Five Legal Tips for “Minor” Gaming Talent Entering into Contracts

The expansion of the competitive video gaming industry has provided talented gamers with the chance to sign lucrative agreements with professional esports teams and brand sponsors. These opportunities include those available for “minors” prior to them reaching the legal age of majority in their jurisdiction. While these chances can be exciting for a gaming talent, it is important that minors and their legal guardians are aware of the potential enforceability of the contract during the talent’s age of minority, the legal obligations related to a minor receiving funds, and the impact an agreement may have on the minor’s other non-gaming activities such as school. Additionally, like other entertainment and media industries involving younger participants, some states have enacted specific legislation related to contracting with minors, including those laws requiring Court approval of a service agreement or ones that mandate the formation of a “trust” bank account to hold the earned funds on the minor’s behalf. While there are many different legal considerations related to contracting with “minors,” this article focuses on five legal tips for minors and their legal guardians to consider when entering an agreement on behalf of a minor professional gamer.

Confirm that a parent or legal guardian is involved and consider whether court approval is required.

One important legal consideration for a minor signing a contract is ensuring that the proper parent or legal guardian is involved in the negotiation and execution of the document. It is prudent to ensure that a legal guardian participates in and ultimately signs any applicable agreement on behalf of a minor gaming talent. Specifically, individuals who have not achieved the legal age of “majority” generally do not have the same legal capacity as adults to enter binding contracts. In fact, when a party contracts with a “minor,” they will often require a parent or guardian to sign the agreement or otherwise provide written consent to the deal. This parental involvement is intended to help all parties understand the agreement and the legal considerations associated with contracting with the minor.

However, it is important not to treat parental written “consent” as a mere formality or as a complete solution to every enforceability issue. In fact, some jurisdictions hold that contracts entered by minors may be voidable at the minor’s election during their minority or for a reasonable period after reaching the age of majority for non “necessaries.” As a result, a legally appointed guardian’s signature may help create obligations for the legal guardian and such duties may discourage later disaffirmance by the minor. Accordingly, the parties should confirm who possesses the legal authority to sign on behalf of the minor and whether the consent of one or both parents or legal guardians is required. This consideration is especially important if any child custody arrangement impacts the approval of an agreement on the minor’s behalf. Similarly, proper discussion with a minor’s legal guardian is especially important in cases where the agreement involves the minor traveling out of their home state or out of the country, the gamer’s relocation to another city or country for housing or training on behalf of a team, as well as issues related to the public commercial use of the minor’s “name, image, or likeness” (NIL).

Moreover, some states have enacted statutory mechanisms and legal obligations related to receiving court “approval” of certain entertainment and talent-related contracts involving minors. For example, states such as New York, Massachusetts, and California have enacted judicial procedures to apply for court approval of a service or talent agreement with a minor. However, the application and necessity to receive court approval depends on the specific facts of the contractual relationship, the applicable state law, and the nature of the services being provided by the minor, among other factors. Thus, all contracting parties should not assume that their signature alone resolves the issue of enforceability and should be aware of whether the state in which the minor resides requires court approval prior to executing an agreement.

Have the agreement reviewed before signing to understand its structure.

It is also crucial for a minor gamer and their legal guardian to have the proposed agreement reviewed by a competent professional, including a licensed attorney experienced in the esports and video game industry, before it is executed. While some agreements may appear straightforward, many contracts contain provisions that may impact not only the current but also the future financial and business opportunities of a talent. As a result, any agreement should be reviewed closely by a professional to ensure that a minor gamer and their legal guardians understand exactly how the contract terms may affect the gamer’s current and future prospects. A proper legal evaluation of any agreement entered into by a minor is particularly important because the agreement may impose obligations on the legal guardian, along with the player themself. In some cases, a legal guardian may be asked to consent to the player’s obligations or make representations about the minor’s availability and capacity to enter into the agreement. Thus, prior to a minor player executing a binding agreement, it is best practice to have experienced counsel review the agreement to ensure that the contract accurately reflects both parties’ understanding of the deal, protects the minor player’s rights, and does not impose unreasonable obligations on the player or their legally appointed guardian.

Ensure compliance with the minor’s educational obligations and child labor laws.

Another paramount consideration in any agreement involving a minor is the player’s education, health, and overall well-being. Unlike adult professional gamers, minors are likely still enrolled in school, or they may be required by state law to take a certain number of classes. Thus, any party entering into an agreement with a minor should be aware of applicable compulsory education laws, child labor or child “performer” regulations, and the potential availability and need for the minor talent’s guardian for transportation, supervision, or support. Accordingly, any professional esports contract involving a minor should clearly address how the player’s educational obligations will be handled. For example, the agreement should consider whether the contracting party must accommodate school attendance, examinations, tutoring, remote learning, homework, and other academic requirements. It should also specify how any team practices, scrimmages, tournaments, sponsorship obligations, streaming requirements, and any other press or media requirements under the agreement will be scheduled during the academic year. In addition, the agreement should outline whether the child’s guardian may accompany the minor to any or all these obligations, as well as which party is responsible for the travel and other associated expenses for the minor’s guardian. In some instances, the contracting party may pay for the costs associated with a minor’s guardian and in other cases, the minor or their guardian will need to cover these expenses on their own.

Federal or state child labor laws may impose further restrictions on the work hours that a minor may be employed for and may also regulate the types of activities and services a minor may perform. These regulations vary by state and country; and, as a result, the requirements may differ depending on whether the minor is designated as an employee or independent contractor. Consequently, parties entering into an agreement should be aware of these legal restrictions and how they may impact the minor talent’s availability to work during certain hours. As a result, any negotiated agreement should include contractual language providing for any reasonable reductions of practice time or any contractual obligations in light of any educational requirements. Ultimately, addressing these issues in advance can help prevent misunderstandings between the parties and ensure that the applicable laws are complied with to ensure a minor player’s development is protected while pursuing professional opportunities.

Clearly address travel, housing, and parent or guardian participation.

Commercial deals in the esports industry frequently require players to travel for tournaments, practices, media appearances, sponsor activations, and international competitions. An agreement involving a minor player should include language addressing how these requirements are handled. The document should clearly identify which party is responsible for travel expenses related to a specific obligation, such as the cost of flights, hotels, meals, and ground transportation. It should also allocate responsibility for obtaining any passports, visas or other required work authorization prior to engaging in any of the contracted for work. Similarly, an agreement should specify whether a legal guardian may accompany the minor on any travel or other certain obligations (i.e., out-of-state events), and who will cover these costs. This point is of particular importance in cases where a minor’s obligation is far from their home or requires the player to be away from home for an extended period. Additionally, any housing and lodging arrangements should also be addressed carefully in an agreement. If a minor is mandated to live in team housing, attend a bootcamp, or room with another individual during a tournament, the contract should explain the details of the arrangement, including whether supervision costs are covered by the team, and the role of the guardian during any such occasions.

International travel required under an agreement may also generate further legal considerations requiring the parties to agree upon the parameters and costs associated with such an undertaking in advance. For example, a document should address and assign responsibility regarding any relevant necessary parental consent or accompaniment for the trip in addition to potentially agreeing under a deal to cover the accompanying guardian’s travel, lodging, and “per diem.” Accordingly, parents and guardians should ensure that any travel or housing arrangements are clearly written into an agreement to ensure that all parties are aware of who is responsible for the costs prior to the player’s travel.

Review and open any statutory required accounts related to payment on behalf of minor.

Finally, minor players and their legal guardians should pay close attention to any applicable statutes or legal obligations related to compensation earned by a minor, including any laws that impact how any funds received by the minor must be held. Additionally, minor talent and their guardians should also understand how sums may be paid to the minor talent. For example, a “Coogan Account” also known as a “blocked trust account” or a “trust account” may be required in certain jurisdictions. These statutes generally require that a specific portion of a minor’s income is held in a trust account on their behalf. For instance, some Coogan accounts require that “15%” of a “minor’s gross wages” must be “withheld” by an employer and “deposited into the account within 15 days of employment.” To comply with these requirements, the minor’s legal guardian is responsible for opening and sharing the Coogan account number with a potential employer to ensure adherence to these laws.

Currently, several states, including New York (referred to as “Child Performer Trust Account”), California, Illinois, Louisiana, and New Mexico, have all enacted their own type of “Coogan” account requirements. For instance, in California, a minor’s legal guardians must open a “Coogan” account and ensure that “15%” of a “minor’s gross wages” is deposited in the account which becomes the legal property of the minor. In Illinois, a “blocked trust” account must be opened by a minor’s legal guardian and functions in a similar manner to a “Coogan” account. Similarly, Louisiana and New Mexico require that the legal guardians of a minor talent must open a “blocked trust” account. In New Mexico, specifically, a talent’s legal guardians are only required to open a “blocked trust” account if the talent earns more than $1,000 under a given employment contract. In New York, the talent’s legal guardians must open a “Uniform Transfer to Minors Act” (“UTMA”) or a “Uniform Gifts to Minors Act” (“UGMA”) compliant “Child Performer Trust Account.” These accounts are similar to “Coogan” and “blocked trust” accounts as they require the deposit of “15%” of a “minor’s gross wages” into the account that later becomes the legal property of the minor. However, some of these accounts may permit the withdrawal of some of the funds by a minor’s legal guardians prior to the reaching the age of majority. For example, a statute may enable an account’s “custodians,” which are usually the minor’s legal guardians, to withdraw funds from a “UTMA” or “UGMA” account for expenditures that are made “for the use and benefit of the minor,” such as for educational or medical expenses. Thus, where applicable, any agreement entered into by a minor should obligate that the legally required portion of the minor’s income be paid directly to the talent’s “Coogan” account or other “blocked” or “trust” account to ensure that the payee complies with these obligations. Moreover, the talent and their guardian should also ensure that all funds payable to a trust account are accounted for and that they are only distributed to the talent in compliance with any applicable statutory guidelines. While signing a contract as a minor can be an exciting and potentially valuable opportunity, these agreements should be approached carefully as they may affect the gaming talent’s current and future career. Accordingly, minors and their legal guardians should focus on ensuring that the proper payment mechanisms and contractual protections are in place, including confirmation that the appropriate legal guardian is involved. Other important considerations are related to whether court approval is required or advisable for the contract in addition to ensuring compliance with any applicable education and child labor rules. Finally, the parties should aim to clarify any domestic and international travel and housing arrangements related to any contractual obligations as well as ensure adherence to any applicable payment and “trust account” requirements (which vary in each jurisdiction). While some of these steps are legally required, it is prudent that gaming talent and their authorized guardians try to follow some of these practices in an effort to help protect the minor player and to try to ensure that they are adequately secure as they progress throughout their career.