THE IOC and Saudi Arabia have cancelled their 12-year deal to host the video gaming Esports Olympics in Riyadh in a rare setback for a sports project backed by the oil-rich kingdom.

The International Olympic Committee said on today they “mutually agreed that they will end their co-operation on the Olympic Esports Games.”

An official Olympic event shaped as a signature asset in the Saudi drive to acquire and develop sports as part of the Vision 2030 modernisation program driven by Crown Prince Mohammed bin Salman, who ordered the brutal killing of journalist Jamal Khashoggi and is known to be a video gaming fan.

“At the same time, both parties are committed to pursuing their own esports ambitions on separate paths,” the Olympic body said, announcing a reset of a major project seven months into the presidency of Kirsty Coventry.

The partnership was confirmed on the eve of the Paris Olympics last year but the inaugural Esports Olympics due to be held this year in Riyadh was already postponed to 2027.

Saudi Arabia already hosts the Esports World Cup which has games like Call of Duty and Street Fighter.

The annual competition in Riyadh pays tens of millions of dollars in prize money and is personally supported by the crown prince.

The Olympic deal was terminated weeks after the $925 billion (£703bn) Saudi sovereign wealth fund fuelled a $55bn (£41.8bn) buyout of storied game maker Electronic Arts. One of the Public Investment Fund’s investment partners in the deal was a firm managed by Jared Kushner, the son-in-law of US President Donald Trump.

The IOC said it will “develop a new approach” to the video gaming Olympics and “pursue a new partnership model.”