Competitive video game tournaments have seen a meteoric rise in popularity across the country in recent years, and the emerging industry’s ability to generate significant tourism revenue hasn’t gone unnoticed in the North Carolina legislature, where lawmakers are considering a measure to attract gamers to the state.
On Wednesday, the House Appropriations Committee approved House Bill 945, which would create income tax credits for companies in the state that film productions of e-sports tournaments.
Under the bill, which was introduced last month by Rep. Jason Saine, a Republican from Lincolnton who serves as a senior chair of the appropriations committee, companies that produce e-sports competitions in North Carolina would be eligible for the 25% tax credit if they show at least $250,000 in qualifying expenses. Those would include goods and services purchased related to production, employee compensation and wages (as well as per diems and living allowances to work in the state), and the cost of production insurance.
At a press conference Wednesday, Saine said the bill would help North Carolina position itself as a leading destination for the burgeoning global e-sports industry, which is expected to surpass $1 billion in revenue for the first time this year.
“We’re making sure that North Carolina will be a friendly place to host these [events]” Saine said.
The tournaments, which can range from informal, amateur events to collegiate or professional competitions, are hosted by e-sports companies and can be either virtual or in-person. And although there is no live sporting action, that doesn’t mean there aren’t thousands of fans who are willing to buy tickets to watch players compete against each other in some of the most popular video games like “Call of Duty” and “Fortnite,” on giant LED screens.
“If you’re not familiar with e-sports or what e-sports are, I guarantee you your kids or grandkids are,” Saine said to legislators during the appropriations committee hearing on Wednesday.
An avid gamer himself, Saine said during the press conference that playing video games with his son was just something he did to relax after a full day of work at the General Assembly. But his view of gaming changed when his son, a fan of the hugely popular game “Fortnite,” convinced Saine and his wife to take him to the game’s 2019 world championship tournament, held at Arthur Ashe Stadium, a 23,000-capacity tennis stadium in Queens, N.Y., normally used for the U.S. Open.
His family “spent a good portion of our vacation money” over the course of that five-day trip, Saine said, and he thought about what similar large-scale e-sports events could do for cities in North Carolina.
The publisher of “Fortnite,” Epic Games, is headquartered in Cary, and announced earlier this year it had reached an agreement to take over the Cary Towne Center and redevelop the sprawling 980,000-square-foot shopping mall into its new campus. With this bill, Saine said he hopes the state can incentivize more video game and e-sports companies to establish a presence in North Carolina and attract gamers in the process.
Under the bill, North Carolina would offer a more competitive tax incentive than neighboring Georgia, which provides a 20% tax credit for e-sports companies that show qualifying expenses of a higher $500,000 threshold.
Charlotte Phoenix, one of the biggest e-sports companies in the state, hosts local tournaments for games like “Rocket League” and “World of Warcraft,” and streams them online. One of the company’s goals is to attract other big-name video game developers like Activision Blizzard and Ubisoft to come to North Carolina and run their tournaments here, according to co-owner C.J. Collins.
“I think that’s absolutely something this [bill] supports,” he said, adding that the attention from lawmakers further “legitimizes” the industry. “The fact that state legislators are looking at the e-sports industry and the good things that come from it is awesome to see.”
Collins said he was not familiar with the specifics of the proposed tax credits, but said that a rebate modeled on film production credits would help his company not only with hosting tournaments, but also its work in providing students with IT training in a number of areas including programming, coding, video editing, and graphic design.
In addition to the tax credits, the legislation introduced by Saine would allocate $5 million to plan and build an e-sports training and education center to be housed at N.C. State University, and $2.5 million to purchase a mobile training facility that could reach students at other schools.
In recent months, several colleges in the state have introduced e-sports teams and gaming clubs, including UNC Charlotte and UNC Greensboro, as well as NCSU. At UNCG, officials are scheduled to unveil a new 3,300-square-foot esports arena this fall, and students interested in pursuing a career in the industry can obtain a digital certificate in e-sports.
Saine said Wednesday that his office had already heard interest in the bill from some companies based in Raleigh, and predicted that the bill would usher in new e-sports tournaments to North Carolina. And if the bill fails to attract companies, he pointed out, the tax credits would expire on January 1, 2025.
The bill is expected to be referred to multiple additional committees before it can be brought to the House floor for a vote.
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