The UK regulator, the Gambling Commission, has published a 17-page ‘position paper’ on esports, clarifying that the existing regulatory framework is sufficient to mitigate the risks it presents, “even where they do manifest themselves differently.”
The UK regulator is both bullish on the future growth of esports betting markets in Britain and wary of the associated risks, especially to young players.
Yet in a newly published “position paper” on the topic it concludes that the often elusive genre can and should be regulated using the exact same framework it applies to other gambling activities, and reminds that anyone offering betting markets on esports must obtain a UK gambling licence.
“esports is a phenomenon that gets bigger every day and is enjoyed by millions,” said the UK’s culture under-secretary Tracey Crouch, framing the government’s interest. “But it is a concern that there are unlicensed websites jumping on the back of popular video games and encouraging children to gamble.”
The Gambling Commission’s 17-page paper reveals that a significant 8.5 percent of British adults have already engaged in betting on esports, and proceeds to clarify its considered approach to thus far regulatory “grey” areas in esports betting. It gives particular focus to where esports intersects with virtual currencies and other tradeable in-game items (such as skins) and their inherent appeal to underage gamblers.
“eSports (competitive video gaming) events are not new, but the interest in and commercialisation of them has, across a number of metrics, been shown to have grown significantly in recent years,” said the regulator. “The expanding range and volume of betting markets offered on eSports indicates industry confidence in the potential for further growth.” The regulator’s paper highlights that 88 percent of esports gamblers have placed bets with real money; 90 percent have bet with ingame items – the most prominent example being “skins”.
Also the gender balance is considerably more evenly split than traditional sports betting, at 58 percent male and 42 percent female. The significant overall uptake is causing concern for the regulator, most notably in its appeal to underage gamblers, and the potential grey areas of virtual currency betting and “skins.”
While it acknowledges a lack of appropriate case law to cover some of the “overlap” in esports between “interactive entertainment” and licensable gambling activity, the regulator makes no bones about regulating substitutive betting tokens as monies.
“Where in-game items or currencies which can be won, traded or sold can be converted into cash or exchanged for items of value, under gambling legislation they are considered money or money’s worth,” it said. “In our view, the ability to convert in-game items into cash, or to trade them (for other items of value), means they attain a real world value and become articles of money or money’s worth. Where facilities for gambling are offered using such items, a licence is required in exactly the same manner as would be expected in circumstances where somebody uses or receives casino chips as a method of payment for gambling, which can later be exchanged for cash.”
Where areas overlap UKGC says the requirement for a licence should be “determined by reference to a number of factors, including how the outcome is determined and how the facilities for participation are arranged.”
The inherent appeal of the genre for underage gamblers is also a worry it says, although it seeks to dispel preconceptions by highlighting that an estimated 73 percent of participants are over 20, and suggests that while licencees should be more vigilant in preventing underage gambling “existing controls are in place to protect children from gambling harm.”
“Video game industry respondents agreed that betting on the outcome of eSports is just like betting on any other ‘event’. Even though such betting opportunities might currently be considered novel, the application of established online sports betting controls should mean it is not uniquely contentious in consumer protection terms.”
In conclusion the regulator notes: “Our view is the existing regulatory framework, rigorously applied, is sufficient to mitigate these risks even where they do manifest themselves differently.”