The Gambling Commission has today launched a discussion paper setting out its latest thinking on virtual currencies, eSports and social gaming and seeking views on emerging issues that can pose a risk to both regulation and player protection.
The discussion paper has been prepared in response to:
- the blurring of lines between some social gaming products and gambling
- technological advances and the expansion of digital or virtual currencies resulting in some social gaming products offering facilities for Gambling Commission
- the growth in the market for gambling on eSports
Neil McArthur, General Counsel at the Gambling Commission, explained: “Our key concern is to ensure that consumers are protected and that children and other vulnerable people are not harmed or exploited by gambling. This discussion paper brings to the fore some areas where we see real issues for regulation, player protection and the protection of children and young people.
“We are concerned about virtual currencies and ‘in-game’ items, which can be used to gamble. We are also concerned that not everyone understands that players do not need to stake or risk anything before offering facilities for gaming will need to be licensed. Any operator wishing to offer facilities for gambling, including gambling using virtual currencies, to consumers in Great Britain, must hold an operating licence.
“Any operator who is offering unlicensed gambling must stop – or face the consequences.
“We are also concerned about betting on eSports. Like any other market, we expect operators offering markets on eSports to manage the risks – including the significant risk that children and young people may try to bet on such events given the growing popularity of eSports with those who are too young to gamble.
“Finally, in terms of social gaming, the Commission’s view has not changed significantly since the publication of its social gaming paper in January 2015. “But”, cautions Mr McArthur, “if we discover that items such as additional spins, credits or tokens or even loyalty points are tradeable, then we will be taking a keen interest.”
Interested parties have until 30 September to respond. The Commission will also be looking for suitable opportunities during the Autumn for direct engagement prior to issuing a position paper towards the end of the year.
— eSportsMarketingBlog (@eSportsMBlog) August 12, 2016
Exract of the discussion paper:
4.1 eSports are not new but in recent years their popularity has continued to grow strongly. It is
difficult to define eSports but for the purposes of this paper we use the term to describe the
playing of computer games which can range from play by two individuals (including ‘matchups’
– see below) to playing in professional competitions.
4.2 Popular eSports include real-time strategy, fighting, first-person shooter (FPS), and
multiplayer online battle arena (MOBA). Tournaments such as The International, the
League of Legends World Championship, the Battle.net World Championship Series, the
Evolution Championship Series, and the Intel Extreme Masters, provide live broadcasts of
the competition, and prize money and salaries to competitors. In 2015, eSports were
estimated to have an audience of 160 million and total prize funds exceeding $71 million.
Offering bets on eSports
4.3 eSports present some particular challenges and risks for gambling regulation. In 2015 a
number of established British operators began taking bets on eSports and some specialist
operators also entered the market. In terms of overall market share, betting on eSports
currently accounts for a very small proportion of the British gambling market, but it is
4.4 At present, betting operators offer a relatively limited range of betting on eSports. Bets are
offered on who will win a match between two opponents, although increasingly in-play bets
are being made and more diverse products are being provided. To date most operators
appear to be limiting the scale of the markets, although turnover is still significant given
these markets are relatively new.
4.5 In the Commission’s view, the regulation of betting on eSports is no different from any other
event upon which bets can be placed. As we see it, betting on eSports presents risks that
need to be managed in a similar way to other forms of betting and gaming, including the
risk of cheating and match fixing and the risk that people will gamble excessively. We
expect operators offering markets on eSports to manage the risks, including the risk that
children and young people may try to bet on such events given the popularity of eSports
with children and young people.
Offering facilities for players to bet on themselves
4.6 We have also seen the emergence of websites and companies offering facilities for eSport
players to play against one another (match ups) and win money or prizes. Some of those
websites offer eSports match ups which allow participants to bet on themselves to win.
4.7 Given the definition of a betting intermediary, our preliminary view is that a person who is
offering facilities for match ups, by introducing participants who bet against each other
about who will win, is providing a service designed to facilitate the making or accepting of
bets between others. If that is the case then the person offering those facilities may be
acting as a betting intermediary and would need a licence.
4.8 We can see, however, that drawing a clear distinction between arrangements that would in
our view amount to acting as a betting intermediary and payment to participate in genuine
competitive tournaments is not easy. In reaching a view on the question of whether a
person is acting as a betting intermediary we would look at a number of factors, including
the number of people involved in the competition (the more people participating in the
contest tending towards tournament rather than match up).
Virtual currencies, eSports and social gaming
4.9 We are keen to hear what further factors respondents believe the Commission should take
into account to ensure a balance is struck between the need to mitigate any risk to the
licensing objectives, whilst avoiding capturing activities for which additional regulation is
Are participants playing a game for a prize, as defined in the Gambling Act 2005?
4.10 We are also looking into the circumstances in which a player who is playing a game or
eSport for a prize may be using facilities for gambling. This is relevant to the question of
whether an activity requires a licence because many eSports contain elements of chance,
even if the eventual outcome is largely determined by skill.
4.11 We are aware that the outcome of a number of eSport contests will be influenced by events
that are determined by a random number generator (RNG). This raises the question of
whether participating in eSports games for a prize could fall within the definition of gaming
in the Act.
4.12 Many eSports appear to fall within the definitions of gaming. For example, we are aware of
card based games, where players can win prizes, which appear to have similar game
mechanics to poker (such as an RNG to determine which cards are dealt to a player) and
do not require a stake. In our view such games fall within the definition of gaming that
would be illegal without a licence.