Activision Blizzard Faces Lawsuit Over Unlawful Competitive Balance Tax
Activision Blizzard recently faced a lawsuit over the unlawful Competitive Balance Tax. This Competitive Balance Tax restricted the amount of money used for player salaries and redistributed the excess amounts to other teams.
The Competitive Balance Tax was removed in 2021 for Call of Duty League ans Overwatch League. This tax however has been around since the start of both leagues and has most certainly affected player earnings.
Since the players have not unionized, the US Department of Justice found this unlawful. Activision Blizzard is in discussion for a settlement with the DOJ.
This is not the first suit for Activision Blizzard. They faced a discrimination and sexism case for the “Cosby Suite & Frat Culture” in 2021. I was leading a Mythic Raiding Group for World of Warcraft in July, in which we voted to not play for a day. This was to join a large amount of players & employees protesting the company.
Activision Blizzard “have always believed and still believe that the Competitive Balance Tax was lawful”. The recent trend of League Franchising and Player Salary Caps has been a large hindrance in the competition and pursuit of “professional” Esports for teams & athletes. Teams aren’t seeing their return on investment in Activision Blizzard’s Franchised Leagues, and teams, not players decide who plays.
Unorganized players got squeezed by an unlawful tax; Activision's franchise model is under real pressure now.
We're watching esports labor economics shift in real time. When the DOJ challenges a major publisher's competitive balance tax, it signals that player protections matter at scale. This affects how franchised leagues structure payroll going forward across the industry.
- Competitive Balance Tax capped player salaries and redistributed money to other teams since league launch
- DOJ found it unlawful because players lacked unionization to negotiate the arrangement
- Tax was removed in 2021, but lawsuit addresses years of suppressed earnings and franchise ROI struggles
SCCG angle: Our network spans franchise operators, league management, and talent advisors across regulated markets. This ruling ripples through how competitive structures get built—we can connect operators who need to understand labor compliance in esports franchise models with the right expertise.
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