Content creators are both a business owner and a service provider, that service being entertainment. However, many creators do not utilize business entities, like LLCs, when providing their entertainment services. This leaves creators open to personal liability. If someone were to sue the creator for any reason related to their content, their personal assets (house, car, etc.) would be reachable through the lawsuit. Avoiding this liability is simple and can be achieved by properly utilizing a loan-out company.
 
What is a loan-out company and how do they work?
A loan-out company is the term for a business entity that the individual utilizes to provide their services. Loan-out companies can be either LLCs or Corporations, though the choice of which can have significant tax consequences. Third-parties, like sponsors or streaming platforms, would engage the creator’s loan-out company through a written agreement for the company to provide the creator’s services to the third party. While this may seem silly, a loan-out company serves as a liability barrier for any legal issues that are related to the stream. This means that if sued, the creator’s loan-out company would be liable, and only company assets (business bank accounts, PCs and other assets, etc.) would be reachable through the lawsuit. This means that the creator’s house, cars or personal bank accounts are much less likely to be reached through a lawsuit. Best of all, loan-out companies are easy to operate and inexpensive to create.  
 
Importantly, once a loan-out company structure is utilized, the business’ assets must be treated as separate and apart from the creator’s personal assets. If not, creators can lose the limited liability protection that they sought from the business entity in the first place. That means creators will need to pay themselves from the business and only utilize the business accounts for business purchases. If creators treat the business appropriately and separate their personal and business expenses, then it is very difficult to lose the limited liability protection.  
 
Should you use a loan-out company?
If you are streaming full time, yes. If you are streaming part-time and obtaining sponsorships, yes. Loan out companies are inexpensive to create and simple to operate, so the added protection against liability is worth it. If you would like assistance with creating your loan-out company, we are happy to help.

(This post was created by Mark Hamilton, a rising 3L at Marquette University Law School and intern at Quiles Law)

Recently, several FaZe Clan members have come under scrutiny as they were found to be promoting a fake crypto token charity named “Save The Kids.” Specifically, their paid promotion was allegedly tied to an unlawful pump and dump scheme. This matter raises multiple legal concerns, including how the streamers will be affected for their endorsement. At the worst case, if the streamers were aware of the fake nature of their promotion, then they would be liable for fraud. At the very least, false claims were made by the streamers during their promotion, which means that the streamers may be subject to discipline from the Federal Trade Commission under its advertising rules. However, this matter further bemoans a single fact:
 
Streamers must vet their sponsors
 
Streamers need to be especially mindful of certain sponsorship areas. Sponsorships from industries such as gambling or cryptocurrency should immediately cause a streamer to pause and think twice. This is due to the fact that these industries are regulated (or in crypto’s case, that similar industries, namely securities, are regulated) and historically tied to laws imparting criminality or criminal activities for certain kinds of interactions within those industries. That isn’t to say that all gambling or crypto sponsorships are unlawful, but that there are bad actors in both industries who operate unlawful enterprises which could result in civil or criminal liability for the streamer. Just because a company is willing to hand a streamer a contract for a sponsorship does not mean that the enterprise is legal. In order to potentially avoid the legal fallout from a bad actor sponsor, a streamer must research and do their own due diligence into understanding the sponsor and what exactly the sponsor wants them to do.
 
Below are a couple of tips on how to vet a sponsor :

1. Find out the location of the sponsor- where are they based and where do they operate?
2. Determine if the sponsor needs to be licensed or not- gambling is HEAVILY regulated on a State by State basis. Are they licensed where they are based/operating? Are they licensed where you are?
3. Can you find any existing claims of illegality or shady dealings about the sponsor online? What are others saying about the sponsor online?
4. Ask the sponsor what they do and what they require out of you as the streamer- is the activation obviously legal in your locality?
5. Does the sponsor have a track record for previous activations- if this is the sponsor’s first deal, that’s somewhat concerning
6. Always ask as many questions as you feel necessary to be comfortable before signing any sponsorship agreement
7. Ask a professional- Our firm can advise on the legality of a sponsor’s operation, the activation, and help you ask the right questions to learn more about the sponsor.

 
The notion that all sponsors are beneficial is false. From a legal perspective, it is up to the streamer to  understand what they are getting themselves into. Legal liability aside, streamers do not want the brand damage of being associated with unlawful or shady enterprises. Utilizing the above tips and questions will help guide you into determining whether the sponsor is legitimate, legal and appropriate. Ultimately, knowledge is key.

If you need any assistance in vetting sponsors, and reviewing sponsorship agreements, our attorneys are here to help.  

(This post was contributed by Mark Hamilton, intern at Quiles Law and rising 3L at Marquette University School of Law)

(This post was created by Mark Hamilton, Jr., a rising 3L at Marquette University Law School and intern at Quiles Law)

The State of Nevada has been working on legislation relating to esports for a significant amount of time. Since its inception in March 2021, the purpose of Nevada State Bill 165 (“Esports Bill”) was to help increase economic activity in the State through the draw of esports events. Nevada wants to be one of the first locations mentioned when it comes to hosting an esports competition. But, what does being first entail? Initially, this proposed Esports Bill was to be the first of its kind, creating a regulatory body for esports events in the State. What Nevada overlooked, though, is the reluctance of developers and other organizations to cede power and control to an independent commission.
 
Ultimately, the Esports Bill has been passed and signed by Governor Steve Sisolak. However, the bill is not what it once was. At the strong urging (and threats) of esports game developers, there have been major changes to the bill. In this blog post, I will discuss the Esports Bill, its original intentions, and its final form.
 
Nevada Esports Bill: Original Plan
Since first drafted in March 2021, the Esports Bill intended to create an independent regulatory commission. This commission was to resemble the Nevada Athletic Commission, which is responsible for the governance of mixed martial arts in the state.
 
The commission was going to be tasked with creating regulations to govern esports competitions. Some of the areas that would be regulated included integrity of competition, testing for controlled substances, qualifications for hosting and participating in tournaments, and approval of venues. The Esports Bill also would have given the commission the ability to create enforcement processes/mechanisms for the regulations. In other words, the State of Nevada could have made a violation of the commission’s rules a misdemeanor.
 
Nevada Esports Bill: The Changes
The major opponent to the original plan of the Esports Bill was the Entertainment Software Association (“ESA”). The ESA is an association that serves as a voice for the video game industry and focuses on building the “best future” for the industry overall. ESA believed that the proposed bill and its increased regulation on esports events would actually harm the growth of the industry. In fact, the ESA believed that if the Esports Bill were to be passed in its original form, the likelihood of Nevada being the leader in esports events, as it desired, would be severely diminished. However, ESA was not opposed to Nevada growing and helping foster the development of esports overall, but simply resistant to increased regulation.
 
Responding to such concern, Senator Ben Kieckhefer (the sponsoring senator) proposed amendments that made significant alterations to the Esports Bill. The amendments created an Esports Technical Advisory Committee with the members being appointed by the Gaming Control Board (Gaming in the gambling sense of the word). The necessity of this change was vital to ESA, as it feared an entirely independent regulatory body. Considering ESA’s concerns, Nevada feared that publishers and tournament organizers might decide to avoid the State of Nevada altogether and host events elsewhere if the independent regulatory body were to remain in the Esports Bill.

The Nevada Esports Bill as Signed into Law
The bill itself is straightforward and short. The Gaming Control Board is to appoint members to the Esports Technical Advisory Committee that consists of industry professionals. The professionals could include anyone spanning from game publishers to hosts to broadcasters and even participants. Once the Committee is developed, they will be tasked with providing recommendations to the Board on how to safeguard the integrity of Esports, especially when wagers are placed at such competitions. The bill goes on to state that the Board may adopt regulations as necessary to carry out and further the recommendations of the Committee.
 
While the bill is not lengthy by any means, it represents the State’s furtherance of its efforts to attract esports to Nevada, and in concept, is something other States will likely emulate.
 
Conclusion
The Esports Bill which was signed is vastly different from how it was initially conceived, and frankly, removes much of the teeth included in the initial legislation. While the creation of an advisory group is welcomed, the removal of any independent authority from the group makes its efforts subject to the approval of the Gaming Control Board. Inherently, the Gaming Control Board is concerned with gambling, betting, and integrity endeavors, and while esports betting is a lucrative piece of the industry, there’s so much more to esports than just betting. Nevada had an opportunity to raise the playing field with its legislation, and instead punted. Here’s to hoping that similar legislation by other States encourages Nevada, and others, to enact regulations with teeth as it pertains to esports.

(This post was created by Mark Hamilton, Jr., a rising 3L at Marquette University Law School and intern at Quiles Law)

With Twitch experiencing yet another wave of DMCA takedowns from the music industry, IRL streamers are particularly vulnerable if they are not careful. As an IRL streamer, it is easy to forget that the sounds around you, including music and other broadcasts, are not only being heard but also recorded and saved by your stream. This issue is not necessarily a new one, as Twitch has experienced multiple waves of DMCA claims in the past few years, though it is a topic worth reminding about.
 
IRL streamers must be aware of and understand their surroundings, even moreso than a streamer playing a simple First-Person Shooter game. As most IRL streams are in an environment in which is not controlled by the streamer, whether it be grocery shopping, retail shopping, or in a restaurant, IRL streamers need to be aware of copyrighted content around them so as to help avoid DMCA claims. This blog post discusses some ways that IRL streamers can help to avoid a DMCA takedown and ultimately ease some concern about IRL streamers being helpless to DMCA takedowns due to their environment.
 
What is a DMCA takedown?
A DMCA takedown is a notice sent because a copyright owner believes someone has infringed upon their content and wants the infringement removed. Essentially, the copyright owner would submit a DMCA takedown notice with Twitch stating that a specific streamer is utilizing their content without permission and that they want the stream and VOD removed. Twitch would then, following its procedures, take down the content that was referenced to by the copyright owner. At this point, the streamer would be told by Twitch why their stream was banned or VODs removed. The streamer could then file a counter-notice, which basically states that the stream and content did not violate any copyright law and that the material should not have been removed, effectively forcing the alleged copyright owner to pursue them in court.
 
However, if a copyright owner files a DMCA takedown and gets the streamer’s content removed without actually checking and making sure that there was a violation, there are consequences. Knowingly submitting a false DMCA takedown makes the alleged rights-holder liable for damages, which the aggrieved party would be entitled to.
 
How are IRL streams subject to DMCA takedowns?
IRL streams face two primary issues in avoiding DMCA takedowns. First, as IRL streams are predominantly in public settings, there is concern that the streamer cannot determine what kind of content is and is not being played in their environment. This in and of itself is the key DMCA takedown risk factor that typical streamers do not have. Second, as common with all streamers, there is the issue of broadcasted copyright content, like background music in a store, being recorded on the streamer’s VODs. Because a VOD is an archived stream, it not only contains all of the audio that was recorded and live-streamed but also is available for any investigating parties/technologies to review and potentially flag for DMCA violations.
 
Not all DMCA takedowns are appropriate
Recently, some IRL streamers have been using their streams as a talk show to  discuss ongoing sporting events. Such was the case with CDNThe3rd (“Ceez”) when his stream was recently banned. During the Logan Paul and Floyd Mayweather fight, Ceez was using his stream as a platform to discuss the fight in what he refers to as “#ViewageFightNights.” At no point did Ceez show the PPV event or play any of the sounds from the broadcast. Instead, Ceez used his own graphics and placed a round counter and timer at the bottom with information about how to legally purchase the fight. Ceez, who has hosted these IRL fight talk shows many times, was then banned by Twitch after only three hours. Showtime, the broadcaster and rights holder of the Paul fight, issued a DMCA strike against Ceez and his stream. However, Showtime did not adequately assess the situation as their content was never shown or played by Ceez. As of now, Ceez has gained his channel back and is no longer banned. But, the mere fact that Ceez had his banned lifted does not make the DMCA takedown by Showtime proper. If Ceez chose to, he may be able to pursue Showtime for damages as a result of the false DMCA takedown.
 
How to avoid DMCA takedowns as an IRL streamer?

1. Avoid areas that might play music out loud for a significant portion of the stream (i.e., grocery stores, retail stores, restaurants, etc.)
2. Stick to locations in which the background music can be controlled (i.e., your backyard, hiking trails, home gyms, etc.)
3. If there is not a controlled location available, create your own environment (if possible, create an atmosphere around your setup that resembles the desired setting you desire)
4. Disable VODs and archiving of streams and individually save each stream onto your hard drive instead
5. Ensure that the audio and video of any copyrighted broadcast, such as sports, is not playing through on stream or being heard
6. If you must enter a specific store or other location which would likely play music, consider muting your stream while in that location until you can determine whether music is being played
7. Plan and scout any proposed streaming locations to assess the risk of copyrighted content being seen or heard on your stream 

Admittedly, the best advice to avoid any sort of DMCA takedown as an IRL streamer is to avoid copyrighted material overall. While this is not easy, it is the only surefire way to ensure that your content will not be flagged or taken down. IRL streaming presents a unique set of circumstances, and often it might feel as if you are more limited than you might be while streaming a game. Unfortunately, because most environments in IRL streams are not established by the streamer themselves, the streamer may be more exposed to potential DMCA takedowns.
 
Conclusion
Legally speaking, IRL streamers should be aware of what they are walking into. In order to help avoid DMCA takedowns, IRL streamers need to be able to recognize potential copyrighted content issues that the setting of their stream and its background may present. Making legally appropriate decisions will determine whether or not the stream or its VOD gets flagged or taken down. Unfortunately, these are not easy assessments to make and may require further planning in advance of IRL streams. While this removes some of the randomness to the content, which is otherwise appreciated in IRL streams, this will also give you the time to think through the risks of copyrighted content at each planned location or give you the opportunity to speak with your attorney to evaluate potential issues.
 
IRL streaming has never been easy, and the discussed copyright issues compound that difficulty. If you require any assistance with assessing the legal risks of your planned IRL streams, we’re happy to help.

As the world bands together to slow the spread of the COVID-19, large gatherings such as sporting events have been canceled in favor of practicing distancing practices such as self-isolating indoors. In times like these where we shift away from real life, esports and gaming have the potential to grow. For example, shortly after several states began to promote or require social distancing, CS: GO reached 1 million concurrent players for the first time ever.

However, esports has experienced its cancellations as well. At the risk of great financial loss, live events must decide whether they must cancel to prevent the spread of COVID-19. Though some events, like Flashpoint, have had the option to continue their matches online, CEO: Dreamland had to continue to host the event because canceling the event would bankrupt the organizer unless a contract’s “force majeure clause” was triggered. These clauses are triggered when a force majeure event occurs, as specified in a contract itself.

The difficulties that event organizers have faced in the wake of COVID-19 have reinforced the need of the following:

Narrowly Drafted Contracts
Contractual parties are excused from performing under an agreement when the failure is due to “force majeure.” To avoid conflicts or confusion when enforcing a force majeure clause, it is imperative that triggering events are narrowly drafted and clearly defined. If an event is not included in the clause and a party tries to rely on a catch-all force majeure clause (e.g., “other events beyond a party’s reasonable control), a court will consider whether the triggering event was foreseeable.

For illustration, a non-exhaustive list of “force majeure” events can include acts of God, strikes, lockouts or industrial disturbances, civil disturbances, arrests and restraints, interruptions by government or court orders, present and future valid order of any regulatory body having proper jurisdiction, acts of the public enemy (think terrorism, not the rap group), zombie apocalypse, wars, riots, insurrections, inability to secure labor or inability to secure materials, including the inability to secure materials because of allocations promulgated by authorized governmental agencies, epidemics, pandemics, fires, and explosions. Terms included in force majeure clauses may be accompanied by their qualifying definitions. If an event does not meet this definition, it may not trigger the clause. Alongside defining which events trigger force majeure clauses, obligations under a force majeure event for both contracting parties should be specified as well.

In short, force majeure clauses should include (1) specific categories of triggering events; (2) the extent and duration of an excluding event; and (3) the type of notice either party must give to be excluded from performance.

The Need for Insurance
A prudent practice to compensate for force majeure specificity is retaining insurance policies that cover the losses resulting from event cancellation. Depending on how they are structured, these policies can allow parties to potentially recover on business interruptions and related financial losses such as hotel attrition fees. However, even then, determining coverage is a granular process.

Business Interruption Coverage
Business interruption policies, as the name suggests, can cover losses of slowed or shut down businesses. Recovery under conventional business interruption insurance requires showing loss due to physical damage or loss caused by a trigging event specified in the policy. Depending on the policy, a loss can include the inability to use a venue or a loss of access. In particular, loss of access may be triggered by the act of a civil authority.  

Force Majeure Insurance
Though they come at a high premium, force majeure insurance policies can cover financial consequences due to changes in federal or state statutes, ordinances, codes, directive, rule, regulation, or orders. These policies appear in many different forms like project completion, performance coverage, delayed competition, or event cancellation insurance. Event cancellation insurance is a growing insurance trend available to clients and venues to protect their bottom lines and protect them from wholly absorbing losses caused by contractually specified triggering events. As force majeure is unforeseeable, insurance companies require policyholders to purchase event cancellation insurance well in advance of their event.

Conclusion
As with all contracts, specificity is key. Before attempting to utilize a force majeure clause, be sure that the perceived triggering event is included in the respective agreement. Prematurely or falsely terminating a contract opens a party to liability for breach of contract claims. Having insurance is a best practice for businesses, but keep in mind that coverage for force majeure events is a safeguard that does not automatically act as a catch-all for any incident – making sure your company complies with the policy is essential. 

(This post was submitted by Patrick Hankins, a 3L at Marquette University Law School and intern for Quiles Law)

(This post was contributed by Patrick Hankins, a 3L at Marquette University Law School and an intern at Quiles Law)

Last month, Epic released its first wave of items from its “Icon Series,” a collection of in-game items, emotes, and skins from some of its top Fortnite Creators. Epic’s first featured creator of the collection was Tyler “Ninja” Blevins, whose likeness was immortalized game as a purchasable character skin. Next, Imane “Pokimane” Anys had her TikTok dance moves motion captured to be available as a purchasable dance emote in a limited-time sale.

Epic’s “Creators” are any players that are partnered with them through the Support-a-Creator Program, a partnership system that allows individuals with at least 1000 followers to earn a small percentage of revenue from any in-game transaction when their code is used at checkout. Not only does the Icon Series provide some of the most sizable Creators a new avenue of partnership revenue, but it is also a way for them to continue to cultivate their brand.

The Legal Mechanism
To have a personal emote in the game, these content creators must enter into a licensing agreement with Epic Games. At the base level, a licensing agreement is a contract that authorizes another party to utilize the licensing party’s name, likeness, logos, and any other related intellectual property rights. A licensing agreement would specifically identify the limited uses for the licensed property, like producing Pokimane’s emote which was available for a period of time. Additionally, any payment terms would be specified in the license agreement. Fortunately, licensing agreements can have creative payment arrangements, like a percentage of the licensed product sold, a flat fee, or a combination of the two. Of course, how sizable this payment is is related to how substantial the licensing party’s brand is, as well as any exclusivity.

Learning from the Lawsuits
In the past, Epic Games has been sued for using public figures’ dance moves in Fortnite. Among these lawsuits, probably most notable was a December 2018 claim by Alfonso Ribeiro, best known for his portrayal as “Carlton” in the popular TV show, “The Fresh Prince of Bel Air,” claiming copyright infringement and a violation of his right of publicity because Epic had stolen his three-step dance move without his permission, proper credit, or compensation and added it into the game as the “Fresh” dance sold in-game. Shortly after in January 2019, Ribeiro tried to register the “Carlton Dance” with the U.S. Copyright Office but was refused because his claimed choreographic was a simple dance routine. Ribeiro’s case has since been dropped, but not before it became highly publicized.

​In contrast to the emote lawsuits, the introduction of the Icon Series is a win for all parties involved. By reaching out to its loyal Creators instead of “finding inspiration” among some of pop culture’s most celebrated individuals, Epic avoids the negative PR of alleged intellectual property infringement and builds among existing promotions through licensing agreements. Epic’s partnerships with its creators show the Fortnite community that they actively want to support those that have contributed to the game’s success. In turn, the Creators have another revenue stream and have associated their name, brand, and likeness with significant in game advertising.

On November 5, 2019, the U.S. Federal Trade Commission (“FTC”) released an updated guide and video for online influencers and streamers about complying with mandatory sponsorship disclosures. Some of the important points discussed are as follows:​​

• Whenever influencers and streamers endorse a product, they are required to tell their audience if they have a relationship with the brand. A relationship with a brand can exist if the brand pays you, gives you free stuff, allows you to review a free product in an unbiased manner, or offers a discount. A relationship exists if there is a “material connection” with a brand. Along with a financial relationship, a “material connection” to a brand includes personal, familial, or employment relationships.
• Influencers must tell people about their brand relationship alongside their endorsement. Simply listing the brand in your profile, bio, or hashtags is not enough. To sufficiently comply with FTC guidelines, the relationship must be placed early in a message or placed prominently on a posted picture. When streaming, the disclosure must be clear and repeated often enough that the audience will hear/see it. Seemingly small actions such as tagging, liking, or pinning promoted brands are still ways of showing your endorsement; however, if you have no brand relationship and tell people about a product you bought and like, no disclosure is necessary to state that you don’t have a brand relationship.
• A post can be labeled as an ad, advertisement, or sponsored, with, or without, a hashtag. If you’ve only received a free product, thanking the brand or labeling yourself a partner or ambassador of the brand is enough as long as the disclosure is easily seen. If you mention a product that wasn’t required by your endorsement, disclose its connection to the brand – never assume that your followers know your brand relationships, or a product’s relationship to a brand.  

In conclusion, remember:

1. Make sure your disclosure is hard to miss.
2. It is the influencer’s responsibility to comply with FTC disclosure guidelines.

(This post was submitted by Patrick Hankins, a rising 3L at Marquette University Law School and an intern at Quiles Law)

Instagram influencer, Belle Kirschner, better known as Belle Delphine, made recent headlines by selling “GamerGirl Bath Water” – jars that allegedly contain Delphine’s bathwater. Most recently, Delphine had her Instagram account, with its 4.5M followers, banned due to its NSFW content. Despite selling out of the product in three days, Delphine reportedly had unsatisfied customers, one of whom claimed that their jar did not contain Delphine’s used bath water. Allegedly a molecular biologist, the fan claimed to have used “an eDNA analysis through ddPDCR” to verify the existence of skin cells in the GamerGirl Bath Water only to conclude that the jar lacked any human DNA. As a result, the individual claimed that Delphine was liable for a class action lawsuit because she advertised the water as “bottled while [she’s] playing in the bath.” Though the allegation was later proven false, could Delphine’s unsatisfied customers rise up and sue her, as the supposed molecular biologist suggested, if the product sold was not the product advertised? This post discusses several of the legal issues involved in misrepresented sales as seen through the lens of the "GamerGirl Bath Water" allegations

False Advertising
False advertising is the intent to promote the sale or increase consumption of services with a false or misleading statement in advertisement. False advertising claims can be based on either state or federal laws.

Virtually every state has laws that generally prohibit deceptive or unfair marketplace acts and practices. The extent of state law claims is generally limited to false advertisement that is significantly harmful to the public or is outrageously flagrant. Though false advertising laws can vary depending on state, a majority of states require a plaintiff to show they suffered injury, harm, or loss due to a deceptive, unfair, or illegal trade practice. As a result of this variation among states, several states have adopted the Uniform Deceptive Trade Practices Act as state law, especially to enable class action lawsuits.

Bait and Switch Advertising
A traditional “bait advertisement” is intended to entice customer to buy a product that an advertiser does not intend to sell in an attempt to switch the customer’s attention to another product. The reason that the bait and switch method is unlawful is because the advertiser is not making a bona fide effort to sell the advertised product. An advertisement is not a bona fide effort when indicated by three factors.

First, the advertisement creates a false impression about the product or otherwise misrepresents the product to sway a customer to a different product.

Second, the advertiser discourages the purchase of the product. Typically, a seller discourages the purchase of its advertised product when: (1) it refuses to show, demonstrate, or sell the product as specified in the offer; (2) it disparages the advertised product or its related offer; (3) it fails to have a sufficiently quantity of the product to meet reasonably anticipated demand unless it discloses that supply is limited; (4) it refuses to take orders for the product within a reasonable period of time; (5) showing the product as defected for its advertised purpose; and (6) a sales plan discourages sales personnel from selling the advertised product.

Third, a sale is made, but rescinded for selling another product in its place. Practices that can satisfy this fact include: (1) accepting a deposit for the advertised product but switching to a higher-priced product; (2) failing to deliver the advertised product in time for a refund; (3) disparaging the advertised product or a guarantee in connection with it; and (4) the delivery of a defective, unusable, or impractical product for its advertised purpose.

Notably, even if a seller later discloses true facts of the advertised product, it is still illegal to garner customers’ attention by deception.

Fraud and Deceit
Fraud is a knowing misrepresentation of the truth, deceit, or concealment of a material fact to deprive another of money, property, or legal right.

Deception, fraud, misrepresentation, and the nondisclosure of material facts against consumers in sales transactions are prohibited by consumer protection statutes. Generally, states and the federal government primarily measure the illegality of a seller’s conduct by its effect on a consumer, regardless of whether a seller intended to deceive consumers. It is not necessary to prove that a business’s statement or act was intentionally deceiving. A seller is deceptive when the effect of its conduct upon a consumer mislead him or her into purchasing something that was not intended or caused a consumer to act differently than otherwise. Under state laws, as long as an act or practice misled the consumer and had an adverse effect, deception can be found.

Conclusion
To avoid lawsuits from dissatisfied consumers, don’t deceive them with misleading advertisements and products – that includes jars of bathwater or other memorabilia. If the allegations against Delphine had held true, liability would arguably attach for false advertising and/or fraud, though it would certainly be quite the odd case to pursue. Regardless of how unique any memorabilia for sale may be, there should always be the intent to sell the products advertised without misleading the customers and all sales should be carried out lawfully.

By all accounts, 2018 was a monumental year for investment in esports. According to a report published by Deloitte and The Esports Observer in April 2019, investments in esports increased from $490 million in 2017 to $4.5 billion (!!) in 2018. Also in 2018, 53% of the industry’s 380 million-person global fan base was comprised of fans aged 21 to 35. This is one reason investors are attracted to the market, as this demographic is widely considered a valuable audience for advertisers.
 
Additionally, investors also see this as an opportunity to get an early stake in an industry that is growing at an unprecedented rate and is expected to continue to mature in a similar manner. In February 2019, NewZoo’s 2019 Global Esports Market Report projected that revenues for the esports industry would increase from its estimated $1.1 billion in 2019 to anywhere between $1.8 and $3.2 billion by 2022. The report also anticipates the total audience to nearly double by 2022 to 645 million fans. With projections like these, it is understandable that investors are pouncing on opportunities within the industry in as many ways as possible. But who are these investors and what are they investing in?
 
Who are the investors?  
According to the Deloitte report, private equity and venture capital groups were responsible for 60 esports investments in 2018. While these groups undoubtedly dominated the investment market within the esports industry, interestingly, a significant subset of individuals involved in the private equity transactions were athletes and entertainers.
 
Over the past few years, athletes and entertainers have consistently continued to grow their stake in the burgeoning space. In 2015, former NBA player Rick Fox, co-founded Echo Fox, an esports organization that has grown to become one of the more popular brands within the industry. Since then, dozens of athletes (both former and current) and entertainers have  joined in some capacity, including Michael Jordan, Stephen Curry, Alex Rodriguez, Drake and Diddy. In addition to their capital infusions, athletes and entertainers are in a strategic position to help grow the target of their investment by leveraging their fanbases and current brand partnerships.
 
What are the Investment Opportunities?
 
Organizations
By far, the most popular investment opportunity for all investors is in esports organizations. For the unaware, esports organizations comprise multiple teams competing in several titles, most frequently under single branding. According to Deloitte, $193 million was reportedly invested into this category in 2018. This is primarily because investors see this as an opportunity to own a stake in an early stage sports business that hopefully could be as valuable as a traditional sports team in time.
 
Investing in existing teams has become a common approach for some professional athletes and entertainers, but others have taken a similar approach to Rick Fox by running their own organization. Los Angeles Rams lineman Roger Saffold (Rise Nation) is one of the most publicized examples, but NBA players Jonas Jerebko (Detroit Renegades) and Jeremy Lin (J.Storm) have purchased their own esports teams as well. However, running an organization may not be the most viable option for the vast majority of athletes and entertainers, as it requires them or their business partners to spend a lot of time handling day-to-day operations.
 
Other Opportunities: Developers, Media Platforms, Agencies, Esports Funds, etc. 
While team investment may appear to be the easiest and most popular way to obtain ownership interest in esports, it is by no means the only way. As with any other industry, the esports landscape provides an assortment of opportunities. Developers, like Riot (League of Legends), Activision Blizzard (Overwatch, Call of Duty), and Epic (Fortnite), are often considered to be attractive investment opportunities, given that they essentially own the intellectual property (i.e. “the football”) behind their respective esports ventures. Individuals may look to invest in a lesser-known developer in hopes of finding the next League of Legends or Fortnite.
 
Additionally, media platforms have grown to be an appealing investment play within the industry since Amazon acquired Twitch for $970 million in August 2014. Recently, an up-and-coming social broadcasting platform that distributes esports, gaming, and music content, Caffeine, received a $100 million capital infusion from Fox. Though many of these investments are made by larger businesses or funds, athletes and entertainers could look to leverage their unique combination of stardom and capital in return for equity in budding platforms like Caffeine, which was cofounded in April 2016.
 
Some athletes have even jumped in on other big-picture plans as their way of getting involved in the esports industry. In 2018, Kevin Durant, Odell Beckham Jr., and the St. Louis Cardinals participated a $38 million funding round for Vision Esports, a holding company set up to invest in a collection of esports businesses. This is not a bad option for those individuals who may not know exactly what to invest in, and trust the industry knowledge of those individuals running the investment fund.
 
Looking Forward
The examples described above are only a fraction of the endless amount of investment opportunities available within the esports industry. From teams to technology to third party tournament organizers, there is an option for every type of investor who is looking to get involved in the space. Unfortunately, as with any new industry, there are a significant number of con-artists seeking to obtain investment on false pretenses, which may be difficult to detect by those not involved readily involved in the esports industry. If you have any questions regarding potential investment opportunities or how to structure a particular transaction, please feel free to contact us.