Sports Betting: The National Gaming Authority warns Sorare it wants to regulate
The French service, based on the speculative purchase of virtual football tickets, could be seen as a platform offering disguised sports betting.
The start of the school year was to be hectic for Sorare. The National Gaming Authority (ANJ) has warned the young company behind French Tech’s biggest fundraiser ($680 million), BFM Business has learned. By the fall, $4.3 billion Sorare will have to prove it’s not a sports betting platform in disguise.
To understand the accusation against Sorare, we have to go back to how it works: customers can buy virtual cards (the possession of which takes the form of an NFT), more or less rare, linked to a soccer player in order to speculate on theirs Increase in line with the evolution of awareness of the latter.
The purchase of the relevant cards
They then use the same cards to compete in virtual tournaments that earn rewards based on player stats associated with the cards in real games. For example a goal or an assist. It is this usage that crystallizes the ANJ’s doubts.
“Money and gambling are considered and prohibited as such all transactions that are offered to the public under any name, in order to hope for a profit – even partially – attributable to chance and for which a financial sacrifices are made by the participants requires” specifies Article L320-1 of the Internal Security Code.
A definition that Sorare’s activity, which has just recruited Kylian Mbappé as an investor and ambassador, could fit in the eyes of Frédéric Guerchoun, legal director of the ANJ.
“For gambling to exist, there must be a public offering, a gain in kind or money, and a financial sacrifice. In our view, the financial sacrifice as defined by case law is an expense. But in the case of Sorare, it is imperative to buy tickets to be able to participate,” believes Frédéric Guerchoun of BFM Business.
This notion of financial sacrifice is not perceived in the same way by Sorare, who defends the operation of its platform.
“As the law currently stands, our analysis is that Sorare does not fall within the scope of gambling regulations. […] Depending on the sporting event, there is no idea of stakes or financial sacrifices on Sorare. When a Sorare card is played in our fantasy game, it is never lost. This map can be played 1 time or 500 times, both in season 1 and season 10,” the company defended to BFMTV.
Big possible consequences
The French regulator isn’t the only one with a gloomy view of Sorare’s activities, however. In October 2021, the UK equivalent of the ANJ launched an investigation into the fledgling company for the same reasons.
“We have issued a warning and requested information from this company. We have already received a number of arguments from them that we still have serious doubts about. We are waiting to see what the representatives of Sorare will present to us at the beginning of the school year. If this difficulty persists, we would have to take a stand,” warns the ANJ executive, who recalls in particular the blocking power of the institution.
For Sorare, this threat could weigh heavily. French law prohibits gambling, despite some exceptions such as casinos or sports betting. If purchasing virtual cards to make money based on sports performance is called sports betting, Sorare should apply to the ANJ to become an authorized online operator, as should Betclic, Winamax and the likes.
In addition to higher taxation, Sorare would then have to control the identity of each user and ban access for minors (which it already does according to its terms of service). This could have serious consequences for the number of active users of the platform and for its profitability.