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