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Ethics and economics: The conflicting values of the esports industry

(Riot Games)

On June 29, Riot Games published the following statement on their website. “It’s been a year of breaking new ground so far — to continue that trend, the LEC is excited to announce NEOM as a Main Partner for Summer 2020.” New ground was indeed broken. Fans of the LEC, or “League of Legends” European Championship, voiced their outrage over the partnership with the Saudi Arabian planned city project. Those working on the league’s broadcast organized a unanimous strike. Sixteen hours later, Riot backed out of the deal.

It was perhaps inevitable that a controversial arrangement such as this would occur eventually. In recent years, esports has seen fresh interest from a range of suitors. The industry’s growth, after all, has been complemented by unique access to a demographic brands have historically found difficult to reach — that of young and often male consumers.

Moreover, there’s already precedent for partnerships between esports properties and nation states or businesses with close ties to government.

Monumental Sports & Entertainment, which co-owns Team Liquid parent company aXiomatic and owns the Washington Wizards, Mystics and Capitals, along with their associated esports teams (Wizards District and Caps Gaming), is partnered with the United Arab Emirates.

Bahrain hosted a BLAST Pro Series event in 2019 and more recently, its first F1 esports Grand Prix.

FC Schalke 04, a German soccer club with an esports division, is sponsored by Gazprom, a largely state-owned Russian energy company. Gazprombank, a private bank owned by Gazprom, recently entered a partnership with esports platform FACEIT.

A number of games companies, including Riot, are owned either partially or wholly by Tencent, which is part-owned by Chinese Communist Party member Pony Ma.

All of the above countries have drawn some level of scrutiny from human rights advocates and watchdog organizations.

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The deal between Riot and Saudi Arabia illustrated why such partnerships can be uniquely fraught, however. A nation state is directly linked to how it governs its population and conducts itself internationally, and its policies can directly conflict with the values of esports companies and organizations. Critics of the partnership between Riot and NEOM, for example, pointed to the suppression of the country’s LGTBQ+ population and the killing of Washington Post columnist Jamal Khashoggi.

The former resonated acutely, as the LEC’s broadcast team has had a long-standing focus on inclusion and diversity behind the camera. The LEC account that tweeted the news of the partnership was adorned with a Pride logo.

The question for those working in esports, then, becomes where to draw the line. Those in traditional sports, particularly soccer, have generally chosen the path of least resistance. There, the commercial landscape is a labyrinth of global interests. The Qatari government owns French champions PSG, and Saudi Arabia recently attempted to take over Newcastle United — and that’s just the tip of soccer’s political iceberg.

Could esports be different? There’s a long history of states and corporations using sports to build respectability, and video games in particular are a way to display tech-savvy and youthful vision. Until esports finds its way to profitability — and on terms amenable to an often-outspoken, always-online audience — industry stakeholders believe it will continue to wrestle with questions that commingle ethics and economic viability.

An uncivil partnership

One of the reasons the LEC has been well-received over the last couple of years is its charismatic on-screen team of casters and analysts. Their input extends beyond being a face on a screen, though.

“The broadcast team had a sense of ownership,” said Devin “PiraTechnics” Younge, who worked on the broadcast between January 2015 and December 2018. “A lot of the sections you see produced are ideated on by the talent themselves.”

And so, unsurprisingly, the LEC broadcast team’s denunciation of the NEOM partnership was swift.

“Up until this point there were some problematic sponsors, Shell and Kit Kat for example, but this was a different level,” said Younge. (Documents show that in 1988, Shell commissioned and did not act upon research implicating the company in global climate change; Kit Kat owner Nestle has been critiqued by advocacy groups for unethical marketing practices, and some of their cocoa has been sourced to facilities abusing child labor). “This is a project to build a megacity directly overseen by a despotic leader of a country that murders journalists and denies LGBT individuals their rights. … I think that was the breaking point for a lot of people.”

Citing Saudi Arabia’s human rights abuses, particularly its discrimination against LGBTQ+ people, talent threatened to strike until the deal was canceled.

“There are LGBTQ+ members on the broadcast team and behind the scenes,” said Dan “Foxdrop” Wyatt, who worked on the LEC broadcast last year. “Everyone cares a lot about it — I don’t think LEC execs thought about the personal ramifications at all.”

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A statement released on July 30 confirmed the end of the partnership, though it did not contain an explicit apology. In an email to The Post this week, a Riot spokesperson wrote that the company “now will be subjecting any international governmental entities to a higher level of scrutiny before approving them to sponsor any of our regional leagues.” They declined to provide specifics about what that scrutiny would entail, citing company policy to not discuss internal processes.

Once the LEC’s partnership with NEOM was taken off the table, widespread attention turned to “Counter-Strike: Global Offensive” (CS:GO) tournament organizer BLAST’s recently announced partnership with NEOM. Its CEO, Robbie Douek, described the partnership as a “record deal” for the company.

Though more gradual than the LEC team’s rally against NEOM, pressure built on BLAST to cancel the deal. Caster Harry “JustHarry” Russell was one of several CS: GO casters who refused to participate in BLAST events until the deal was revoked.

“It wasn’t just that BLAST tried to partner with a murderous and unethical government,” Russell told The Post, “but that they did so as an organization that has clearly stated on multiple occasions that it is allegedly all about inclusivity.”

A leaked email from former CS: GO caster and current Team Liquid head coach Jason “Moses” O’Toole highlighted the issues that those close to BLAST had experienced after the deal’s announcement.

“Since I first reached out on July 30, calls and meetings have been scheduled and then delayed, dodged, rescheduled, and canceled,” wrote O’Toole. “Your refusal to speak up in defense of your own deal has placed your employees in the crossfire. Your weakness in this regard has allowed the freelancers you work with to be hung out to dry under public scrutiny. You are allowing others to take the heat for a deal that most of us know nothing about, do not agree with, and flat out despise.”

Just over two weeks after the announcement of their partnership, BLAST followed in the LEC’s footsteps by ending the deal.

State-sponsored soft power

Sports have long been used to help launder the reputations of countries and companies alike.

“The more you have going on in your country that other countries are criticizing, the more you want to have things that people can say good things about,” said Laurence Chalip, Professor of Sport Management at George Mason University. “It’s about rebalancing the scale.”

Chalip used the example of China to illustrate the process, but noted that the strategy is similar for a number of countries investing widely in global sports. “What we’re seeing in China is an aggressive effort to build soft power around the world — it’s among several countries that recognize sport has certain advantages,” Chalip told The Post.

Esports faces a similar dynamic. Gazprombank’s recent sponsorship of FACEIT, for example, mirrors the company’s approach to sponsorships of FIFA, Schalke and the Champions League.

“It’s all about how Gazprom want to be seen in the European space — it normalizes Gazprom as a commercial enterprise,” Veli-Pekka Tynkynnen, Associate Professor of Russian and Eurasian Studies at the University of Helsinki, said.

The Russian government has adopted laws that curtail Internet freedom, and Human Rights Watch notes that the country’s authorities harass peaceful protesters and critics of the government, engage in smear campaigns against independent groups, and stifle them with fines. It has also been accused by opposition leaders of orchestrating the poisoning of anti-corruption politician Alexei Navalny in August. (The use of a chemical nerve agent linked to Russia raised questions “only the Russian government can answer,” said German Chancellor Angela Merkel.)

Neither Schalke 04 nor FACEIT responded to The Post’s requests for comment.

Saudi Arabia’s forays into esports can be understood as part of a broader grand strategy, too. NEOM is described on its website as a “model for the New Future,” and “a centerpiece of Saudi Arabia’s 2030 Vision plan to … position the country to play a leading role in global development.” The prospective LEC partnership also fed into a more specific strategic narrative for Saudi Arabia.

“It has to be linked [to the] tech aspirations of Saudi Arabia in general,” Simon Chadwick, professor of Eurasian sport at Emlyon Business School, told The Post. “Console gaming and esports are part of this high-tech narrative associated with NEOM. … Esports are important for a number of reasons. They are a way to build relationships and visibility, they offer economic value, and are a route into the malleable minds of the younger generation.”

The executive branch of the United States government has also drawn negative attention in this regard. The U.S. Army received criticism this summer for trying to recruit in misleading ways on live-streaming platform Twitch. On Tuesday, a social media post advertising the U.S. National Guard on the feed of gaming media outlet GameSpot was shouted down by critics.

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Beyond their desirable demographics, esports is also a financially-convenient venue for states looking to promote their interests. Despite audience growth and an influx of money from sponsorships and fundraising, for the most part the industry isn’t profitable. This makes big investments more difficult to turn down, especially for smaller organizations.

“The barriers to entry in the esports sphere are relatively low; if a country is seeking to build its image and reputation, then esports is low-hanging fruit,” Chadwick said.

Potential sponsorships can therefore put some orgs in an ethical and financial quandary.

“We’ve always been profitable, that’s not changing,” said Team SoloMid Chief Revenue Officer Brad Sive. “But I do think in the future teams in financial trouble might look to [morally questionable] sources of money for support.”

Shades of gray

Though the NEOM deals seem to have caused a sort of social awakening for those in the industry, the financials of the esports sector aren’t just a problem for organizations. Frankie Ward, a CS: GO caster, points out that when she worked for BLAST in Bahrain last year, she started to understand the problem.

“The audience surprised me — we had so many young boys and girls who were genuinely excited to have us there,” Ward told The Post, “But I posted a photo on Instagram and a couple of friends called me out on it. That was the first wake-up call.”

Human Rights Watch describes Bahrain’s situation as “dire,” pointing to the imprisonment of prominent human rights defenders and opposition leaders for peaceful activism.

Ward went on to participate in Gamers Without Borders in May 2020 — a charitable event organized by the Saudi government’s General Entertainment Authority, and attended by a number of esports organizations and other casters. “I was living in a half-finished house with a mortgage to pay, panic set in and I took the job,” said Ward. “If I could go back in time and turn it down I would … but it’s important for me to be honest about those mistakes so that I can move forward positively and do good.”

Just a couple of months later, Ward was one of the first to strike against BLAST’s decision. “I saw the action taken by the LEC team and realized I needed to take a stance,” she told The Post.

BLAST declined The Post’s request for comment.

As awareness grows, however, decisions will have to be made about the parties with which those in the industry align themselves. Riot’s ownership by Tencent, which holds significant stakes in a litany of other games companies, has repeatedly spawned questions to that end. Some see Tencent’s ownership, and its state ties, as a problem. The Chinese government has generated international scrutiny for the Communist Party’s internment of the Muslim Uighur population in Xinjiang and suppression of democracy in Hong Kong. The government also has a record of repressing free speech, using torture and jailing human rights activists, according to Human Rights Watch. Others draw a distinction between Riot and Tencent and the LEC/Saudi Arabia partnership.

“The disappointing thing comes after, when people start saying, what about Tencent? What about China?” Younge, the former LEC broadcaster, told The Post. “I think the people that have been accusing the shout-casters of being hypocrites are kind of missing the point. It’s working for a company that might have ties to something problematic versus outwardly endorsing something horrible.”

Jim Van Stone, president of business operations and chief commercial officer for Monumental Sports and its family of traditional and esports clubs, pointed to how sports and related partnerships can bring people withdifferent philosophical or political opinions” together and foster social progress, such as the one between Monumental and Etihad Airways, the UAE’s flag-carrier airline. In 2017, the Washington Capitals invited Fatima Al Ali, a player on the UAE’s women’s national hockey team, to visit their practice facilities and meet the team. A year later she was joined by her teammates to drop the ceremonial first puck in conjunction with the NHL’s “Hockey Is For Everyone” promotion.

“We evaluate every partnership as we go into it and we figure out what’s in the best interest of a partner and us to participate,” Van Stone said when asked about criticism of the UAE from activist groups for unjustly detaining government critics and using its legal system to discriminate against and imprison LGBTQ+ individuals, migrants and women. “From a Monumental core standpoint, equality is one of the things that we stand behind. … We’ve been a huge proponent of women’s athletics in our investment into WNBA’s Mystics. We also are very cognizant of community based programs that really are important to people and we want everyone treated equally and fairly.”

To that end, a partnership with an organization that has a stated commitment to equality might offer the UAE some insulation from critics of the country’s human rights record.

While many teams contacted by The Post were reluctant to specify where they would individually draw the line with regard to sponsorships, it’s clear that the line does exist. Lindsey Eckhouse, commercial director for G2 Esports, remarked that G2 “wouldn’t do a deal, for example, with a cigarette company because that doesn’t align with our overall values.” Alexander Muller, managing director of SK Gaming in the LEC, also cited tobacco as an industry from which his organization wouldn’t accept sponsorship.

“When we look for a brand partner, we want to shy away from controversy,” said TSM’s Sive. “We understand that we’re talking to a young demographic and we need to be thoughtful of that.”

Muller pointed out that it’s not easy, or even ideal, to simply not work with any government entities. “I can see scenarios where [working with governments] would be beneficial,” he wrote in an email to The Post. “We are Cologne based, as an example … if there are ways we can contribute to the city and its appeal to the younger generation, the city could see this as valuable and support us financially.”

“It’s made a lot of us reconsider where the money comes from and what the threshold is for acceptable,” said Russell, the CS:GO caster. “Esports isn’t in its infancy anymore … so I feel like we don’t need to sell to the highest bidder with complete disregard for what us as individuals or as a brand stand for.”

However, where individuals or brands take a stand may depend on their bank accounts. As the esports landscape becomes more commercially competitive — and more lucrative — its major players may find themselves with increasingly difficult decisions to make.

Ewan Morgan is a freelance writer from Wales whose work explores the intersection of sport and politics. He volunteers as a copywriter for Accidental European, and tweets @ewan_morgan.

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