Esports Trade Association has members throughout the esports ecosystem, including game developers, tournament organizers, sponsors, advertisers, influencers, and other stakeholders who are cashing in on this phenomenon. Before Covid19, professional players competed in huge arenas for seven-figure prize money with millions of fans watching live-streamed coverage all over the world. Despite the pandemic, influencer players and teams stream their gameplay to fans everywhere and are grabbing the attention of investors and sponsors. Revenues in this space are expected to reach $3 billion in 2022 (Goldman Sachs).
Where there is money, there is risk—and, the need for insurance. There are few agents and carriers that specialize and offer products specifically for esports. Exposures and legal risks in esports include media, employment, governing bodies, among others.
Since esports exists on the Internet, media liability is a primary exposure. Stakeholders seek insurance to protect against suits for defamation, intellectual property infringement, misappropriation of name or likeness, or breach of privacy. The pandemic has made event cancellation insurance even more important. This includes the financial consequences of event cancellation or non-appearance of key talent. Media tech insurance addresses the fundamental ability in esports to stream live events continuously. Media tech failure can affect ticket sales, resulting in a breach of contract suits, and claims of professional negligence. Deadly weapons protection insurance addresses the risk of an attack on a venue. Mergers and acquisitions are now common with esports brands, resulting in litigation. Stakeholders seek insurance to protect them against the risk that a buyer could assume unforeseen liabilities from a seller, resulting in litigation. Other applicable insurance includes general liability insurance, teams insurance, event liability, property insurance, cyber insurance, and professional liability insurance.
Individual players also seek insurance. Like traditional athletes, they risk livelihood threatening injuries, which could lead to short or extended disability. Common injuries are blood clots, carpal tunnel syndrome, trigger finger, and tennis elbow. Players require health insurance and short and long-term disability insurance. If they are using some of their own gaming equipment, this will require appropriate property coverage.
Carriers that are offering esports insurance include: Beazley Insurance, CFC Underwriting, K&K Insurance, and American Specialty. Other insurers are entering the esports industry, but do not have tailored programs to date.
Have you considered the risks associated with your business operations? Have you added esports operations to your business without consulting your insurance agent or broker? It is wise business practice and sound risk management to assess your risk financing plan. Will you self-insure in the event of a lawsuit or claim or will you pass along the cost of indemnification and hiring an attorney to an insurance company? It’s a good idea to check in with an insurance professional every year or every time you make changes to your business.
Although you may feel that insurance premiums are expensive, having coverage will give you peace of mind that you will be able to withstand the financial consequences of a lawsuit and that the viability of your business will not be threatened by litigation.
Katharine M. Nohr, Esq. is an Esports and insurance defense attorney. She is the host of The Wide World of Esports show on the ThinkTech Hawaii live-streaming platform and is a frequent speaker on esports and sports law and risk management. Ms. Nohr is the author of Managing Risk in Sport & Recreation: The Essential Guide for Loss Prevention (Human Kinetics 2009).