UK Gambling Commission Investigates Unlicensed NFT Site

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Sorare, a soccer NFT company based in France, is operating in the UK without a gambling license, and the Gambling Commission has kick-started an investigation to assess whether it requires one. [Image: Shutterstock.com]

A warning to users

Regulatory body the UK Gambling Commission (UKGC) has issued a warning to the general public regarding a French company called Sorare. The firm’s website, which allows users to purchase non-fungible tokens (NFTs) relating to soccer plays, has launched in the UK market without a gambling license.

The UKGC took to Twitter on Friday last week to share its warning in regards to the “football-themed website:”

In a statement shared last week, the UKGC said that the unlicensed NFT website is currently acting outside of UK gambling regulation. The national regulator urged UK residents to consider this information before deciding whether to sign up with the company.

The Gambling Commission has kick-started an investigation into Paris-based Sorare to establish whether it requires an operating license, or whether its services do not actually constitute gambling. For now, the UKGC said it will not comment any further on the situation until it has completed its enquiries.

Sorare makes its case

Sorare, which has operated in the UK since 2019, does not actually allow its users to wager on sports, but there is a speculative nature to the site’s operations. The value of each NFT is determined by the corresponding player’s performances.

On Monday, Sorare released an official statement in response to the warning given by the UKGC. The company said it is “very confident” that its services do not constitute any form of regulated gambling. “This has been confirmed by expert legal opinions at every stage since the company was founded,” the firm added.

the responsible way to grow our game”

In addition, the company has confirmed that it intends to have an open discussion with any authorities asking for more information on the game. “We believe this is the responsible way to grow our game and community globally,” the statement read.

The fast-growing French company offers NFTs for some of Europe’s most popular soccer teams, including Bayern Munich, Liverpool, and Juventus. It increased its value to around $4.3bn in September after raising $680m in a second round of investment. In Q2 2021, the company said it increased its quarterly sales 54 times from the previous year.

Bad memories of Football Index

Undoubtedly, the UKGC will be hoping to avoid any situation vaguely similar to that experienced with sports betting company Football Index. Unlike Sorare, the Jersey-based company did have a UK operating license, but it collapsed in March this year after slashing the dividend payouts on its betting exchange.

the UKGC has taken a large portion of the blame

Although some Football Index users have received their cash back, others with heavy investments at the time of the crash have lost out. As the market’s regulator, the UKGC has taken a large portion of the blame for the incident, prompting a government review into its failings. The body recently affirmed that it would make changes to its regulatory oversight in response to the review.

The Football Index saga has continued over the past week. Documents leaked by The Athletic suggest that BetIndex used customer funds to pay for its international expansion. The firm reportedly sent £15m ($20m) of customer cash to its holding company, Index Labs, between 2019 and the beginning of 2021. UK gambling law requires that betting firms keep customer money separate from operating funds.

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