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Gambling regulator secures 'landmark' prosecutions in e-sports betting case

Out-Law News | 07 Feb 2017 | 2:32 pm | 2 min. read

The Gambling Commission has demonstrated its intent to clampdown on unlicensed betting activity in the 'e-sports' market by successfully prosecuting two men for Gambling Act offences in a "landmark" case for the industry, a gambling law expert has said.

On Monday, Dylan Rigby, 34, of Colchester, Essex, and Craig Douglas, 33, of Ilford, Essex, pleaded guilty to charges that they were officers of a business, Game Gold Tradings, which provided facilities for gambling without having a licence to do so and which advertised unlawful gambling.

According to the Gambling Commission, Game Gold Tradings was a company behind the FutGalaxy.com website, where users could trade an in-game virtual currency for the FIFA series of video games for 'FUT coins' which could be used for gambling purposes. The FUT coins could also be converted into FIFA coins and then "sold for real money on an unauthorised secondary market", the Commission said. The FutGalaxy.com site is not an official website for the FIFA games or EA Sports, the manufacturer of those games.

The judge in the case said that children had used the FutGalaxy.com website to gamble, the regulator said. Rigby was ordered to pay £164,000 in fines and costs, whilst Douglas was ordered to pay £91,000.

Christopher Rees-Gay of Pinsent Masons, the law firm behind Out-Law.com, described it as "a landmark case".

Sarah Harrison, Gambling Commission chief executive, said: "This was one of the most serious cases that has been investigated and prosecuted by the Commission. Its gravity is reflected in the significant financial penalties imposed by the judge. [Rigby and Douglas] knew that the site was used by children and that their conduct was illegal but they turned a blind eye in order to achieve substantial profits. The effect on children of online gambling was rightly described by the court as ‘horrific’ and ‘serious’."

"All websites offering gambling facilities in Britain must be licensed; it is the only way in which children and vulnerable people can be protected. This case demonstrates that we will use the full range of our statutory powers to investigate and prosecute individuals and companies who try to operate illegally," she said.

Last summer, the Gambling Commission published a new discussion paper on virtual currencies, e-sports and social gaming in which it confirmed that it had written to more than 100 unlicensed online gambling websites calling on them to "cease offering facilities for gambling to British customers". It said a "significant number" of those websites were "offering facilities for remote gambling" in the context of e-sports and gaming.

At the Commission's 'Raising standards' conference in Birmingham in November last year, the topic of e-sports and gambling regulation was debated further. The Commission flagged the fact that there is legal uncertainty over the status of 'skins' – in-game items that players can buy, sell or trade with other players, which in some cases skins can be proffered as stakes in a game of risk where possible returns are other virtual assets.

At the time, the Commission said that if skins can be treated as money or money's worth then it would be possible to classify certain trading of skins as gambling activity. The issue boils down to whether or not in-game skins can be cashed out, in the same way casino chips can be substituted for real world cash, it said.

Christopher Rees-Gay of Pinsent Masons said: "This is a landmark case for the Gambling Commission, with the Commission clearly showing its intent to reinforce the position it set out in last August’s discussion paper on virtual currencies. This action sends out a warning to all others that allow virtual currency to have a ‘real money's’ worth."