The global appeal of athletes, entertainers, and other public figures has long been a driving force in brand marketing. As esports and video games become deeply embedded in mainstream entertainment and popular culture, celebrity endorsements present significant commercial opportunities. However, leveraging name, image, and likeness (NIL) rights in gaming requires careful legal navigation to mitigate potential risks.
The Power and Legal Complexities of NIL in Gaming
The strategic use of celebrity NILs in esports and video games can enhance brand visibility, attract new audiences, and create compelling marketing narratives. However, failure to properly secure usage rights and adhere to applicable laws exposes companies to litigation, financial penalties, and reputational harm.
Individuals generally retain exclusive rights to monetize their NIL unless they grant a license to a third party. A high-profile example arose in 2018 when the Egyptian Football Association (EFA) featured Mohamed Salah's likeness on its official team plane. The aircraft was sponsored by WE, a telecommunications provider that competes with Vodafone—one of Salah's key endorsers. In response, Salah and his legal team objected, threatening to withdraw from the national team. Ultimately, the EFA conceded.
To avoid similar disputes, companies integrating NILs into their esports and gaming strategies should consult experienced counsel to address critical legal considerations, as outlined below.
Essential Components of an NIL Licensing Agreement
An NIL licensing agreement ensures that all parties align on the terms of use, financial arrangements, and legal protections. Key provisions include:
- Consent: Securing explicit, written authorization to use an individual's NIL, specifying the scope, duration, and permitted contexts.
- Compensation: Determining appropriate financial terms based on the individual's market value, usage scope, and projected commercial impact.
- Confidentiality: Safeguarding sensitive contract details and proprietary information exchanged during negotiations.
- Intellectual Property Rights: Clarifying whether trademarks associated with the individual are included and outlining ownership rights over newly created assets.
- Transformative Use: Defining how modifications of an NIL, particularly in video game settings, comply with legal standards for transformative works.
- Defamation and False Endorsement Protections: Preventing misleading portrayals and ensuring proper disclaimers to avoid consumer confusion.
- Term and Termination: Establishing agreement duration, renewal options, and conditions for early termination.
- Dispute Resolution: Specifying mediation, arbitration, or litigation procedures, including governing law and jurisdiction.
Comprehensive agreements incorporating these elements protect all parties and mitigate the risk of costly legal conflicts.
NIL Law Trends Impacting Esports and Gaming
The evolution of NIL rights in esports requires ongoing legal
scrutiny. Emerging issues include:
- NCAA Athlete Image Rights: Following landmark litigation and policy shifts, NCAA athletes now have the right to profit from their NIL. As colleges increasingly field esports teams, questions remain regarding how traditional NIL frameworks apply to digital athletes, particularly given the absence of a unified collegiate esports regulatory body.
- Passing-Off and Trademark Issues: Companies must ensure they do not misrepresent affiliations or improperly use league-owned trademarks. A notable example is Caitlin Clark's Gatorade campaign, where her attire was deliberately generic to avoid unauthorized use of team logos.
- Streaming and Digital Representation: Esports professionals often serve as both competitors and content creators, potentially causing conflicts between personal sponsorships and team obligations. Agreements must address rights to in-game avatars, AI-generated likenesses, and team-affiliated content.
- Blockchain and NFTs: Digital assets present new NIL monetization opportunities, such as player-specific NFTs and blockchain-enabled royalty payments. Smart contracts could automate revenue-sharing mechanisms, while decentralized governance models may reshape NIL negotiations.
Mitigating Risk and Maximizing NIL Opportunities
Given the legal and commercial stakes, parties engaging in NIL transactions should:
- Conduct Due Diligence: Assess the individual's existing contractual commitments and applicable legal restrictions before entering agreements.
- Monitor Compliance: Regularly review promotional materials to ensure adherence to contractual terms and regulatory requirements.
- Enforce Rights: Address unauthorized NIL usage through cease-and-desist actions, negotiations, or litigation as needed.
By proactively managing NIL agreements and staying ahead of evolving legal trends, esports organizations, gaming companies, and athletes can capitalize on NIL opportunities while mitigating associated risks. Legal counsel with expertise in digital media, entertainment, and intellectual property law plays a critical role in structuring agreements that align with industry standards and regulatory developments.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
