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Tuesday, June 30, 2015

The Next Generation of Gamers

By Jeffrey A. Silver

On April 29, 2015, the UC Berkeley Golden Bears eSports team beat Arizona State to win the collegiate video gaming championship tournament. The winners received their remaining years’ tuition, and if they were graduating seniors, they received a year’s worth of tuition in cash. The contest was sponsored by Blizzard Entertainment, a video game developer whose “Heroes of the Storm” game, which was used in the competition, is scheduled to be released this month. The most notable “milestone” was that the game was broadcast live on ESPN2.

In July 2014 a similar contest featuring the game “Dota 2” was held in a Seattle basketball arena crammed with 11,000 screaming spectators. The contestants were playing for $11 million in total prize money and, according to The New York Times, “moved another step closer to securing [social] gaming’s legitimacy as a major-league spectator sport.” The October 2014 “League of Legends” tournament that was held in Seoul, Korea’s soccer stadium was sold out with 40,000 fans in attendance, another indicator of the rabid devotion to this form of entertainment.

“Global revenue for games is $20 billion higher than the music industry’s and is chasing that of the movie business,” says Nick Wingfield, a writer for The New York Times, and “this fall [2014], Robert Morris University in Chicago will dole out over $500,000 in athletic scholarships to gamers.” He added, “More than 70 million people worldwide watch e-sports over the Internet or on TVs, according to estimates by SuperData Research.”

The Las Vegas Convention and Visitors Authority (“LVCVA”) recently released its year-end statistics that showed over 41 million visitors came to Las Vegas in 2014, a new record! However, there were also a few notable trends in the 2014 “Las Vegas Visitor Profile” conducted by my friends at GLS Research in San Francisco, a company which prepares the annual report for the LVCVA. Their in-person interviews of 3,600 visitors per month revealed that 19% of the interviewees stated that this was their first trip to Las Vegas, and 47% of all visitors said their primary reason for visiting Las Vegas was vacation or pleasure, up significantly from 41% last year. Of the new visitors, 69% said they came primarily for either vacation or pleasure. However, the most surprising, or perhaps disconcerting, statistic was that only 12% of the visitors said they came primarily to gamble!

These two stories are not disparate. Combine them with the recent successes of fantasy sports and we can plainly see the preference of both the millennials and Gen-Xers to a more varied, interactive, and challenging form of gaming entertainment. This is surely a “sea change,” but the dilemma for legalized gaming is to find a way to monetize the phenomenon. The Nevada Legislature recently passed SB 9, which was hurriedly signed into law by the Governor. The preamble to the Bill states, “the continued growth and success of the gaming industry in the State of Nevada depends on the fostering of a business and regulatory environment that promotes continued advances in the use of technology in gaming, which improves the entertainment experience, encourages innovation and supports expansion of the domestic technology sector of the economy of this State.”

In sum, the Legislature has directed the Nevada Gaming Commission to adopt regulations that encourage manufacturers to deploy gaming devices that differentiate requirements for outcomes of a game of skill, a game of chance, and hybrid game. To accomplish this, greater flexibility must be allowed in payout percentages. The Commission was also asked to provide guidelines for some type of integration of social networking technologies so that players enrolled in interactive mediums could engage in games supported by networked servers.

Dickinson Wright’s gaming lawyers are poised to represent game manufacturers, developers, and other ancillary businesses who need access to the casino and resort industry or whose products may require regulatory review.

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