UK case promises to offer greater certainty on use of virtual currencies in gambling, says expert

Out-Law News | 19 Oct 2016 | 4:33 pm | 2 min. read

Gambling operators could obtain greater certainty about how to respond to the growing use of virtual currencies in gaming, including in the e-sports betting market, from a court dispute set to be heard early next year, an expert has said.

On 6 February 2017 Birmingham Magistrates' Court is due to begin hearings in a case concerning alleged Gambling Act offences committed by two men. Dylan Rigby and Craig Douglas were charged in September. They pled not guilty to the charges at the court on 14 October.

Rigby is accused of breaching requirements on providing facilities for gambling. Both men have also been charged with advertising unlawful gambling, and Douglas has been charged with inviting children to gamble in breach of the Act, the Gambling Commission has said. The Commission has brought the prosecution against the men after concluding an investigation into the website www.futgalaxy.com, access to which was blocked for customers in the UK earlier this year.

According to a report by Wired magazine, both Douglas and Rigby are YouTube video bloggers and their alleged Gambling Act offences relate to in-game coins for the Fifa computer game. The coins can be purchased using real money. According to the BBC, Fifa players can use Fifa coins to bet on virtual football matches or for other forms of gambling via some third party websites. Players can transfer winnings back into the Fifa game, it said.

In August the Gambling Commission warned online platforms that facilitate bets on e-sports or which allow gamers to gamble virtual items they have obtained when gaming that they might require a gambling licence to continue with their operations.

In its discussion paper the regulator addressed the rise in the trade of so-called 'in-game' items which computer gamers can win, trade, sell or use. It said those "digital commodities", or 'skins', can sometimes be "converted into money or money’s worth" and that they therefore serve as "a form of virtual currency" which can be gambled with. 

It previously confirmed that offering facilities whereby virtual currencies can be used for gambling qualifies as a regulated activity for which a gambling licence is required.

Expert in gambling law and licensing Christopher Rees-Gay of Pinsent Masons, the law firm behind Out-Law.com, said: "The crux of the issue is whether in-game items have a monetary value derived from the current market price and can be converted back into real-world money, and whether the court's interpretation of the Gambling Act accords with that of the Gambling Commission on the matter of virtual currencies."

"The Commission in its recent discussion paper stated that 'where ‘skins’ are traded or are tradable and can therefore act as a de facto virtual currency and facilities for gambling with those items are being offered' it considers that a gambling licence is required. It is an offence under section 33 of the Gambling Act 2005 to provide facilities for gambling without the necessary licences being in place. The court in the forthcoming case is likely to offer its view on how the provisions should be interpreted in respect of in-game items and virtual currencies," Rees-Gay said.

"This is an important case, as the outcome of it will give a degree of certainty, in what is currently a grey area. Operators will have a firmer idea of where they stand in terms of virtual currencies and the provision of facilities for gambling," he said.