The U.S. Justice Department and Activision Blizzard (ATVI.O) reached a deal to end the lawsuit that the department filed against Activision Blizzard on Monday over salary limits in professional esports leagues.
In a lawsuit filed in U.S. District Court in Washington, the Department of Justice said that Activision Blizzard Inc., which owns leagues based on its “Overwatch” and “Call of Duty” video games, and the independently owned teams imposed a tax that “effectively operated as a salary cap, penalized teams for paying esports players above a certain threshold, and limited player compensation in these leagues.”
In the complaint from the Justice Department, it was said that Activision had dropped plans to limit salaries in October 2021. Activision said in a statement (as per REUTERS) –
“The tax was never levied, and the leagues voluntarily dropped it from our rules in 2021.”
“We have always believed, and still believe, that the Competitive Balance Tax was lawful, and it did not have an adverse impact on player salaries.”
The department said that as part of the settlement, Activision agreed not to put any caps or limits on the salaries of esports players or teams. The settlement still needs to be approved by a federal judge.
Do you know that Microsoft just signed a new 10-year contract with a cloud gaming company? This time, it’s with Ubitus, a provider in Tokyo, Japan:
The Justice Department said that about 60% of Americans say they play video games once a week, and millions of people like to watch professionals play video games.
The government said that the “Overwatch” and “Call of Duty” leagues made hundreds of millions of dollars through franchise fees, sponsorships, exclusive streaming deals, and a TV broadcast deal for Activision that brought in millions of viewers.