In a recent statement on Medium, Sorare announced updates to its product roadmap, referring to this change as a "temporary solution." This decision aligns with the requirements set forth by the French National Gaming Authority, l'Autorité National des Jeux (ANJ), which creates an optional alternative method for users based solely in France.
In practice, Sorare has expanded access to its fantasy sports leagues for players in France. The French version of the statement highlighted that this new entry method would allow participation "without blockchain cards," which was not mentioned in the English text.
This adjustment signifies the increasing regulatory pressure ANJ has exerted on Sorare for over a year. iGB reported in December that Sorare operates by issuing virtual player cards as NFTs, which players buy through the Ethereum platform to assemble their fantasy teams. The cards’ values fluctuate based on the players' on-field performances, and they can be traded in Sorare's digital marketplace.
This connection between real-life performance and card value drew ANJ's attention. As part of ongoing discussions, the regulator required Sorare to enhance its free play model, ensuring equal winning opportunities for players, irrespective of whether they opted to pay.
Initially, Sorare had until March 31 to implement changes, but this deadline was later extended to May 26. The updated model enables French players to join tournaments without the necessity of purchasing NFTs or blockchain cards. ANJ president Isabelle Falque-Pierrotin remarked to Les Echos that this arrangement "neutralises the idea of financial sacrifice (stake), which is one of the criteria to be considered a real money game."
Without this modification, Sorare risked potential sanctions from ANJ. Nevertheless, questions remain regarding the new setup: Will it apply exclusively to new players without accounts who don’t possess any blockchain cards? Furthermore, can existing account holders participate in free play mode without utilizing their blockchain cards?
In response, Sorare clarified that French users opting for the new method in any game week cannot submit another lineup using their NFT-backed cards in the same week. Regarding the second question, the company confirmed that existing account holders can choose between using their NFT cards or participating in free play mode.
This flexibility allows Sorare to continue monetizing its player base in France, one of its largest markets. Sorare explained, "This latest update is an optional, alternative free entry method for all French users," including existing and new account holders, as long as they are based in France and register a phone number while providing appropriate documents to verify their residence.
Whether ANJ will approve this new structure remains to be seen. The regulator noted that it acknowledged Sorare's recent adjustments but has "not validated any operational solution" beyond the fundamental principle that a free play option must provide equal chances of winning as a real money product. ANJ will assess Sorare's revised model but did not provide a timeline for its verdict.
The future of Sorare’s operations in France is further complicated by prospective regulations from the government concerning Web3 companies, which reportedly aim to establish guidelines for "games with exchangeable digital objects." This would cover businesses like Sorare, Socios, or Binance while exempting them from the same regulations that govern real-money gambling.
Under the proposed rules, these companies would not need a license from ANJ and would not be subject to the gross gaming revenue tax that applies to real-money operators, though they would incur a 20% VAT on sales of digital goods.
Reports suggest there is no consensus among French gambling entities regarding these new regulations. The lottery operator Française des Jeux seeks to have Sorare and similar companies taxed as real money operators, while land-based casinos focus more on the online gaming regulations. Proposed changes are currently under review by the French treasury, which will draft a new law based on this analysis.
With France aiming to position itself as a leading European hub for tech and international startups, Sorare exemplifies this trend. It is seen as a significant player within the Web3 space and has maintained connections with top officials in the French government.
Although Sorare does not provide specific player numbers for each country, it claims three million registered users globally and approximately $300 million in sales over the last year. Comparatively, ANJ-licensed operators in the French online sports betting sector reached record gross gaming revenues of nearly €1.4 billion in 2022, bolstered by World Cup activity.
As Sorare awaits a response from ANJ regarding its free play model, the outcome will likely impact how the authority interacts with Sorare and shapes its regulatory framework for Web3 companies in the future.
