Esports Regulations Are Front and Center in Brazil – The Esports Observer

Since 2017, there has been a movement in Brazil to regulate esports in the country. After public pressure stopped a bill from passing on the federal level in 2019, new legislation with similar language is being pushed forward, and in many cases, being approved, through individual Brazilian state governments.

This movement has been surrounded by polemic episodes and conflicting sides, which The Esports Observer discovered in researching this article and will expose as facts that might explain what is happening and what may become of this subject.

Prior to this investigation, TEO heard local leaders of the esports community who were pessimistic about the idea of confederations in the esports environment. Their dissatisfaction extends to laws that may pass, and in their view, could ruin the freedom and self-regulation of the local esports market.

That’s why in 2019 these local leaders, including Bad Boy Leeroy (BBL) Chief Relationship Officer Leo de Biase and the INTZ CEO Lucas Almeida, went to the Senate with the support of publishers to testify against the Federal Senate Bill number 383 of 2017, proposed by Sen. Roberto Rocha, which would regulate and grant esports the status as an official sport in Brazil. Their efforts were not in vain: with the support of Sen. Leila Barros, they were able to keep the bill from passing.

But community leaders were surprised to learn that supporters of the bill were pushing for its passage in some Brazilian state’s legislatures, a cause of concern for people in the esports business. The local approach worked as the bill managed to pass in a number of states. In São Paulo, opponents were able to contact the governor of the state, João Doria, who stopped it from passing.

The Sides

The person behind all those bills, both on the federal and state levels, is Daniel Cossi, the president both of the Brazilian Confederation of Electronic Sports (CBDEL, from the acronym in Portuguese) and of the World Esports Consortium (WESCO), both affiliated with the International Esports Federation (IESF), established in South Korea. Cossi told The Esports Observer that, by approving regulations for esports, the confederation would be able to accelerate the development of the scene by enabling access to benefits for pro players and for esports promotion companies, even those that criticize the model.

Although he claims not to have any problem when acting in other countries with WESCO, Cossi faces a huge objection in Brazil from the community. His name is often mentioned in relation to the failure by CBDEL in 2016 to fulfill the promise of sending a Brazilian team to the 8th IESF World Championship in Jakarta, Indonesia. That incident, according to Cossi and to a statement from CBDEL to ESPN in 2018, resulted in the exclusion of a former director from the confederation’s board. Cossi also had his name involved with the World Cyber Arena held in China, which was shut down after failing to pay prize money to participating organizations, a fact that also did not help his reputation.

The texts of the bills that are being carried through the states are the same as Senate Bill Project 383, written by Cossi with the support of Rocha, blocked in 2019. These are being filed individually in the states by local politicians who are sympathetic to CBDEL and under Cossi’s influence, as Rocha was. Suspicions regarding a possible conflict of interest were raised especially as Rocha’s son, Roberto Rocha Jr., occupied the role of Vice-President at CBDEL.

TEO asked Cossi about the bill, and he said that he indeed got to know Rocha Jr. through his father, who mentioned that his son also operated esports events in the state of Maranhão, in the northeast of Brazil. Cossi then approached him and invited him to be the vice-president of CBDEL in the region.

This raised concerns in the local community about CBDEL and Cossi, who claim to have invited publishers and local leaders to join him in the debate and have their interests represented. Cossi says they ignored the offer. Cossi carried the regulation project forward anyway, raising concerns that it would result in a forceful intervention by the confederation at private esports projects, something that he strongly denies: “I have no power of intervening at anything, and it can’t be done because, if anyone tries to do so, the Public Prosecutor’s Office [a public body that represents the interests of society in Brazil, known locally as Ministério Público] would act against this person or entity.”

CBDEL has a portal where, following the Brazilian law for recognizing a sports entity, it publicly displays its documents, showing that it did, in fact, invite representatives from publishers, like Ubisoft and Riot Games, and local leaders, like Leo de Biase, to participate and communicate with CBDEL. They chose a tactic of ignoring and minding only their current businesses in the scene, letting initiatives in the public sphere “speak for themselves” so they would not be legitimized by the esports community. “The market understands that the federative format is not beneficial, so it doesn’t support it,”  Biase told TEO. Therefore, leaders and publishers only got involved when the law was already being discussed in the senate.

So, the debate was handled without any support, prestige, or established contact with key players from the local esports market, opposed by a side that chose to not move regarding inevitable legal happenings. The result of the lack of contact between those sides was a controversial bill, with broad language not specific on points of concern from publishers, event organizers, and other components of the esports industry. Esports are now being discussed in the public sphere by politicians who, without proper contact with the market, have little or no knowledge of the scene.

The Bill

Translated from Portuguese to English, is the text of the bill that was blocked by the São Paulo governor. It offers the same text that is in bills being pushed through other state parliaments in Brazil:

Article 1 – The exercise of electronic sports activities in the State of São Paulo will obey the provisions of this law.

Sole paragraph – Electronic sports are understood to mean activities that, using electronic artifacts, characterize the competition of two or more participants, in the mixed ascension and descent system of competition, using round-robin tournament systems and knockout systems.

Article 2 – Those who practice electronic sports now receive the nomenclature of “athlete”.

Article 3 – Electronic sporting activity is free in the State of São Paulo, aiming to make it accessible to all interested parties so that it can promote intellectual, cultural, and contemporary sports development, leading, together with other influences of Information and Communication Technologies – ICT, to cultural training, providing socialization, fun, and learning for children, adolescents, and adults.

Sole paragraph – The specific objectives of electronic sport are:

1 – promoting, and stimulating citizenship, valuing good human coexistence through sports;

2 – provide educational sports practice, leading players to understand themselves as opponents and not as enemies, at the origin of fair play, for the construction of identities, based on respect;

3 – develop cultural sports practice, uniting through its virtual players, diverse people around them, regardless of creed, race and political, historical, and/or social divergence;

4 – combat discrimination against gender, ethnicity, creeds, and hatred, which can be passed on subliminally to subject players in games.

5 – contribute to the improvement of intellectual capacity by strengthening the reasoning and motor skills of its practitioners.

Article 4 – The State of São Paulo recognizes as a promoter of sports activity the Confederation, Federation, League, and associative entities, which regulate and disseminate the practice of electronic sports.

Article 5 – The “State Day of Electronic Sport” is instituted, to be celebrated, annually, on June 27th.

Article 6 – This law comes into force on the date of its publication.

The main concern from local leaders and publishers rests in Article 4, which, in their interpretation, makes all esports subject to entities such as CBDEL. Cossi denies that, saying that any interference in private esports initiatives once they choose to not associate with any confederation would be unconstitutional, and therefore impossible. He said that entities such as CBDEL would not have any power to regulate or charge any private initiative whatsoever. Cossi also says that the fear of the approval of the bill is actually caused by misinformation.

Cossi implies that even if the bill passes through all spheres of Brazilian legislation, nothing would change for current esports companies. Armineyde Abtibol, a lawyer specializing in sports law and also the president of the Superior Court of Electronic Esports Justice (STJDDE, from the acronym in Portuguese), an institution created by CBDEL to judge sportive cases in its affiliated tournaments, reinforces this position: “ [The bill] will not oblige the federation of these existing leagues, even because they exist and will always exist. In fact, private events do very well. Being part of the federative system is an option if a team wants to make proper career plans for those recognized as high-performance professional athletes.”

TEO also spoke to Nicholas Bocchi, a lawyer specializing in sports and esports legislation, who raised questions regarding CBDEL’s speech: “We cannot fail to observe that, in Article 4 of the bill written by CBDEL, the terms deliberately used to denote who might be the entities that promote sports cause the limitation feared by market agents, differently from what occurs in the Brazilian General Sports Law, which determines that any type of company can assume this role. They could, and it would be even easier, have just copied the article of the general law that provides for this.”

On the side of the interests, CBDEL could provide such legal structures to organizers who choose to be part of the federation, so even if it does not charge anything of associates as it promises, approving the bill would increase its influence in the local scene. To organizers in the business of formal tournaments, the bill might represent the end of a kind of legal immunity on which they rely today. For example, if a player sues a league or an organization, today, it may not be treated as a sports case, and the player’s contract might be registered in the sports law. So companies in esports, without proper regulation, can switch from being a sports or an entertainment entity according to what is convenient in each case. Even considering this possibility, Abtibol says that little would change from the current scenario:

“The approval of the bill will not affect the recognition of employment or not, as it already exists today,” she said. “The characterization of the employment relationship for professional athletes is possible if all the requirements determined in article 3rd of the CLT [Brazilian consolidated work law].”

It is relevant to point out that Brazil uses a civil law structure, different from the common law used in the U.S. When a new bill is issued in the country by the legislative power, it won’t be enforced until there is a conflict, which can be formally issued either by the Public Prosecutor’s Office or by any person or institution that sees something wrong, to be analyzed by the judiciary, which will apply the law within its boundaries.

Bocchi warns that just fitting esports into sports law might be a mistake. Although he strongly disagrees with the bill that is currently running through Brazilian states and is even against the existence of confederations as CBDEL, he speaks in favor of regulation: “Esports are something completely new and different. It is necessary to make something from scratch, facing the reality and the elements of esports.”

Felipe Ferreira and Raphael Andrade from law firm Andrade Chamas Lawyers, who are both knowledgeable on matters related to the esports ecosystem, agree with Bocchi’s opinion: “[This bill] is problematic for several reasons. Firstly, it addresses a point that is far from unanimous among esports professionals: the supposed need for its recognition as ‘sport’ for the purposes of the applicable legislation.” Ferreira and Andrade also wrote that “the legislator seeks, in a very unfortunate way, to define ‘fundamental principles for electronic sport,’ ignoring that each game is the property of a developer who must be free to explore its product in the best way to understand and shape it to market needs.”

The question regarding the intellectual property rights of publishers is another point raised by community leaders. They consider it a risk to make their games subject to laws that might cause them to lose control over their IP or increase costs to a point they wouldn’t be willing to operate esports in the country. Cossi defends his text saying that there are already other laws in Brazil that protect intellectual property, and it would be redundant to point them out again in the esports bill. He also says that, if a publisher does not want to have its game used by third-parties, the process for blocking it based on intellectual property laws would remain the same as it is today.

Pro Players Caught in the Crossfire

There is a third side in this battlefield, which is the most vulnerable and often ignored during the debate: the pro-player. High salaries and luxurious lives are exceptions and temporary, and not even a safe retirement plan is guaranteed. The lack of regulation into such an expanding market might lead in the long term to a generation of former esports pro players completely unprotected by basic rights and structures. To date, there is not a strong association or union in Brazil to represent their collective interests.

According to Bocchi, “the summary of what they [current esports promotion companies] want is to keep everything unregulated and without legal security to continue enjoying what is good in sports law, but without having to apply what would increase the cost of their operation, usually what would bring more rights to the athlete.” Abtibol agrees with Bocchi, pointing that “it is observed in the current scenario that the ‘athletes’ have daily training for over, in many cases, 12 hours. Thus, it is essential to pass specific legislation that brings legal certainty.” 

Bocchi, although, points that extensive training periods are common in the world of esports in general, not only in Brazil, and restricting it could severely weaken the country’s representation in the international scene: “A serious regulation of electronic sports should allow this situation, but not without guaranteeing that the working conditions follow minimum standards of safety and ergonomics and that the athlete is rewarded in a way that is sustainable to the market, not causing a burden that will make clubs collapse.”

Cossi claims that CBDEL is interested exclusively in addressing this issue of the esports scene, helping players or organizations who voluntarily associate with the confederation to establish career plans and access benefits, including financial ones, that the Brazilian government enables for athletes.

To investigate Cossi’s speech, TEO spoke with an organization that bucked pressure from major players and affiliated with CBDEL. Adriano Grosser, the owner of Real e-Sports, an organization that fields a team in the elite of the Brazilian Free Fire in a partnership with Santos eSports, allows the CBDEL to support the club with legal assistance, players’ contracts and rights, and even in raising partners when investments are necessary after qualifications, for example. Grosser also confirmed that the confederation had never charged anything to the organization, neither monetary nor in participation in CBDEL’s tournaments, and the resistance to getting to know it is “due to misinformation.”

CBDEL’s tournaments are a major element in this discussion. If the confederation’s intentions are not to charge organizations, leagues, or players, and the approval of the bill project, according to Cossi, wouldn’t change a thing in the current structure of the Brazilian esports scene; the tournaments would become more relevant after being legitimized by law. That would be used to attract sponsors and generate revenue to CBDEL, which says such benefits would reach its members. 

In this matter, the private side claims that, as many non-endemic brands might make their first steps into esports by searching for a local confederation instead of game publishers, for example, a bad experience with CBDEL tournaments might take away new potential investors. Cossi claims his critics are trying to monopolize the market. At the same time, he is accused of using the government as a way to gain relevance for the scene. 

Where We Are Now

The bill is blocked in the federal senate and in São Paulo, where the majority of esports organizers and entities are established. In other states, such as Paraíba and Ceará, the law has been approved already and esports is now fit into sports law.

Cossi says that absolutely nothing changes in the territories where the bill has passed, and private initiatives that do not want to affiliate with the confederation will not be legally required to join. TEO asked Cossi if others could take advantage of the bill and try to subject private esports events and companies to confederations, even though CBDEL assures it will keep out of private business. The answer, to which Bocchi agrees, is that they will not be able to do it because it would be unconstitutional.

Both proponents and critics of the bill say that if it gets approved nothing should happen to any current esports initiatives. CBDEL cannot interfere with any private esports company that does not choose to affiliate with it. The private side does not (and seemingly will not) recognize any confederation or public institution to regulate esports. On the legal side, it does not compel any side to take action, and any intervention to private initiatives would be illegal. The concern from the private side is that the bill currently running in courts across the country will be misused, opening breaches to opportunists, and therefore needs to be stopped. 

It is clear that if the esports business wants to grow, it may have to come to grips with the fact that government regulations are going to happen. Even if the market regulates itself from a commercial point of view, if not controlled it may become a grinder of pro players’ lives. What it currently lacks is for one side to realize that it cannot act alone without consent from the stakeholders in the market, and for the other side to realize that running away from the debate to keep the market deregulated is probably not an option, unless the esports industry wants to stop expanding. 

Source: Read Full Article