U.S. Department of Justice probing the Overwatch League over antitrust
The League has a salary cap and a wealth redistribution policy without a player's union, opening it up to investigation.
The United States Department of Justice is looking into the Overwatch League and potential violations of antitrust law, Dot Esports has reported.
What exactly is the Overwatch League being investigated for?
The major issues surround the League’s salary cap and lack of a player’s union. The Overwatch League has a soft salary cap implemented, which reportedly stood at a $1.6 million threshold last year. If teams spend over that amount, their cost of each dollar spent doubles. For instance, if a team spent $2 million on player salaries, they would end up paying $800,000: $400,000 in salaries, and an extra $400,000 to the league. Then, teams that hadn’t spend over the cap would get that extra $400,000 split between them.
This in and of itself isn’t an issue – many professional sports leagues, particularly in America, have setups like this. The main problem is that this policy is in place without a player’s union. For example, the reigning champions, San Francisco Shock, currently field 10 players. If they’re exactly on the cap, this translates to an average salary of $160,000/year per player. Without a player’s union, there’s no solid way for players to negotiate against this salary cap, and thus higher pay for themselves.
If the League had had a player’s union, they would be able to acquire a “non-statutory labor exemption”. The professional sports leagues that do have a salary cap and revenue sharing, the National Hockey League for example, use this policy. Without one, though, they’re open to investigation. According to Dot, the DOJ has contacted and interviewed several ex-Overwatch League staff members. The League themselves have instructed teams not to tamper with their information around salaries.
The Dot Esports report expands on a few more details. The investigation is being led Kathleen Simpson Kiernan, a Trial Attorney under the Civil Conduct Task Force of the DOJ’s antitrust division. Dot also report that the investigation is not criminal. This means that we may see the league forced to establish a player’s union, or have to pay fines, but there’s little risk of being completely shut down.
The early phase of the investigation means all options are still on the table
The investigation seems to be in a relatively early phase still. Jacob Wolf, one of the reporters who broke the story, shared some of the directions this could go. Basically, everything is on the table. The DOJ could end up dropping the investigation. Any number of agreements could be made – they could be forced to establish a union, or possibly just drop one part of their offensive policy. Or, the DOJ could escalate things to court, which would be the most concerning outcome for Overwatch League fans.
Credit goes to Jacob Wolf and Liz Richardson, the reporters responsible for breaking the story. Stay tuned to Esports.gg for the latest Overwatch news and coverage, as well as updates on this situation as it develops.