Great Britain’s gambling watchdog, the UK Gambling Commission, has warned that Sorare, a French-based NFT startup that offers a fantasy football game, might be operating in the country without a license. The regulator issued a notice on October 9, noting that any activity that Brits complete on the Sorare website falls outside the gambling regulations that licensed operators should follow.
According to the notice, the watchdog has made an inquiry into the company to determine whether it requires an operating license and if its services can be considered gambling. In the meantime, the regulator urged Great Britain citizens to consider this information before interacting with the website.
While the Gambling Commission promised to offer updates on this matter, six days have gone by without any official information.
Assuring its users that it does not need licensing, Sorare published a blog post, saying it is confident it does not offer any forms of regulated gambling. The company added that legal experts confirmed this fact at different stages of its growth since its launch.
The firm, which recently secured $680 million in its Series B funding round, added that it welcomes inquiries from authorities that want to learn more about its game. According to Sorare, this is the responsible way to grow its game and community globally.
Sorare might fall under the Gambling Act of 2005
While Sorare is sure its activities do not fall under any forms of regulated gambling, a legal expert believes the company might be wrong. Richard Williams, a gambling and regulation partner at Keystone Law, claims Sorare could either belong in the category of pool betting or gaming-regulated activity under the Gambling Act of 2005.
The legal expert further noted that the Gambling Commission would review the product thoroughly. However, he believes there is a legal question regarding the structuring of the Sorare game, seeing as the cards it trades are speculative. He added that if the regulator finds Sorare falls under gambling, things might quickly go downhill for the Paris-based firm.
According to Williams,
If it is gambling, it is highly unlikely that the Gambling Commission would issue an operating license to a business which transacts with customers using cryptocurrency, as it is difficult to establish the source of funds of customers.
Williams added that the Gambling Commission’s warning against Sorare is part of the regulator’s efforts to protect consumers against organizations that offer unlicensed gambling services in the UK. According to him, the Football Index crash, which saw customers suffer high losses, might be the reason behind the increased scrutiny.
Contributors
