Arstechnica recently put together an article explaining why exactly Nintendo can legally ban a game from tournament play. In the back of our minds a lot of us are going "well, duh! We weren't really debating if it was legal or not." However, it appears that maybe we should have been, since Hasbro cannot ban Scrabble from tournament play. To put a frame of reference on this story, Nintendo recently tried to ban Super Smash Bros. Melee from EVO entirely, settled on shutting down the stream, and then later rescinded all the restrictions.
Seems like a conflicting move, but Nintendo's legal team acts independently of Nintendo themselves, and as such, it probably took a little bit for Nintendo to get directly involved with the legal team to stop them from restricting the act. Still, why can Nintendo ban one of their games legally, while Hasbro can't ban theirs?
In a way, video games are no different from DVD movies, which you can't legally show to a big group of strangers without the proper license. The only difference is that the movie industry has a simple Website where you can buy legal public performance rights for your DVDs, while the game industry has no such organized entity for getting legal clearance for your game tournament.
Methenitis says that this has caused problems for groups like libraries, which have come to him looking for help making their video game-themed tournaments and events nice and legal. "They were sort of in a tizzy, 'What do we do about this?'" he recalled. "[I told them] you can try to send an e-mail to Nintendo or Sony or whoever you're dealing with, but I don't really have any assurance you'll get a response, and there is no easy licensing system you can go to for this.… It's sort of such a grey area with games that no one has done anything to really formalize it in either direction."
No doubt the tournament organizers at EVO would have appreciated such a one-stop licensing solution for their efforts as well.
At some level, it makes sense that a video game maker can control the public performance of its work, even in a tournament setting. Video games are games, like football or Scrabble, but they also include significant expressive elements, like character design, settings, voice acting, animation, and more. These are the kinds of inherent elements that convinced the Supreme Court that video games are speech protectable under the First Amendment, rather than simply a set of unprotectable "rules." While that protects the games from government intervention, it also gives video game creators a much stronger say over the games' public use than, say, James Naismith has over basketball.
On the other hand, playing a game in public isn't exactly the same as hitting "play" on a DVD and selling tickets, or even posting a "Let's Play" video on YouTube (another area where Nintendo has been flexing its legal muscle recently). The tournament organizers are primarily selling access to the particular match of the game being created by the competitors and the live commentary on that match from the shoutcasters. This is the "work" the spectators are paying to see, more than the underlying game elements behind it.
Legally, though, this distinction is moot. The law treats a performance of Smash Bros. the same way it would treat the performance of a written play or a piece of sheet music—that is, as something that can be controlled by the original copyright owner. This is true even though the game is much more improvisational and competitive than simply reciting a script (improvisational theater is much harder to protect with copyright), and even though the same exact game would not be considered a performance if it were not on a video screen.
What I gather out of this is that a game like Scrabble can't be stopped because the essence of the game isn't copyright-able, but that video games can be because they are much more involved as an art form. Also, from what I gather, the ESA should really get a system set up like the movie industry has for these tournaments so they can stop teetering on legal grey area.