The new legislation of electronic sports games in Andorra

Andorra have passed legislation to regulate e-sports at a national and international level. Through this article you will learn about the advantages of establishing your company, your team or your association in Andorra and benefit from the different attractions that the country offers.

Technological and professional disruption is becoming increasingly evident in our societies. Technological penetration both in the business and in private spheres has led to the creation of new industries and sectors based precisely on the opportunities offered by the technical evolution. We have gone from having a society of digital immigrants as it is known in areas of marketing, to a society of digital natives as defined by Marc Prensky.

In this context, activities related to leisure based on an electronic environment have acquired a major role, among which videogames / eSports have played a leading role. Indeed, the gaming experience is no longer linked to a single user, but, with the Internet and the multiplication of access channels on the Internet, gaming has become a choral activity in which users no longer only participate as players, but also want to be spectators of tournaments and other events, both face-to-face and online, in which players and teams compete against each other.

E-sports - Gaming
E-sports – Gaming

 

But what are videogames or eSports?

There are many definitions offered by different institutions. In addition, being something quite recent in Europe as we will see later. Some institutions define it as follows:

Newzoo: According to one of the world’s largest digital entertainment agencies, e-sports are: “Competitive gaming in an organized format; event or league, organized by a third party; with a specific goal, with a clear distinction between players and teams who are competing against each other for a chance to win that goal ”;

University of Cambridge:the activity of playing computer games against other people on the internet, often for money, and often watched by other people using the internet, sometimes at special organized tournaments”.

University of Oxford:a video game played as a competition for people to watch as entertainment”.

RAE: No definition currently

Despite these general definitions, they are very limited to the current reality of the activity. In recent years, e-Sports have grown immensely and have expanded into new markets. There are even more and more countries that are trying to create regulatory frameworks for this activity like any other sector. And why do we say that? Well, because currently there are many actors around professional videogame players (according to the definitions), to name a few we have physical trainers, coaches, referees, event organizers, the public among many others.

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Where are they born?

e-Sports have their origin in South Korea, a country that currently has the best professionals in this sector. It arose as a result of the success among the youth of the famous game StarCraft, developed by Blizzard Entertainment, which led to the creation of the Korean e-Sports Players Association (the KeSPA). Despite the name, which may be misleading because of the final term of partnership, KeSPA is actually a union of private interests and the Korean Ministry of Culture, Sports and Tourism in order to diversify the economy. This peculiar union in the West is very common in South Korea.

Korean e-Sports Players
Korean e-Sports Players

 

How important is it economically?

Currently, it is one of the activities and sectors that is having the greatest exponential growth in South Korea and in the Asian continent that in turn is expanding throughout the West. According to recent data from Statista:

The combined prizes of all the annual tournaments to e-Sports players have gone from 115 million dollars in 2017, to 327 million in 2020 and it is estimated that in 2023 it will be about 543 million according to estimates;

The audience for these events has gone from 397 million viewers in 2019 to an estimated 577 million viewers in 2025;

The same goes for investment by sponsors, which has gone from $124 million in 2017 to $364 million in 2020. Sponsorship and publishing spending is projected at $634 million in 2023;

The sector’s revenue has gone from $325 million in 2015 to $1,220 million in 2020...

And all this, without taking into account betting and other related activities.

Andorra Flag
Andorra Flag

E-Sports in Andorra

This activity represents an opportunity for economic and social growth, taking into account its globality, growing popularity and the data presented above for the whole country. This sector is a very clear example of the so-called new economy, it presents obvious growth opportunities, but it also involves obvious regulatory challenges.

Esports has proven to have a great capacity for economic and social attraction. It is increasingly common for players dedicated professionally to esports to be young. In addition, these professionals require other professions as we have mentioned above. Which leads to the creation of a large ecosystem around e-Sports.

With the rise and attractiveness of this sector, greater involvement and incorporation of minors into this sector is practically inevitable. As a result, professional and non-professional eSports entities are faced with a somewhat particular situation. It is important to ensure an environment in which adequate levels of protection are guaranteed to all participants.

It is for all these reasons, and as an opportunity to diversify its economy and open up to new business sectors, that Andorra has decided to join the few countries that currently regulate or have a regulatory framework for this activity.

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With this new Law, Andorra intends to promote, through this structure, good practices for the use of these new technologies. Thus avoiding malpractice in this new sector of activity. In addition, a legally defined environment has been created – in competitive and at the same time protective terms, as indicated – in the law 8/2021 regulation, of April 29, d’esports electrònics. Such regulations should be an attractive factor for professional and non-professional players, companies and clubs, etc of electronic sports for the development of its activities both within the Principality and internationally. This possibility, however, will only be obtained through an adequate, modern, realistic treatment capable of balancing the various interests at stake.

For the Principality of Andorra, the regulation and the current boom in the activity of electronic sports could become not only a fundamental strategy for competitiveness, economic growth and job creation, but also a framework that guaranteed adequate protection for all actors in the sector and, in particular, minors.

The objectives with the creation of this law are:

  • Provide a legal framework that generates security for all participants in the ecosystem.
  • Ensure protection from the increasingly obvious inclusion of minors in the sector.
  • Creation of measures against doping of prohibited substances or stimulants.
  • Ensure consumer protection.
  • Encourage innovation and creativity.
  • Develop and promote the national business fabric.
  • Development and development of programs that promote the use of eSports.
  • Integration of eSports into the education system.
  • Promotion and attraction of foreign investment through the creation of specific regimes and programs for professionals or non-professionals of e-sports.

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Andorran Commission of Esports, What is it?

For all these reasons, the government has opted for the creation of a body called: the Comissió Andorrana d’Esports Electronics which will perform the functions of regulator of the sector and propose improvements in the existing law. The commission is composed of:

  • A representative of the Ministry of Economy;
  • A representative of the Ministry of Sports;
  • A representative of the Ministry of the Interior;
  • A representative of the government’s legal office.
  • The commission will submit a report to the government each year reporting on events taken, actions taken, objectives and possible improvements to the law in an ever-changing sector.

The main functions of the Andorran eSports Commission are:

  • Ensure compliance with this Law and its principles.
  • Propose the elaboration or modification of Andorran regulations on eSports in accordance with the framework established by this Law and adapting to the needs and circumstances of the moment.

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Clubs, How do they work?

With this new regulatory framework, professional and non-professional clubs may be formed, which must have one of the legal forms designated by law:

  • Public limited company or limited liability company;
  • Private non-profit association.

Professional players, how does it work?

In turn, professional players, their coaches, commentators, managers and other professions related to the ecosystem must register in the Register of professional / non-professional players and technicians of esports that is managed by the Andorran eSports commission.

E-sports players
E-sports players

Taxation in Andorra, How is it?

Taxation of professional/non-professional esports players:

At the time of publication of the Law, there are still no specific programs or schemes for such professionals in the sector. Currently, they are still governed by the current income tax brackets. As professionals:

  • Up to €24,000 exempt from taxation;
  • Between 24,000 and 40,000 euros a tax of 5% will be applied
  • From 40 000€ onwards a tax of 10% maximum will be applied.

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And with societies, what’s it like?

Corporation tax is set at a maximum of 10%.

On the first € 50,000 is taxed only 5%. This is true in the event that the company invoices less than € 100,000 in three years. In case the profits can be greater than € 50,000 the maximum applicable percentage is 10%.

On the other hand, non-profit associations are exempt up to € 10,000 of profits, from that amount they are taxed as a company.

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What about regulation in other countries?

France was among the first European countries to regulate esports back in 2016. At that time, a decree-law was approved that aimed to remove from hiding a sector and professionals who did not have a regulatory framework to exercise their activity as it happened in other southeast Asian countries, where the profession of eSports player is regulated and accepted like any other profession.

Unlike other existing regulations, the French government’s text had the collaboration and contributions of French society. In addition, the decree defines the concept of e-Sports (Article 101) and the activity of an eSports player (Article 102). Which we must specify has certain limitations unlike Andorran law. The French law considers that e-Sports competitions of small magnitude – economic aspect – is not covered by that law, but by the law of gambling.

France Flag
France Flag

Another great difference with the Andorran regulations, is that the French law limits to about 4 or 5 professions that can be covered by this law, which are:

  • Organizer of the competition
  • Clubs
  • Players
  • Creator of the game
  • Transmitter of the event

Thus excluding physical trainers, coaches, referees, commentators, analysts and other related professions.

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The French legislation also highlights other interesting points such as the protection of minors and their participation with the prior authorizations of their guardians. Specify that children under 12 years of age are not allowed to participate in this type of competition. This regulation also emphasizes the peculiarities of the employment contract between players and clubs, which resemble football athletes. It also provides the procedures and requirements for organizing a tournament and the guarantees of final prizes.

Despite all this, France does not consider an esports player on the same level as a professional football player, since as the secretary of digital affairs, Axelle Lemaire, said at the time, “le eSport a le droit de sortir de la clandestinité juridique. L’Etat va donc encadrer cette pratique“. Which leads us to the conclusion that France does not intend to regulate a new sport as such but a new practice taking advantage of its media boom and proof of this is that referees, a key player in any sport, are not protected by this regulation.

With this new regulation, Andorra aims to be both an innovative and disruptive country. Offering a broad and flexible regulatory framework to a booming sector and providing greater guarantees than its neighbors in the environment. Proof of this are the multiple aspects covered by Andorran regulations unlike its neighbors, such as the professionalization of these actors. As proof of this professionalization, we can highlight the point that the Andorran regulations incorporate a chapter in the fight against doping, which equates it to high-performance athletes. Another important aspect is the promotion and creation of school disciplines linked to e-Sports such as programming, graphic design… and thus, to enhance the economic and social aspect.

E-sports player
E-sports player

Conclusion: Two points we want to highlight

In the official presentation of the strategic plan on the promotion of e-Sports in Andorrahttps://www.youtube.com/watch?v=t6vgE3xbx_c, great personnel of the sector attended: Diego Soro, CEO Cream Real Betis – Manel Guerrero; Associació Andorrana d’Esports Electrònics i CEO WhatYouPlay – Alvaro González de Buitrago; CEO Team Queso – Roberto Expósito; CEO Asobu eSports;12

Recently, Andorra Business on behalf of the Government of Andorra closed a contract with Global Esports Summit to show the potential of Andorra in eSports. It is the most important and largest event at European level.

Andorra is thus positioned as a pole of attraction at the European level for the whole sector, both for its regulatory framework and for its attractive tax system, which can be improved through incentives as provided for in the law.

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Source:

  1. 1 Prensky, Marc. Natives and Digital Immigrants. Edits: Distribuidora SEK, S.A. https://marcprensky.com/writing/Prensky-NATIVOS%20E%20INMIGRANTES%20DIGITALES%20(SEK).pdf. Pg 5-7.
  2. 2 Prensky, Marc. Natives and Digital Immigrants. Edits: Distribuidora SEK, S.A. https://marcprensky.com/writing/Prensky-NATIVOS%20E%20INMIGRANTES%20DIGITALES%20(SEK).pdf. Pg 5-7.
  3. http://www.e-sports.or.kr
  4. Annual combined eSports prize pools worldwide from 2017 to 2023. https://www.statista.com/statistics/532689/annual-esports-prize-pools-worldwide/
  5. eSports audience size worldwide from 2019 to 2024. https://www.statista.com/statistics/1109956/globalesports-audience/
  6.  Sponsorship and advertising spending on eSports worldwide from 2017 to 2023. https://www.statista.com/statistics/1129550/esports-spending-advertising-sponsorship/
  7. eSports market revenue worldwide from 2019 to 2024. https://www.statista.com/statistics/490522/globalesports-market-revenue/
  8. Value of the eSports market worldwide from 2019 to 2024. https://www.statista.com/statistics/1129596/esports-revenue/
  9. LAW No. 2016-1321 of 7 October 2016 for a Digital Republic (1).
    https://www.legifrance.gouv.fr/jorf/id/JORFTEXT000033202746?r=aZpxq7aLT8
  10. LAW No. 2016-1321 of 7 October 2016 for a Digital Republic (1). https://www.legifrance.gouv.fr/jorf/id/JORFTEXT000033202746?r=aZpxq7aLT8
  11. https://gaming.gentside.com/esport/la-france-va-reconnaitre-l-esport-comme-un-vrai-sport_art9106.html
  12. Presentation of the strategic plan for andorra’s e-sports. https://www.youtube.com/watch?v=t6vgE3xbx_c
  13. https://help.platform.newzoo.com/en/articles/3615815-newzoo-s-esports-terminology#:~:text=ESPORTS%3A%20Competitive%20gaming%20at%20a,are%20competing%20against%20each%20other
  14. https://dictionary.cambridge.org/es/diccionario/ingles/e-sports
  15. https://www.oxfordlearnersdictionaries.com/definition/english/e-sport#:~:text=(also%20esport),people%20to%20watch%20as%20entertainment
  16. https://www.andorrabusiness.com/es/eventos/global-esports-summit-2021/
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