WASHINGTON, April 3 (Portal) – The US Department of Justice has agreed to a settlement with Activision Blizzard (ATVI.O) to settle the department’s lawsuit filed on Monday over salary caps in professional e-sports leagues.
The department said in its lawsuit filed in U.S. District Court in Washington that Activision Blizzard Inc, which owns leagues built around its Overwatch and Call of Duty video games, and the independent teams levied a tax that “effective as a salary cap, penalizing teams for paying eSports players above a certain threshold and capping player compensation in those leagues.
The Justice Department’s complaint said Activision dropped plans for October 2021 salary caps.
Activision said in a statement: “The tax was never collected and the leagues voluntarily removed it from our rules in 2021.
“We have always believed and still believe that the Competitive Balance Tax was lawful and had no negative impact on player salaries,” it added.
As part of the settlement, which has yet to be approved by a federal judge, Activision has agreed not to place caps or limits on the salaries of esports players or teams, the department said.
The Justice Department found that an estimated 60% of Americans say they play video games weekly – and millions enjoy watching video games played by professionals.
The Overwatch and Call of Duty leagues have generated hundreds of millions of dollars from franchise fees, sponsorship revenue, exclusive streaming deals and a television broadcast deal for Activision that draws millions of viewers, the government said.
Reporting by Diane Bartz; additional reporting by David Shepardson; Edited by Mark Porter and Jonathan Oatis
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