Online Gaming League

Discussion in 'Accounting and Taxes' started by absolute, Oct 25, 2009.

  1. absolute

    absolute
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    I have a rather unique, yet not original idea, and I am looking for information on the business / legalities side.

    I have developped a site for online gamers. This site will pay players who win the season and tournaments.

    Here's the basics:
    - I am located in Canada. Most players will be in USA, and some overseas, mainly Europe
    - 2 divisions, 1 Pro, 1 amature.
    - Pro players pay $20 US to sign-up
    - Amature free signup
    - Top 5 pro teams split a pot size of roughly $2,000
    - About $150 - $200/player for top prizes
    - Top Amature team wins a small cash prize & admittance to Pro the next season
    - Revenue is generated from ads & players paying to join/play ever season


    Questions:
    - When paying players - What do I have to worry about tax wise? What other legalities are required?
    - When paying myself, what's involved?

    Essentially it'd be great to put 80% back into the community for prizes and pocket 20%, but I'm sure there's something more that needs to be done.

    Guidance? Advice?
     
  2. Chrisj0401

    Chrisj0401
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    First here's my opinion about the business idea.

    I'm a gamer & an Entrepreneur. I had interests in this same or similar idea... Your idea is only slightly different from other online tournaments. I dont see any way this type of business can be profitable. But even in a non-online sector of gaming tournaments can be a tiny bit profitable, still wont be enough for me to invest into that industry, even as gamer who loves competition. And not just any gamer a PC gamer who did compete in non-prizes/cash tournaments.

    As for legal information I'd suggest investing into a International Attorney who specializes in giveaways, contests, and contracts. You'd need to invest a lot of money into an online only gaming league, in order to be able to compete with the giant competitors and where I dont see any profits ever coming in, and if their is profits it'll be 10-20 years at least after the company has been running. All the money of what you'll earn will be for operational costs.

    A online league isnt a one man army running the whole show. Even with volunteers to help run it, the business side of things like handling the cash, obtaining sponsors, advertising/marketing.... just isn't worth it I think. If you want to run a online league for gaming, check out the competitors right now running, volunteer and help them on your free time... Just because this industry of Online Gaming Leagues has no net profits for any online gaming league I've ever seen. And again if it does it will be once technology gets really intense into making gaming very realistic like virtual reality, then maybe, its possible, but now, no....

    You can even confirm this with your competitors like TWL, CAL, ect. about how much net profits they gain, if any. TWL and CAL is one of the two biggest online leagues for PC Gaming and somewhat for console gaming as well. TWL, I think since last time I've competed there, is non-prize giveaway league, and CAL is both ways -prize/no prize- depending on the games.


    That's my 100% truthful advice.
     
    #2 Chrisj0401, Oct 25, 2009
    Last edited: Oct 25, 2009
  3. absolute

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    Thanks for the feedback.

    I'm aware the profit margins are minimal. I'd like to do it for the experience, I'm young, who knows where it will lead. It must be worth it to some extent, as there are a few other leagues doing such.

    And you advise an attorney. Any books, or online info that anyone would recommend to get some more insight?

    I'm hoping / assuming once the legalities get sorted out, obtaining sponsors will come a lot easier. I would also consider hosting events in the future as well. More money in events than aything.

    I'm in no rush to get this started, I want to go about it right.
     
  4. Chrisj0401

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    I'd suggest talk to your competitors as I've mentioned above. Just dont make it seem like your their future competitor. Just for research purposes only if they ask why. And if they keep asking why say your just doing a study report for a business class. They're the best people with the best knowledge to give you the correct and right information to you. Ask them do they make any NET profits from the online only gaming league. And how long to turn to positive net profits. How much money, and man power it would take to start up an online league.

    I'm sure even one of the biggest guys in the Online Gaming leagues, such as TWL, makes no profits what so ever, heck I'm sure they're in the negatives just because they do not offer and cant afford to offer any form of prizes to the players/teams. And TWL has been in the game for more then 10 years. So, saying "profit margins are minimal" is an over statement in my opinion. For experience, ehh if you got $10,000 to burn sure...

    Also your competitors I'm sure will have the time to talk to ya, its not like they're busy making money lol.
     
    #4 Chrisj0401, Oct 25, 2009
    Last edited: Oct 25, 2009
  5. Fergal

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    I'd suggest that you go for the idea. I agree with you that starting the business will be a very valuable experience and that you never know where it might take you. I'd also suggest that you watch your costs and overheads in the beginning and try to keep them as low as possible.

    It would help to create at least a basic business plan to help you plan and organise how you are going to move the business forward and to clarify your goals for the business. You might find the business plan templates listed in our Useful Business Resources / Links thread helpful. Your plan doesn't have to be extremely detailed or complex. Even a short document of a few pages, with an outline of the idea, the costs involved and details as to how you will make money from it, will help you.

    I'd recommend that you speak to a local accountant to get advice on these questions. Perhaps you know an accountant already or ask someone who uses one for a recommendation and introduction. You may not be charged for your first meeting and they should be able to give you some very valuable advice and pointers in the right direction.

    Are there any government funded enterprise / business support agencies in your area, that you could speak to, to get some advice and support?

    Good luck with it and please keep us updated on your thoughts and progress.

    [Moving thread to Online Business forum!]
     
  6. KouK

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    People that go into these kind of business it is not really for the profit more of the love of eSports if you know what i mean.

    I am opening a company soon related to gaming.


    Also for Chrisj0401:

    If you check the europeens, gaming over there is HUGE. When i say it's huge i mean it. Spectators over there are like our concerts here and it is what sponsors look for.

    You just need to really well plan it, be unique, offer nice prizes and know where to advertise it.
    I have been around eSports for over 8-9 years now, been around the big owners, managers and know how it works. All you need is marketing gurus who can come up with new stuff that sponsors haven't heard of.

    Also talking to your competitors is not really a reliable way. If they are successful, they will not share any information nor answer your questions when they become too (much into business talking).

    Also, if they find out that you are looking to create something around what they already run, they won't even talk to you.

    That is the gaming world.
     
  7. unleashed

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    This is a great idea. But you know online games can be cheated on. I am not myself a gamer but on a few other forums I visit, I can easily cheat their arcade using Tamper data addon. So, you need to be careful on that part. However, you would also have to ensure about the security of your online payment account. You should also first gather few players who are willing to pay $20 otherwise you might get in heavy loss.
     
  8. KouK

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    Online league use Anti-Cheat programs that a player must login to and run before running the game.
     

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