Game, Set, Law: Esports and the Future of Dispute Resolution in Emerging Industries

As the global economy is being reshaped by emerging industries, their rapid growth, more often than not, outpaces their ability to successfully develop their legal and regulatory frameworks. These sectors, ranging from esports and fintech to Artificial Intelligence (AI) and renewable energy, are fast-moving and often cross-border in nature. Therefore, traditional dispute resolution methods such as litigation may not be best suited to ensure stability and long-term success in these dynamic markets. Emerging markets may best benefit from tailored dispute resolution systems (DRS) which offer more flexible and cost-effective approach.

This article will focus primarily on esports and gaming, examining Riot Games’ recent initiative to introduce a DRS for their League of Legends and Valorant players in the EMEA region. The Riot Games’ DRS, set up in the form of an independent arbitration court, aims to maintain “healthy, professional esports ecosystems” as well as aid “contractual stability and integrity”.¹  Esports industry has been known for being an unregulated Wild West with no consistent governance framework. Frequent contractual disputes, including non-payment of salaries, and the issues surrounding contract practices² have impacted its growth potential.

The Riot Games’ case provides a valuable example of how tailored DRS can address industry -specific challenges.

The Challenges of Emerging Industries

Each emerging industry, such as esports, faces their own distinct challenges that make traditional dispute resolution mechanisms inadequate. These can include:

1. Regulatory Gaps: Many new sectors operate in a grey area of the law, with limited or evolving legal precedents. This uncertainty can lead to frequent disputes over contracts, intellectual property, and compliance. Judges are tasked with interpreting the existing laws to address these new types of conflicts, but their interpretations may not always align perfectly with the evolving nature of the issues. For instance, esports tournaments often face issues over intellectual property rights, such as the usage of team logos or game footage. In some cases, organisers and teams clash over who owns the content created during a tournament, especially when regulations regarding media rights are still unclear. Copyright lawsuits against game developers are also common. In 2018, Kyle Hanagami filed a lawsuit against Epic Games in the United States District Court for the Central District of California for an undisclosed amount where he alleged they used his dance choreography in Fortnite without permission.³ The claim, initially dismissed, was later overturned by the Ninth Circuit Court of Appeals.⁴ Notably, the judge ruled that the district court incorrectly reduced the choreography to static poses, ignoring the movement and transitions, and stated that “short does not always equate to simple”. The claim was recently settled, likely in order to avoid further legal expenses and uncertainties, but the Ninth Circuit Court’s decision has far-reaching implications for any future disputes.
2. Rapid Growth: The speed at which these industries develop often leads to hastily drafted agreements, unclear terms, and inconsistent enforcement of obligations. For example, due to limited funds, esports teams which compete at the lower levels use online employment contract templates to sign their esports players. Such situations often lead to contracts containing clauses which reflect the imbalance of power between the player and the esports organisation. This doesn’t mean that top-tier teams are free from such issues. For example, back in 2019, Turner “Tfue” Tenny sued his former employer, FaZe Clan, over an oppressive gaming contract which gave the esports organisation the ability to take up to 80% of his earnings.⁵ 
3. Global Operations: Many emerging industries, such as esports and blockchain, inherently operate across several jurisdictions. This creates complex challenges in resolving disputes where differing legal systems apply. For instance, esports teams frequently sign players from different countries, often without fully considering the implications of cross-border employment laws.
4. Specialised Expertise: The technical nature of specialist industries like construction or renewable energy means disputes often require arbitrators or mediators with industry-specific knowledge to fully understand the issues at hand. In esports, the technical issues that may arise include in-game cheating where players use third-party programs to cheat in competitions or intellectual property disputes over specific in game assets. Since game developers own the rights over their games, they have ultimate power over the rules but there is not a single unified system to address these challenges. Some game developers choose to use support of external organisations such as the International Games & Esports Tribunal. This notable collaboration between Esports Integrity Commission and the World Intellectual Property Organization brings together expertise in dispute resolution, IP rights, video games and esports ensuring that any ADR is resolved with the help of the industry experts.⁶

Benefits of Industry-Specific DRS in Esports and Gaming

If designed well, tailored DRS can offer several advantages in esports and gaming. By providing clear mechanisms, DRS encourages players, esports teams, sponsors and tournament organisers to honour their agreements, knowing that breaches, such as prize money disagreements or unfair contractual terms, will be addressed efficiently and fairly. 

DRS effectively reduces time and costs, as resolving conflicts over sponsorship deals, cheating allegations or player transfer through arbitration or mediation is often faster and less expensive. 

Finally, DRS enhances trust and stability within the industry. Transparent and fair systems build trust among players, organisations and sponsors fostering stronger commercial relationships and contributing to the industry’s growth. 

Dispute Resolution in Esports – Riot Games Case Study

Riot Games’ new DRS represents a significant step forward in addressing some of the most persistent issues in the esports industry. By focusing on fairness, accessibility, and expertise, the system is tailored to handle disputes such as unpaid salaries, prize money disagreements, and contract breaches. This structured approach provides a much-needed framework for resolving conflicts that have previously undermined trust within the esports ecosystem.

How the DRS Works

The DRS functions as an independent arbitration court designed for professional and developmental League of Legends and Valorant esports disputes. The solution is accessible to individuals within Riot Games’ ecosystem who are in Tier 1 and Tier 2 of League of Legends and Valorant esports. Complaints can be filed by any eligible party from the EMEA region given their initial contract included the specific arbitration clause or both parties agreed to this DRS. No lawyer is required to proceed but parties may choose to be assisted by a legal counsel. All proceedings are conducted in English and no time limits are imposed for submitting a claim.

To further promote accessibility, Riot has introduced a Legal Aid Fund to assist players who may lack the financial means to pursue arbitration. The help is available to individuals (not companies) whose annual gross salary is less than €30,000.⁷  Riot Games allocates a fixed budget to the Legal Aid Fund annually and no additional funds are provided until the following year. Currently financed by the game developer, the Legal Aid Fund is intended to become a self-sustaining system over time. This initiative underscores Riot’s commitment to levelling the playing field and ensuring that all stakeholders—regardless of their resources—can access justice.

This innovative framework, however, comes with its own challenges:

1. Non-Mandatory Arbitration Clause: The system applies only if the parties have previously agreed to arbitration in their contracts. Since the arbitration clause is not mandatory, many disputes may fall outside the system's scope, especially at lower levels where the industry is less scrutinised.
2. Funding Limitations: Riot’s annual Legal Aid Fund is a commendable initiative, but its finite resources could leave lower-tier players unable to access arbitration, especially if the fund is depleted later in the year. With administrative fees ranging from €500 to €4,000 and arbitrator fees between €1,000 and €5,000, the costs of pursuing a claim could easily outweigh its value. This is a significant barrier for players in lower divisions, many of whom are students or early-career professionals with limited financial resources.
3. Enforcement Issues and Cross-Border Complexities: Arbitration awards must be enforced in national courts, which can be a complex process. Cross-border disputes, common in esports, can further complicate enforcement, particularly when dealing with uncooperative parties or varying national legal standards.
4. Team Dissolution: In cases where a team dissolves or ceases operations, securing remedies can be nearly impossible. Lower-tier teams are especially vulnerable to financial instability, leaving players without recourse. For instance, Team Finest’s CS:GO team, which shut down in October 2022, still owes over $70,000 in unpaid salaries and prize money to its players.⁸
5. Independent Oversight: The involvement of a Germany based external counsel lends credibility to the system, but over time, concerns about the consistency of decisions and impartiality could emerge. Ideally, arbitrators should have expertise in esports, but the pool of qualified individuals is limited. This scarcity can lead to two potential issues: a reliance on the same arbitrators, raising concerns about impartiality, or the selection of arbitrators without sufficient industry knowledge, which could compromise the quality of rulings. 

Riot Games’ initiative lays a strong foundation, but its long-term success will depend on further refining the system to enhance accessibility, ensure enforceability, and promote greater inclusivity

Conclusion

Emerging industries require innovative and adaptive approaches to dispute resolution. Tailored systems that address the specific needs and challenges of these sectors can help build a culture of compliance, minimise conflict, and drive sustainable growth. Riot Games’ EMEA framework serves as a strong example of how these systems can be effectively implemented, providing lessons that extend beyond esports. As legal professionals, we have a unique role in shaping these frameworks to ensure they remain fair, accessible, and robust enough to support the evolving needs of future industries.

¹Riot Games, “Riot Games Launches Dispute Resolution for Esports in EMEA”, (November 2024) 

²The Washington Post, “Inside ‘contract hell’: Esports players say predatory contracts run ‘rampant’”, (March 2022)

³Reuters, “Epic Games resolves 'Fortnite' dance moves copyright lawsuit”, (February 2024)

⁴Esports Legal News, “Revolution in Copyright Law: The Hanagami v. Epic Games Case”, (November 2023)

⁵Forbes, “Fortnite Star Tfue Settles Dispute With FaZe Clan, Ending Esports’ First Major Employment Lawsuit”, (August 2020)

⁶International Games & Esports Tribunal

⁷Riot Games, “Dispute Resolution for Riot Games’ Esports (EMEA)”, (November 2024)

⁸Esports.Net, “Team Finest organization still owes $70k to CS:GO players and staff”, (September 2024)