This weekend I received a flurry of questions regarding Sorare.
Naturally, the recent Footstock announcement and demise of Football Index has left traders anxious. Several asked me to share my thoughts, much like the Football Index review in December. I may revisit this idea in the coming weeks, time permitting.
For now, my first question is…
Is Sorare a Gambling Game?
Sorare describes itself as an online global fantasy football game where you can collect and trade virtual cards via the ethereum blockchain. These ‘virtual cards’ can be used in online competitions to win cash prizes or more cards.
But isn’t that gambling?
Looking at the Google definition of gambling, you might think so…
Although a quick skim of the SO5 game rules states:
THE GAME IS FREE. A PURCHASE OF COLLECTIBLES DOES NOT IMPROVE CHANCES OF WINNING.
I would presume this term is there to allow them the regulatory workaround of the SO5 game being a ‘Prize Competition’ like that of a crossword or sudoku puzzle in the paper offering a prize.
You can read the UK gambling act prize competitions and free draw requirements here.
However, looking at the public discussions on Twitter, it appears that the ‘common cards’ that you receive upon signup are of less use when it comes to winning prizes…
Should it be classified as gambling or not, it begs the question – are some Football Index users chasing their losses on SoRare?
Whilst some SoRare users are clearly into collecting cards, many appear to be there for financial gain alone. Hopefully they are not over-exposing themselves in terms of affordability.
A Legal Loophole?
So if the cards enable the user to win cash or additional cards of value, why doesn’t SoRare need a gambling license?
Here’s Sorare’s CEO explaining via discord:
In short; there isn’t an entry fee for the competitions and Crypto/NFT’s mean it’s not gambling. Regardless of the result, the user gets to keep their imaginary card via the blockchain.
It’s an interesting legal workaround in my opinion. My first thought was – how long until Betfair accept cryptocurrency as payment and offer a bet with each NFT you purchase?
By doing this, they wouldn’t need a gambling license either!
The ‘free to play’ in tournaments is true, although I suspect there’s an argument to say it’s not entirely free as you have to purchase cards in the first place (that presumably pay for prizes). A bit like a lottery, or pool betting.
If Regulation Catches Up…
Assuming my thinking here is correct, users need to be careful about their decisions.
Crypto and NFT’s are relatively new and it might be a case that various regulation hasn’t caught up yet. If regulators should decide this is indeed gambling and or there is additional regulation around NFT’s, the company will be safe and users will be left holding some very expensive cards, without the added ability earn prizes.
And remember, the cards are only worth what the next person is willing to pay…
Note: SoRare has reached out via email and offered to answer any questions I have. I’ll be asking them about these points and updating this article once there has been a response!
Update: A Response From Sorare
As promised Sorare have responded to the concerns raised in this article via email, along with a few other questions that will be addressed in a more thorough review.
My question:
At first glance, it appears to me that SoRare is a gambling game that requires NFT’s to play. For example, to win a prize in division 4, users need at least 4 rare cards (paid or won) and 1 common (free).
Could you explain why Sorare isn’t gambling and therefore regulated?
Sorare’s answer:
No, Sorare sells NFTs (cards) and, in addition, gives access to a free game. This game is reserved for cards holders (free or acquired) as it exists for many services.
From my own personal perspective, it’s disappointing to see this answer. I was hoping for something more explanatory, highlighting something I had missed. It appears that this is not the case though.
Sorare isn’t gambling in the same way a bar that requires you to buy a pot noodle to get a free pint of beer isn’t a bar. For anyone that isn’t in the UK, this is how bar owners here have successfully navigated coronavirus restrictions – stating that legally, they are in fact restaurants providing a substantial meal.
There will be a fuller Sorare review including answers to other questions in the coming weeks!
16 thoughts on “Is Sorare Gambling?”
They are bending the rules to benefit themselves like pubs did when the rules around a substantial meal come out last year. We aren’t a pub we are providing bowls of Huel that give you a free pint of beer because you are here for the substantial meal.
One born every minute mate.
Not too sure they are deliberately bending them, although it appears like there is a dose of interpretation in there unless I’ve missed something.
You don’t get it its a digital collectables website not betting!
Actually mate, the co-founder actually says that’s ‘Sorare’ is a fantasy football game and the collectible element is a component of the card. The NFT (the card) and the platform (Sorare) need to be separated.
Wouldn’t that completely change the product?
Not sure what you mean?
Is football gambling? Clubs spend money on players to compete for prizes.
The football club would have a contract with the player that includes many different things, including some intrinsic value to the club.
But I guess if you wanted to be awkward you could say everything in life is a gamble, from brushing your teeth to crossing the road. You could choke or get run over.
this is a gamble but not gambling. as you say a football team in real life buys ‘an asset’ who also happens to be a human being. a contract with conditions is signed detailing the use of that asset over time. prizes and financial rewards can be obtained by the club using this ‘asset’ or collection of assets. when a contract is over the player is sold – strangely clubs never get the additional option of holding the player as a collectible ( whether this will be ultimlately profitable or not) so i suppose those football clubs have a worse scenario – or a bigger gamble in some ways. my mum sells antique plates – they are collectible – seems riskier to me though – markets change and she cant milk them for rewards whilst they are gathering dust in the cupboard. An interesting and necessary discussion to have – i think the whole of the crypto/nft space needs to be looked at but i think it’s too soon to label it as gambling in legal terms
I’m afraid this feels like a rather desperate attempt at justification. I’ve gone by the official definitions in the article. If we are to use yours there; gambling doesn’t exist, and everything you ever do is a gamble. NFT’s are not ‘assets’ they don’t have real-world utility or intrinsic value like a person or your mums plates.
Good article. I think it’s possible regulators may take a look at Sorare at some stage as to whether it’s gambling. It’s a very complex question however, and is unclear whose jurisdiction it would fall under – cryptocurrency is largely unregulated at the moment and it might not fall under gambling regulators authority, even if they did think it was gambling.
If gambling regulators went down the route of regulating crypto games, they would have to look at a whole world of different games that have sprung up recently with in-game purchases/rewards etc. Sense they don’t have the scope or desire to do so.
Even if they did decide Sorare was gambling though, there would be options for them :-
1. Remove the ETH prizes, so you are only winning cards. This would weaken the argument that it’s gambling as you are not winning money (even if we accept that ETH is “money” which in itself is debatable). This could negatively affect card prices of course, but they could add additional utility to the cards like “moments” as with NBA Top Shot.
2. The SO5 element could be spun off and operated by a company with a gambling licence, or complies with whatever regulations are necessary where it is based.
3. Sorare could obtain a licence themselves. Presumably this would come from the French/EU regulators as Sorare is a French company.
So not necessarily the end of the world even if this does happen.
Its certainly complex. This could be the case with crypto regulation, but players should realise that potentially they could just be left holding some cards that very few people want.
1, 2, 3 would all change the value of the existing cards which might be a worry. Plus I’m not sure they would just be able to get a license like that. How can they do affordability checks on users paying with crypto? Bit of a minefield.
Social media influencers are promoting this as the next big thing its going to end in tears
What makes you think it will end in tears?
Because its not really worth anything.
I play the game with the free cards and enter the SO5 game with those cards. I have no interest in buying cards. I’m hoping I can maybe fluke a good week and get a score that rewards me with a card that has value. To be fair, on the site it doesn’t feel like there is a constant bombardment of pressure by means of adverts or a ‘look at what you might have won’ if you had this player type of marketing. I’m assuming though that at some stage using the free cards I’ll find myself boxed into a situation where the only real way to progress will be to deposit money and buy cards. I’ll walk away at that point. My other concern with these NFT’s is what exactly is in that blockchain entry. On some NFT sites the blockchain entry is just a URL that points to a jpg/gif hosted on the selling companies own servers. This is very dangerous. In this situation if the selling site goes under so goes your NFT. You’ll just have a blockchain entry that points to nothing. Not saying that Sorare are doing this. You can export bought NFT’s (not the free ones) to a compatible ethereum wallet for storage. I can’t see how
or where the card image is stored and displayed in the external wallet as I only have the free cards.