The UK Gambling Commission (UKGC) has warned that Sorare does not hold a UK Gambling Licence. The fantasy football NFT platform is now under investigation by the UK authority. The UKGC announced that it is ‘carrying out inquiries into the company to establish whether Sorare.com requires an operating license’ in a notice on October 8th.
This is a serious issue for Sorare, the fast-growing trading card platform. Without the support of the commission, It will be hard for Sorare to operate in the UK. However this is not new, the watchdog has been warning consumers about the dangers of fantasy trading since 2017.
What is Sorare?
Established in 2020, Sorare has grown at a rapid rate. The company obtained 4 million dollars via seed funding, bolstered by the global success of NFTs. Since then, Sorare has gone on to raise over 688 million dollars, in Series A and B round seeding in 2021.
Sorare has signed over 200 football clubs to their site. The clubs involved include Liverpool, Real Madrid, and PSG. The involvement of these franchises has provided a huge boost for Sorare. As well as this, Football megastars such as Gerard Pique and Antoine Griezman have roles in the company.
Using the Ethereum blockchain using ERC-721, the platform allows football fans to trade NFT cards of famous players. Users can build a squad that can compete across leagues for cash prizes. The performance of a player determines their price, similar to Fifa Ultimate Team. This allows users to speculate which players will be successful throughout the football season. This limited-Edition Lionel Messi card sold for over $11,000 dollars.
How will the notice affect Sorare?
The UK gambling commission is notoriously strict. However, they aim to protect consumers when gambling. This is a huge industry and the government plans to make it as fair as possible. In the notice, they stated 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’. Importantly, this could cause significant problems for Sorare and British teams involved such as Liverpool.
The UK government announced plans In September to overhaul the current laws regarding gambling. This will include an investigation into the sport and its ties with gambling companies. The proposed rule changes will affect how these companies are allowed to operate within the sport. There are suggestions that there will even be a ban on clubs being allowed to advertise gambling on their shirts. Several Premier League clubs are partnered in long term deals with gambling companies. It will be interesting to see how this plays out.
These rule changes will have long term implications on the whole of the gambling industry. In particular, cryptocurrency-based games will face further scrutiny. The UK government already treats the cryptocurrency industry with contempt and this will bring further rule changes. Sorare views itself as a legitimate enterprise with long term expansion plans. Therefore, the UK Government will need to provide further clarity on the situation.