Benjamin Franklin probably wasn't referencing esports when he said that nothing was for certain except death or taxes, but the sentiment may prove apt all of the same. Esports revenues are continuing to climb, and like other athletes traveling through town on business, gamers can make lucrative profits taking part in online competitions. Now it would appear that state governments are ready to start collecting their cut.

According to a story published last month by The Washington Post, states like Pennsylvania have programs set up to help the esports industry "understand and improve their tax compliance." But the degree to which collectors are able to rely upon existing tax structures should players elect to travel courtesy of virtual private networks (VPN) may depend largely on the sophistication of the individual leagues involved.

"If there really is a virtual esports event of some kind then it would be very difficult to imagine how you could tax the players without the assistance of a central major league gaming apparatus," said Christopher Ballod, a partner at Lewis Brisbois Bisgaard & Smith.

The biggest complication potentially stems from VPNs, which essentially afford a user privacy and anonymity during their online activity and could preclude an individual gaming competition from tracing the real-time location of each of their participants for tax purposes or otherwise. While the issues this poses to esports may be something of a novel commodity, the root problem is not.

Ballod indicated that regulators have been grappling with questions around taxation since the dawn of the commercial internet, a space with no clearly defined boundaries to draw upon—state or otherwise. In the case of e-commerce companies, for example, the issue was eventually resolved when tax authorities required companies such as Amazon to collect tax at the point of sale.

"While Amazon is verifying your location for shipping and payment then that's where their obligation to collect the tax also occurs. It doesn't matter where you are, it doesn't matter if you are behind a proxy, in order to make the payment happen you've got to collect the tax," Ballod said.

While e-sports aren't purchasing anything from their prospective teams, the general principle would likely still apply in terms of placing an onus on leagues to be more proactive about their players' taxes. However, some leagues may be further along in that direction than others.

Ryan Fairchild, an attorney working in esports at Brooks, Pierce, McLendon, Humphrey & Leonard, said that when he entered the space almost two and a half years ago, teams seldom classified their players as employees in a potential effort to avoid all of the the administrative work associated with payroll and withholding taxes. That has already started to change in some of the larger "franchise" leagues,—such as "Call of Duty" and "Overwatch"—which now impose their own classification requirements.

"But outside of that you still tend to see teams as independent contractors. And frankly players often like that as well because they can control their tax situation a little bit more that way or at least they perceive it that way," Fairchild said.

He suspects that for leagues like "Overwatch,"—which this season will implement a schedule that finds players physically traveling from location to location—staying on top of various state tax laws that are triggered will remain pretty straightforward. More informal leagues that don't maintain records or facilitate competitions largely through streaming may present a more challenge target for tax collectors.

However states may not be entirely without recourse. Ballod at Lewis Brisbois pointed out that some sites are configured to restrict the use of VPNs at certain points, something that could theoretically make it easier to ascertain who is playing from where. Fairchild, on the other hand foresees a possible regulatory fix.

"Eventually you would have some sort of requirement to at least say what state or jurisdiction you were streaming from. There are ways that they could regulate this into place for better or worse," Fairchild said.