The Gambling Commission has initiated legal proceedings against crypto fantasy sports site Sorare.com for providing unlicensed gambling to consumers in Britain.
Sorare will appear at the Birmingham Magistrates’ Court on 4 October, charged with providing gambling facilities without a licence in the UK.
Users of the site pay real money to trade digital player cards and can manage five-a-side football teams, as well as basketball and baseball teams. Players compete for cash prizes, merch and VIP experiences.
French gambling regulators ANJ questioned Sorare’s business model in the past, wary of its similarities with betting exchanges. France’s ANJ initiated an investigation into the business in 2021.
In 2020 Sorare had agreed to “strengthen free access” to its tournaments as a way to address ANJ’s “serious doubts regarding the legislation on gambling that this part of the offer raised”.
But the model has been more widely questioned by regulators, The UKGB published a note in 2021 saying it was investigating Sorare to see whether it required a licence or its services didn’t constitute gambling.
Multiple international sports leagues have partnerships with Sorare, including Spain’s La Liga and Germany’s Bundesliga. In January 2023 the English Premier League gave the site access to sell official Premier League-licensed NFTs (non-fungible tokens) in a $30m a year agreement.
Top athletes Lionel Messi and Serena Williams are counted as investors in the $4.3bn business, which boasts over three million users across 180 countries. It has raised $769m in funding since its inception in 2018.
Sorare has responded to the UKGC’s case, denying any claims that it is offering gambling as stipulated by UK law.
“The commission has misunderstood our business and wrongly determined that gambling laws apply to Sorare. We cannot comment further while legal proceedings are under way,” a Sorare spokesperson said, as reported by the Guardian.
Steve Ketteley, partner at gambling law firm Wiggan said Sorare’s model has been questioned across the gambling law practice for some time.
“A model that allows players to pay for packs of NFTs could engage gambling law if the customer can then use the collectibles as a selection mechanism for a fantasy football product and win money/money’s worth,” he said via his LinkedIn page.
“Put the whole thing together and, I expect the Commission’s argument will be, you have a pay-to-play fantasy football product (which requires a licence here in UK, unlike in some other places).”
Gambling Commission called out for lack of black market enforcement
Regulus Partners called out the Gambling Commission in its report on the black market this week for not taking enough action against unlicensed gambling sites.
“The fact that over 100 black market websites are still being found per quarter despite Britain being domestically regulated since 2014, with 75 identified affiliates and advertisers helping them to promote their content in Britain, demonstrates the extent to which black market operators are resilient and regenerative to disruption that occurs only to the digital face of their distribution model,” the study warned.