UK Gambling Commission opens investigation into NFT Sorare fantasy game – Ledger Insights
The UK Gambling Commission issued an advisory on the fantasy football game Sorare on Friday, saying the platform was not licensed by the Commission. He also said an investigation was underway. As noted below, there is more to this than might be obvious at first glance. The Gambling Commission itself has been recently reviewed, and it is conceivable that the investigation will aim to consult outside lawyers given the newness of the platform.
Sorare has deals with more than 180 football clubs, including some of the biggest in the world, as well as league-wide contracts with the Spanish Liga and the German Bundesliga. Players buy NFT card collectibles and can use them in fantastic free games, winning prizes from other collectibles or ether cryptocurrency.
Barely three weeks ago, the French startup announced a $ 680 million funding round led by Softbank.
In response to the Commission’s opinion, Sorare issued a statement saying: “We are very confident that Sorare does not offer any form of regulated gambling. This has been confirmed by expert legal opinions at every step since the inception of the company, including several fundraisers. We will always engage and have an open dialogue with the authorities who contact us to learn more about our game. ”
The Commission’s position on fantastic games
In 2017, the Gambling Commission published an advisory on fantasy games, warning “those who organize fantasy football leagues… we don’t think this is how Sorare works, because the game is free to play.
However, the 2017 advisory also states that “Gaming advertising includes anything that encourages someone to play or provides information about gaming facilities in order to increase usage. This includes posts on Twitter or Facebook, whether public, private, or within groups.
This begs the question that if there is no pool then is there gambling? Therefore, is social media activity important? We reached out to lawyers specializing in the game, but did not receive a response in time for the release.
Indented, while Sorare offers collectibles and runs some fantastic games, there is no doubt that the entire NFT space has become quite speculative, driven by a significant subset of users.
Elsewhere, the British Premier League has some fantastic free-entry competition, and we don’t think they have a gaming license. Likewise, Sorare’s fantasy game is free.
Here is the description of the Sorare site: “The Game is a free promotional game organized to promote the main activity of the Organizer…. The aim of the Game is to create the best team of five Collectibles representing professional football players.
So while the game is free, users buy collectibles, which are not free.
The Gambling Commission examined
The timing of this warning may be relevant. Just two weeks ago, the Gambling Commission was criticized by an independent government review for its management of the Football Index which operated a stock exchange-type football investment platform.
BetIndex, the owner of Football Index, took office in March 2021. At that time, open bets stood at £ 124million. Although licensed for several years, the company did not begin to undergo a detailed review until 2019. The government’s review said it “considered the nearly two years that elapsed between 2019 and the suspension of BetIndex’s license in March 2021 were too long “.
The FCA, which regulates investments, has also been criticized. “Faced with the need to examine the regulatory position of an undoubtedly new product, the legal interpretation of which was nuanced and open to different conclusions, the FCA did not obtain the external legal opinion of the lead lawyer. ‘after the suspension of the BetIndex gaming license. . “
The review also indicated that the FCA’s approach was driven by available resources rather than legal analysis. This labor shortage is something that regulators elsewhere, including the SEC in the United States, have highlighted.
Coming back to Sorare, another question is whether the Commission is investigating Sorare, why only Sorare? Looking at the description of Football Index, other blockchain platforms seem much closer, although they are also new and different.