Copyright territory. If they wanted, they could do the whole event offline and pay people out without Nintendo being able to stop them. This, obviously, isn’t a valid option since part of the joy of these events is being able to watch top players do their thing, esports teams getting recognition, merch sales, meaning in chat, etc. not to mention the TO’s and commentators getting paid for their work.
Hosting a tournament is an abuse of their online service and anyone organizing/participating will be banned and lose the ability to play online/their digital purchases/etc. (which is shitty but they probably have a clause saying they can ban people for any reason, or no reason at all)
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