Although educational games have become quite popular in recent research, only a limited number of studies have focused on the effectiveness of these games. While numerous claims have been made about the effectiveness of games, the studies that examine educational effectiveness often contain flaws resulting in unclear conclusions. One possible solution for these shortcomings is to focus on separate game elements rather than on games as a whole. A second solution is to take into account students' perceptions of instruction as they are likely to affect students' interpretations and learning outcomes. This study investigated whether the addition of the gaming element "competition" to a computer-based language learning environment is related to students' motivation, perceptions and learning outcomes. Additionally, this study probed into the effect of instruction, i.e., the instruction of a gaming or learning environment, on students' perceptions of the environment, their motivation and learning outcomes. 83 students participated in this study, all working in a game-based learning environment for learning business English conversation skills. The results demonstrate that competition is not significantly related to students' learning gains and only partly related to students' motivation. Moreover, the majority of students perceived the environment as a learning environment, even when they were instructed to be playing in a gaming environment. To conclude this paper, the practical and theoretical implications for the fields of instructional design and educational games research are discussed.