Overwatch League is Reportedly Being Investigated by US Department of Justice
The United States Department of Justice’s antitrust division is reportedly investigating the Overwatch League according to Dot Esports. The esports league’s soft salary cap policy prevents teams from excess spending on players. The policy in addition to the lack of a player union has led to investigations headed by DOJ trial attorney Kathleen Simpson Kiernan who is part of the Civil Conduct Task Force subdivision of the antitrust division in Washington. The nature of the investigation is allegedly not criminal, and Activision Blizzard has communicated to its executives to cooperate with the investigation.
Why is the Overwatch League being investigated
The Overwatch League does not have a player union which would potentially allow the league to apply for a “nonstatutory labor exemption” status. DOJ trial attorney Kathleen Simpson Kiernan contacted Activision Blizzard, the operator of the Overwatch League to coordinate with the investigation. The company has directed its executives to not destroy or tamper with any information regarding player salaries during the investigation which is a routine measure during government investigations according to Dot Esports.
In addition to the soft salary cap there is also a “competitive balance tax” which was confirmed by London Spitfire manager Susie Kim. The details of these clauses were never revealed by the Overwatch League to the public. Activision Blizzard allegedly issued a statement to Dot Esports which stated, “We have received an inquiry from the Department of Justice and are cooperating accordingly. We deliver epic entertainment to our fans and support our players and teams in producing the most competitive and enjoyable esports leagues in the world.”
According to the report, the soft salary cap was $1.6 million for the entire roster of any team. If any team exceeded the amount, it would have to pay the excess salary amount without any assistance from the Overwatch League. It would also have to pay the same amount to the league as luxury tax. The clause prevents teams in the Overwatch League from paying massive salaries to its players. The luxury tax in question is distributed to the non-offending teams in the league and according to reports, there are very few teams that have naturally cleared the threshold of $1.6 million.
The DOJ created the Civil Conduct Task Force division to “identify and pursue conduct investigations that require additional focus and resources.” It remains to be seen how the investigation affects the Overwatch League’s financial model.