The Department of Justice has taken Activision Blizzard to court, alleging the publisher’s esports leagues had been potentially underpaying their workers/players via an exploitative “Competitive Balance Tax”.
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The tax, which was signed off years ago by both Activision and each team in their Call of Duty and Overwatch esports leagues, was designed to operate (roughly) like the salary caps found in the NFL and NBA. The government says this specific deal, however, “had the purpose and effect of limiting competition between the teams in each league for esports players and suppressed esports players’ wages”, saying in a court filing on April 3:
Sports fans might be thinking, hey, that’s almost exactly how the NBA’s salary cap and luxury tax work. And it is! But as the Department of Justice point out, the NBA’s deal was hashed out in negotiations with a player’s union, as part of collective bargaining agreements. This tax was not.
The government say that an investigation into the Competitive Balance Tax has been going on for years, and that in 2021—having been warned it was potentially illegal—Activision “issued memoranda to all teams in the Overwatch and Call of Duty Leagues announcing that it would no longer implement or enforce a Competitive Balance Tax in either league”.
