The rise of e-sports in Thailand and opportunities for investors

The rise of e-sports in Thailand and opportunities for investors

Baker Mckenzie Team

E-sports has become popular in Thailand over the past two decades. The first e-sports tournament in Thailand was held in 2001, and apart from the aspect of professional sports and athletes, the popularity of e-sports also creates an ecosystem of businesses that revolve around it, including:

• Software and hardware business: In e-sports competitions and training, the games and equipment, such as computers, mobile phones, and other gaming gear used, are essential.

• Media business: The popularity of e-sports also evolves through live broadcasts and advertisements during e-sports competitions.

• Professional e-sports club: Similar to other traditional professional sports, e-sports also has professional sports clubs which are responsible for finding sponsors and sourcing income for athletes.

According to the research on Thailand's digital content business, undertaken by the Digital Economy Promotion Agency of Thailand (DEPA), the gaming industry in Thailand was valued at approximately 34 billion baht in 2023, and it is estimated that the digital content business in general will continue to grow at the rate of 4 percent in the next few years.

LEGAL STATUS OF E-SPORTS UNDER THAI LAW

Despite its popularity and success in Thailand, e-sports was not recognised as a professional sport until 2021. At that time, the Professional Sports Commission of Thailand ("Sports Commission") officially recognised and announced e-sports as a professional sport, similar to other traditional sports like football, golf, and tennis. Such official recognition provides concrete protection and legal obligations to businesses and stakeholders within the industry.

Now, under the current Notification of Professional Sports Commission, re: Designation of Professional Sports B.E. 2566 (2023), e-sports are finally recognised as a professional sport under the Promotion of Professional Sports Act B.E. 2556 (2013) ("Professional Sports Act"). Protection and legal obligations that apply to traditional professional sports shall be applied to stakeholders in the e-sports industry.

Below are certain key protections and legal obligations for stakeholders within the e-sports industry:

1. Professional e-sports clubs and professional e-sports associations

• Professional e-sports clubs and professional e-sports associations are required to notify the competent authority of their operations.

• Those who notify the competent authority will obtain the right to use e-sports-related terminology in their club or association name, and be granted certain benefits (e.g., athlete and staff development, information on athletes, participation of national and international professional competitions, and the lending of properties of the SAT).

• The notified professional clubs and associations must adhere to the following key requirements, including but not limited to:

(1) Entering into a contract with each of their e-sports athletes and staff, which must contain the minimum required terms (e.g., normal working hours, annual leave, and termination of employment).

(2) Issuing a code of conduct for their e-sports athletes or staff. The code must include punishment for any violations.

(3) Providing assurances that e-sports athletes, staff, fans or attendees of events/competitions will act in an orderly manner throughout the competition at the exhibition ground.

2. Professional e-sports athletes and staff

• Professional e-sports athletes and staff are required to notify the competent authority of their professional status. Similar to clubs and associations, those who notify the competent authority will obtain certain forms of protection and benefits (e.g., participation in national and international professional competitions, borrowing properties of the SAT, and the protection of contractual rights with professional e-sports clubs or associations).

• If any e-sports clubs and associations engage in unfair practices, professional athletes and staff can file complaints with the competent authorities.

• Professional e-sports athletes and staff are entitled to establish an organisation to uphold the dignity and preserve the interests of its members.

3. Organising e-sports competitions

• An organiser of an e-sports competition is required to notify the competent authorities of its event plan, including the distribution of interests or revenue.

• Competitions must be organised in accordance with professional sports standards (e.g., venue safety, maintaining order measures, health checks for athletes, facilitation of necessary medical staffs and equipment, etc.). Organisers of an e-sports competition that is in compliance with the standards can also apply for promotion and support from the SAT.

4. Match fixing of e-sports

• Any person that influences professional e-sports athletes to commit match fixing, or e-sports athletes that commit match fixing shall be subject to criminal punishment under the Professional Sports Act.

• Any person that influences e-sports referees to provide unfair judgment, or a referee who commits unfair judgment, shall be subject to criminal punishment under the Professional Sports Act.

From the early days of national competitions, to achieving international success, e-sports in Thailand has fostered an ecosystem encompassing businesses such as media, advertising and professional clubs. Legal recognition and regulatory frameworks have further solidified the status of e-sports as a professional sport, ensuring protections and obligations for professional athletes similar to other traditional sports.

Based on the Thailand Investment Promotion Strategy 2023 – 2027, e-sports is presented by the Board of Investment (BOI) as one of the new areas with potential for investment opportunities in Thailand in the area of creative industry i.e. software development. A qualified software development project could receive up to eight years of corporate income tax exemption privilege from the BOI.

As the industry continues to expand, Thailand remains a significant player on the global e-sports stage, with promising prospects for future growth and success.

Authors

• Nont Horayangura, Partner, Intellectual Property and Technology

• Teetouch Dilokgomon, Associate, Intellectual Property and Technology

• Chana Sooppipat, Associate, Corporate and M&A

• Haruthai Chaisanee, Associate, Corporate and M&A

Contact details:

Melanie Geslin, Special Counsel, European Desk Baker & Mckenzie Ltd.

+66 2 666 2824 ext.4051 www.bakermckenzie.com