Sorare under investigation by UK’s Gambling Commission over lack of license
Sorare, the blockchain-based fantasy platform, is being investigated by the UK’s Gambling Commission industry regulator.
The Gambling Commission said it had come to its attention that Sorare was available to consumers in the UK while not licensed by the commission, meaning users could be left unprotected.
The commission explained: “This means that any activity completed on the site by consumers in Great Britain is outside of the gambling regulations that a licensed operator should comply with.
“Consumers are being advised to consider this information when deciding whether or not to interact with the site.”
The Gambling Commission has said it is now exploring whether Sorare needs a licence at all, or “whether the services it provides do not constitute gambling.”
In a statement of its own, Sorare said: “We are very confident Sorare does not offer any forms of regulated gambling. This has been confirmed by expert legal opinions at every stage since the company was founded, including during a number of fundraising rounds. We will always engage and have an open dialogue with authorities who reach out to us to learn more about our game. We believe this is the responsible way to grow our game and community globally.”
The platform allows individuals to buy soccer players represented in the form of non-fungible tokens (NFTs) – essentially unique digital trading cards that increase or decrease in value based upon real-world performances – to create virtual teams that compete against each other.
The speculation surrounding player value is what will be of interest to the Gambling Commission, bearing in mind the criticism levelled at it following the recent Football Index fiasco.
That self-described “football stock market” also allowed users to speculate on player values based on real-world performances but went into administration in March this year, with £90 million ($122 million) of user stakes trapped and unlikely to be fully recoverable.
A report by the UK’s Department for Culture, Media and Sport released last month found that both the Gambling Commission and the Financial Conduct Authority regulator had an inadequate understanding of how the Football Index worked and took too long to find out.
The use of NFTs by Sorare is an additional element of complexity, in comparison to Football Index.
Indeed, in its statement, Sorare noted: “When a product with a nascent technology becomes successful, such as Sorare’s digital collectable cards and game, it is normal and expected to be regulatory questions.”
The company was founded in 2018 and now has deals in place with more than 140 teams around the world, including France's Paris Saint-Germain, Germany's Bayern Munich, Italy’s Juventus and Spain’s Atletico Madrid.
Last month it announced that it had raised $680 million in Series B financing, giving it a valuation of $4.3 billion.