion of cyber clubs and esports arenas in the patent tax system, a move that would simplify the tax process by allowing clubs to pay a fixed sum based on their specific type and location of operations. This system could replace the traditional tax declaration and payment process, offering a streamlined approach beneficial for smaller entities.

“The introduction of a tax system tailored for esports arenas and cyber clubs could significantly ease the bureaucratic burden these entities currently face,”

a Langame spokesperson explained.

Redefining Esports as a Sport

In addition to tax reform, ARKI aims to work on the legislative recognition of computer clubs and esports arenas as official sports venues. This recognition could transform how these entities operate and are perceived within the wider sports and recreational sectors.

The move towards forming ARKI is seen as a logical step in the evolution of the esports industry, which has already surpassed movie theaters in revenue generation. Many clubs are privately owned and categorize their revenue under equipment rental, which aligns with ARKI’s interest in patent tax utilization, indicating a strategic move towards financial optimization and regulatory compliance.

Moreover, Vasily Ovchinnikov, head of the Video Game Industry Development Organization, supports this initiative, highlighting its potential to dismantle barriers and foster growth. He notes the complex nature of the current system where computer clubs are taxed similarly to entertainment segments, which ARKI could address through its advocacy for beneficial tax positions and legislative recognition.

Esports vs. Traditional Entertainment: A Financial Juggernaut

The formation of ARKI is not merely a business maneuver but a reflection of the esports industry’s growth trajectory, which now outpaces traditional cinema in terms of revenue.

“The esports industry has evolved from a niche entertainment sector to a major economic entity, necessitating a formal structure like ARKI to advocate for its interests,”

noted Vasily Ovchinnikov, head of the Video Game Industry Development Organization. However, this rapid growth has not been without its challenges. The existing tax regime, tailored more towards general entertainment than competitive gaming, imposes a significant financial burden on club owners, who often categorize their revenues under equipment rental to mitigate tax liabilities.

Interestingly, the Russian Esports Federation (RESF) of Russia, established in 2016, has also been active in promoting the interests of the industry, achieving recognition of esports as an official discipline, and advocating for benefits such as military service deferments for esports athletes. However, ARKI’s formation signifies a broader coalition aiming to enhance the structural and regulatory framework of the esports industry further.

Sporting Venue or Recreational Facility? The Ongoing Debate

The distinction between recreational and sporting venues becomes particularly poignant in locations where alcohol sales can coexist with esports activities, as in shopping centers.

“The coexistence of alcohol sales and esports competitions in the same venues complicates their classification and requires careful regulatory consideration,”

Ovchinnikov added. This situation necessitates a clear regulatory framework to distinguish between purely entertainment-oriented clubs and those that genuinely foster competitive esports.

The Future of Russian Esports

For the industry, the stakes are high, and the potential is immense. With esports clubs seeing a 15% revenue increase in 2023 alone, reaching 23 billion rubles, the formation of ARKI could be the cornerstone of a new developmental phase for Russian esports. This unified approach could not only address immediate financial and regulatory challenges but also pave the way for a sustainable and recognized esports ecosystem in Russia.

Russia’s Esports Strategy

While the strategic formation of ARKI highlights the potential of Russian esports, it also casts a light on a broader tactic often seen in Russian governance: leveraging emerging industries like esports to project a modern, technologically advanced image while possibly overlooking deeper systemic issues such as regulation and international perception. This ‘esports washing’ raises questions about the sincerity of efforts to nurture the industry organically versus using it as a facade for enhancing national prestige.

With material from: kommersant.ru