Corporate Structures, Player Contracts and Dispute Resolution in Esports

Esports has moved beyond being merely a means of entertainment and has become a professional sector that brings together millions of players, spectators and investors on a global scale. This development has also given rise to a need for legal regulation. New questions are emerging in many areas, from player contracts to sponsorship relationships and from data protection to competition law, and the distinctive structure of esports requires classical legal norms to be reinterpreted.

In this context, in the first part of the study we shared with you (you can reach the relevant article at this link: https://www.dg-legal.com/yazi/e-sporda-oyun-ici-varliklarin-hukuki-durumu), we addressed the fundamental legal building blocks of the esports ecosystem; in particular, we examined in detail the issues that have come to the fore with digitalisation, such as the place of computer games within the intellectual property regime, the ownership and licensing problems that NFTs give rise to in the context of games and esports, and the assessment of skin gambling and lootbox systems from the standpoint of consumer law.

In this article, we will focus on the corporate structure of esports, player-team relationships and dispute resolution mechanisms. In particular, the sporting status of esports in Türkiye, the functioning of the federation structure, the disputes encountered in professional player contracts and the means of resolving them will be assessed, taking into account problems of legal classification and jurisdiction. In addition, the effect of doping substances specifically in esports and the uncertainties arising from legal gaps in this regard will also be addressed.

Esports Federations and Their Functions in Türkiye and the World

In the process of the institutionalisation of esports, federations are among the principal actors that determine the legal, sporting and administrative framework of the sector. While these structures ensure the establishment of standards among players, teams, organisers and broadcasters, they also play a decisive role in the debates on how esports is to be classified under sports law.

Different models have been adopted around the world. In countries regarded as pioneers of esports such as South Korea, there are strong, state-supported structures such as the Korea e-Sports Association (KESPA); these structures both manage licensing processes and exercise decision-making authority on matters such as player contracts, disciplinary sanctions and international representation. In China, similarly, state-affiliated bodies treat esports both as a cultural instrument and as a strategic sector, and introduce comprehensive regulations. In Europe, esports federations are mostly civil-society-based, although in some countries they are recognised or supported by national sports ministries. In countries such as France, Germany and Sweden, legislative efforts aimed at esports acquiring official sports status can be observed, and federations are accordingly transforming into increasingly institutional structures. On the other hand, bodies such as the European Esports Federation (EEF) and the International Esports Federation (IESF) are gaining importance through their role as standard-setters.

In Türkiye, the most important development in the field of esports is the Türkiye Esports Federation (TESFED), established in 2018 within the Ministry of Youth and Sports. TESFED has been an important step towards the recognition of esports as a sport, and has assumed functions such as granting licences to players, placing tournaments on an official footing and defining teams. However, TESFED's sphere of authority is not yet as broad as that of classical sports federations. In particular, the need for stronger regulation persists in areas such as disciplinary provisions, international representation and the protection of players' rights.

The basic functions of federations include standardisation, representation, supervision and training activities; the existence of these structures facilitates the integration of esports with sports law. However, some of these federations operate as a reflection of traditional sports models, far from keeping pace with the dynamics of the sector, and this leads to shortcomings in regulating flexible, technology-based structures. Therefore, federations can function effectively not only through legal recognition but also through a management approach that connects with the sector, is player-centred and is responsive to technological developments.

In addition, the question of the legal basis on which esports federations operate is also important. In Türkiye, TESFED was established under Law No. 3289 on Youth and Sports Services with the status of an affiliated federation, and is administratively attached to the Ministry of Youth and Sports. However, this structure grants TESFED limited decision-making and sanctioning authority; it is not possible for the federation to make binding regulations or to take decisions with a direct effect on private-law actors. Given that professional relationships in esports are largely governed by private-law contracts, this limits the federation's practical impact.

Furthermore, the financial structure of federations also directly affects institutional effectiveness. Affiliated federations such as TESFED are financed largely by public resources, and revenue items such as sponsorships from the private sector or licence fees remain limited. By contrast, some federations in developed countries have achieved economic independence through broadcasting rights, commercial activities and private tournament revenues. This difference is decisive not only for financial sufficiency but also for the level of autonomy in decision-making processes.

Finally, the effect of esports federations on private-law relationships is becoming increasingly important in areas such as tournament regulations, player transfers, licensing and disciplinary proceedings. Although TESFED's sphere of authority in this area is still limited, in the long term the development of binding internal norms originating from the federation is inevitable in order to protect players' rights, prevent breaches of contract and ensure that ethical rules are enforceable. Otherwise, relationships among actors in the sector will rest solely on commercial contracts, and a gap outside legal supervision will arise.

Dispute Resolution Mechanisms in Player and Team Contracts

Contracts concluded between esports players and clubs or organisation companies have many features that distinguish them from classical employment contracts. The foundation of these contracts consists of performances regulated across a wide spectrum, such as the player's participation in tournaments, involvement in broadcasting activities and compliance with brand and sponsorship obligations. However, despite the increasing professionalisation in these relationships, dispute resolution mechanisms are most often structured in an uncertain, incomplete or inadequate manner.

In Turkish law, the nature of the contract concluded between a player and a club differs according to the content of the relationship between the parties. If the player receives regular remuneration, is under an obligation to work at certain times and acts under the management of the organisation, this contract may qualify as an employment contract (hizmet sözleşmesi). However, contracts made with players who are freelance or who take part in one-off events may also be regarded as a contract for work (eser sözleşmesi).

This distinction is directly important for determining the competent court in the event of a dispute. If an employment relationship exists, the labour courts will have jurisdiction; in other cases, the competent court will be the civil court of first instance (asliye hukuk mahkemesi). It is also possible for the parties to include an arbitration clause in the contract. Although there is not yet a mandatory arbitration body specific to esports in Türkiye, some international organisations include in contracts provisions containing their own arbitration or disciplinary boards; however, such provisions do not acquire absolute validity in Türkiye. Provisions such as a "unilateral right of termination", a "ban on non-tournament activities", a "contractual penalty" and a "non-compete clause" are also often added to contracts; such provisions must be assessed within the framework of the general principles of the Turkish Code of Obligations and the principle of good faith. For example, if a contractual penalty is excessive, it may be reduced by the court.

Finally, the absence of any mandatory dispute resolution mechanism before the Esports Federation (TESFED) means that in-sector resolution channels remain limited in such disputes. This raises the need to produce institutional solutions and to establish an arbitration system within the federation that is accepted by the parties and capable of rendering binding decisions.

Permits, Licences and Liability in the Organisation of Esports Events

Esports events are not merely digital gatherings where games are played; they are multifaceted organisations involving live broadcasting, sponsorship, ticketing and interaction with the media. In this respect, it is clear that persons or companies organising events are subject to certain obligations under both public law and private law.

In Türkiye, in order for esports tournaments to acquire official status, they must be recognised or approved by the Türkiye Esports Federation. Through guidelines on tournament organisation, TESFED can impose administrative obligations on organisers, such as applications, registration, licence checks and reporting. Although the binding force of these guidelines is not yet at the level found in other sports federations, they form the basis of institutionalisation in the sector.

The intellectual property rights in the games used at events, for their part, give rise to a separate licensing process. Game developers may make the use of their games in tournaments directly subject to permission, and in some cases may even convert these permissions into commercial licences. Since broadcasting rights are likewise regarded as "communication to the public" under the Law on Intellectual and Artistic Works (FSEK), broadcasting a game without the consent of the developer or broadcaster may give rise to legal liability.

In addition, the liability of event organisers for damage that may arise from organisational faults is also assessed within the framework of the Turkish Code of Obligations. Situations such as technical failures during the event, disclosure of participant information and wrongful disqualification may give rise to both contractual liability and tortious liability.

The Use and Control of Doping in Esports

The fact that esports involves no physical contact or physical activity should not lead to the misconception that the use of performance-enhancing substances is insignificant in this field. On the contrary, the use of certain stimulants that increase concentration span, sharpen reflexes or delay mental fatigue can also provide a significant performance advantage in esports. In particular, cases of attention-enhancing drugs such as "Ritalin" being used by some professional players have shown the need for a regulatory framework in this area.

In traditional sports, doping controls have for many years been carried out in accordance with standards set by international bodies such as the World Anti-Doping Agency (WADA). In the field of esports, however, there is no such central supervisory structure. Responsibility for control is mostly left to tournament organisers, which gives rise in practice to serious differences and gaps in supervision. For example, while traditional doping controls such as urine tests are carried out at some major international tournaments, many organisations make no provision for such controls at all.

The main reason for this difference is the legal and conceptual uncertainty that still exists as to where esports should be placed within the concept of "sport". In the legislation of Türkiye and of many countries around the world, esports has not been expressly included in the supervisory and disciplinary regime to which traditional sports are subject. For this reason, the concept of doping must also be reconsidered in the form specific to esports. Moreover, as well as the detection of the substances used, whether the effect of these substances on performance in esports can be scientifically proven is also debated. Unlike in traditional sports, it is cognitive endurance rather than physiological capacity that is to the fore. This situation also requires new legal criteria to be developed on which substance is to be regarded as doping.

Conclusion

The rapid development of esports has created a new field that must be addressed not only in its technical and economic dimensions but also in its legal dimensions. Whereas the first article examined the nature of digital assets, the protection of intellectual property and the legal uncertainties arising from new economic models emerging in the virtual environment (NFTs, lootboxes, skin gambling), this article has focused on the institutional functioning of esports, player and team relationships, contractual liabilities and the current limits of the regulatory framework.

In Türkiye in particular, it can be seen that the legal infrastructure of esports is still fragmented and is being defined within the framework of traditional norms. The nature of player contracts, the uncertainty of dispute resolution avenues, the limited institutional sphere of authority of federations and the failure to fully reflect consumer law obligations on digital platforms create significant risks in the sector for both players and organisations. On the other hand, it is clear that supervisory areas such as the use of doping, which were previously regarded as specific to traditional sports alone, also need to be reregulated in the context of esports.

In this context, the development of esports law will be possible not only through the creation of new norms but also through the adaptation of existing norms to technology and through the informed conduct of sector actors. In order to ensure legal predictability, strengthen contractual relationships in the sector and protect players' rights, it is of great importance that federations assume a more active role, that private arbitration mechanisms be developed and that the applicability of consumer law to digital platforms be increased.

The attainment by esports of a sustainable and equitable structure, both in Türkiye and internationally, can be achieved only through a holistic legal approach and a normative framework that grasps technological reality.

Av. Mehmet Emre Darıcı