European Gaming Lawyer magazine Spring 2016 | Page 21
(3) restrict contest entry to those states
in which the prevailing definitions of
‘skill’ and ‘chance’ are most favorable for
online gaming.
These new controversial products have
not evaded the European regulators’
radar. Similarly, to the US, in Europe, an
examination of their legality would have to
be based on a country-by-country analysis.
However, the big difference compared to
the US lies in the fact that in Europe there
is a mature i-gaming market. The question
many are asking is whether the explosion
of DFS in the US will also happen in the
UK. There are several EU member states
with distinguished potential- UK, where the
Gambling Commission specifically requires
DFS operators to hold a pool betting
licence; Spain, where a gambling license is
also required for this sort of gaming; the
same goes for Malta and the Isle of Man. In
Italy, DFS and e-sports are considered skill
games, but operators still need to obtain
licenses for that. In Germany the situation is
particularly interesting, as ground breaking
ruling of the German Federal Court said
that season long fantasy sports is not
considered to be gambling but a game of
entertainment, and this is one of the first
countries, alongside Denmark that is about
to regulate specifically DFS by offering “soft”
gaming licenses.
We believe that in the case of e-sports
there is greater opportunity to influence
the debate, as there are specific measures
to be taken by operators in order to
differentiate themselves from gambling.
Words have power, thus terminology is
important and use of words such as bet
and wager should be avoided as much
as possible. Entry fees have a key role as
well- for a start, the game should involve
an unconditional entry fee that does not
make up the winnings purse. Moreover,
there needs to be a guarantee for winnings
that are going to be awarded, that are not
subject to the number of entrants. Another
important inspection is the position of the
operator. If the “house” is unable to compete
for the prizes, the element of gambling
is significantly minimized, as traditional
gambling typically involves betting against
‘the house’. To achieve proper compliance,
your tournaments need to be structured so
that players are competing on a level playing
field against each other with the outcome
based entirely on merit.
However, even if you comply with these
requirements, do not get too optimistic just
yet. From our experience as veteran gaming
lawyers, once DFS and cash skill games
start to gain traction and awareness in
Europe, legislation and regulation demands
will follow. That is why we recommend
our clients with e-sports, cash skill games
and DFS ventures who wish to enter the
EU market to apply for gaming licenses in
popular and not very expensive jurisdictions
such as Malta and the Isle of Man. We
believe in following the money- wherever
money is, legislation and regulation will
follow.
To conclude, and as the title of this article
suggests, the products we discussed here
are all legally grey. However, we advise our
clients and readers to take all measurements
that are in their control in order to increase
the legality of their products and to move
them to the lighter side of the grey scale in
the ways that we mentioned here briefly,
but this is still just the tip of the iceberg. In
order for operators to protect themselves
more adequately, there is a need for a
complete tailor made legal and procedural
regime, that will be of help in case the
regulators come knocking on their doors
one day.
Adv. and Notary Tal Itzhak Ron,
Chairman of Tal Ron, Drihem & Co.,
Tel Aviv [email protected]
Aviya Arika, Head of Offshore and
Gaming Department at Tal Ron,
Drihem & Co., Tel Aviv
[email protected]
European Gaming Lawyer | Spring Issue | 2016 | 21