# **Risks, Rules and Realities of Running an Esports Business**

  



Esports may be exciting, fast-paced, and full of opportunity — but it's also a real business. That means real risks.

Whether you’re starting a team, launching a stream brand, running tournaments, or opening a gaming café, success in Esports doesn’t come without challenges. This page offers an honest look at the **legal, financial, and operational risks** involved — and how Esports entrepreneurs overcome them.

It’s a must-read for students, startups, and anyone looking to understand the reality behind the hype.

  

## Strategic Risks

Strategic risks are about the **bigger picture** — long-term changes that can affect your business plans, audience reach, or position in the market.

### 1. **Competitor Growth**

New Esports brands appear every day. As competition increases:

* You’ll need to **differentiate** your offer
* Build a **strong community** or niche identity
* React to fast-moving trends

> **Example:** A new UK team enters the same game title as yours with better funding and instantly attracts your best players or viewers. Your business must pivot to stay relevant.

### 2. **Changes in Audience Behaviour**

What if your audience moves on?

* Twitch trends shift
* A game loses popularity
* A generation grows up and stops playing

> **Tip:** Businesses should avoid relying too heavily on **one title** or platform. Stay flexible and watch the market.

### 3. **Corporate Buyouts and Platform Changes**

If you're building on another company’s platform or using their game, you're at their mercy.

* What if Twitch changes its revenue share?
* What if Riot stops supporting third-party tournaments?
* What if a major sponsor pulls out due to an acquisition?

> **Case Study:** *Mixer*, Microsoft's streaming platform, shut down in 2020 after big investments. Many streamers had to rebuild from scratch elsewhere.

  

## Compliance and Regulation

Legal and ethical **compliance** is essential in Esports — even for smaller teams or streamers. Breaking rules can lead to bans, lawsuits, or damaged reputations.

### 1. **Tournament Rules**

Each tournament has strict guidelines:

* Team eligibility
* Substitutions
* Cheating and match-fixing policies

Not following these can result in **disqualification**, **bans**, or **fines**.

> Example: Players caught using aim-assist software have been permanently banned from major circuits — ending careers overnight.

### 2. **Player Contracts**

If you’re signing players or creators:

* Contracts must be legal and fair
* Include terms on pay, promotion, behaviour, and leaving
* Respect employment law (especially with under-18s)

> Tip: Seek legal advice or templates from trusted sources like [British Esports](https://britishesports.org).

### 3. **Copyright and Intellectual Property**

You **can’t stream, share, or use** any content (logos, music, footage) unless you have permission. This includes:

* Game footage
* Event logos
* Background music
* Third-party artwork

Platforms like YouTube and Twitch can issue strikes or bans.

### 4. **Health, Safety, and Safeguarding**

If you’re running in-person events or managing under-18s:

* Follow **health & safety regulations**
* Get risk assessments done
* Provide adult supervision (DBS-checked in the UK)
* Safeguard vulnerable individuals

  

## Financial Risks

Running an Esports venture comes with a wide range of financial responsibilities and potential pitfalls.

### 1. **Equipment and Setup Costs**

Esports needs tech — and tech is expensive. You may need to fund:

* PCs, monitors, peripherals
* Streaming gear (cameras, lights, capture cards)
* Venue hire, internet upgrades, travel

> Even small online businesses need hosting, licensing, software, and marketing tools — it adds up quickly.

### 2. **Prize Money Disputes**

It’s not uncommon for prize money to be:

* Delayed by months
* Reduced due to unclear rules
* Withheld due to disqualification or contract terms

> Tip: Always **read tournament fine print**, and get **everything in writing**.

### 3. **Cash Flow and Tax**

Even small Esports ventures must manage:

* **Revenue vs. costs**
* **Invoices and receipts**
* **Tax declarations** (via HMRC in the UK)

> Sole traders and companies must **file accounts**, **pay tax**, and **keep accurate financial records** — just like any other business.

  

## Operational Risks

Day-to-day activities also bring a set of practical risks that can disrupt or derail your work.

### 1. **Travel and International Issues**

Players and staff often travel for LAN events or bootcamps.

Risks include:

* Lost luggage or equipment
* Travel cancellations
* Visa issues, especially for players entering or leaving the UK

> Example: A UK-based team might miss an EU tournament due to post-Brexit travel complications or incomplete paperwork.

### 2. **Technology Failures**

Live events and streams rely on:

* Stable internet
* Properly configured software
* Compatible hardware

Unexpected problems can ruin audience trust or stop a tournament.

> Tip: Always have a **backup plan** (spare PCs, recorded content, backup routers, etc.).

### 3. **Cybersecurity and Data**

Running any kind of online platform or event means collecting:

* Emails
* Payment info
* User-generated content

This must be stored securely and managed according to **GDPR** rules in the UK.

### 4. **Team and Staff Disputes**

Creative differences, performance pressure, or miscommunication can cause:

* Staff burnout
* Conflict between players
* Resignations or breakdowns mid-project

> Building a **positive, transparent team culture** is essential.

  

## Futureproofing and Strategy

Running an Esports business isn’t just about reacting — it’s about **planning for the future** and adapting to change.

### 1. **Franchising and Expansion**

Some Esports businesses grow by:

* Buying into franchise leagues
* Opening new divisions (e.g. in *Valorant*, *Rocket League*, etc.)
* Expanding into content, events, merch, or tech

Franchise models mean guaranteed participation in high-level leagues, but come with **huge costs** and **long-term commitments**.

> Example: Teams paid **\$25 million+** to enter the *Overwatch League* — some thrived, others struggled with ROI.

### 2. **Innovation**

Survival often depends on creativity:

* Trying new content formats
* Partnering with indie developers
* Experimenting with hybrid events (LAN/online)
* Creating your own IP — not just relying on others’

> “Be first, be better, or be different” is a great rule for futureproofing.

### 3. **Adaptability and Learning**

The best Esports entrepreneurs are:

* Open to feedback
* Willing to pivot
* Focused on **continuous learning**

They don’t wait for things to go wrong — they **watch the market**, listen to their audience, and adapt fast.

  

## Final Thoughts

Esports is a creative, community-driven space with real entrepreneurial opportunities — but also **real risks**.

Whether you’re a student planning your first team, a streamer launching a brand, or an event organiser setting up a local tournament, being aware of the **rules, pitfalls, and future strategies** is key to long-term success.

Don’t just ask “what could go right?” — also ask “what could go wrong?” and be ready.

  

## Useful Resources

* [British Esports – Education & Legal Guides](https://britishesports.org/education/)
* [UK Gov – Setting up a business](https://www.gov.uk/set-up-business)
* [HMRC – Sole Trader and Ltd Tax Info](https://www.gov.uk/business-tax/self-employed)
* [Esports Insider – Industry Legal Cases](https://esportsinsider.com)
* [UKIE – Game Industry Guidance](https://ukie.org.uk)