As a firm – we periodically, provide legal opinions or “comfort letters” on the subject of whether (usually, online) “Gaming” ventures are subject to regulatory oversight (= which often impacts upon payment services providers’ willingness to work with such relevant venture).
The problem is that within the online industry – the phrase “video gaming” appears to have colloquially evolved into the phrase “[online] gaming” – Which phrase potentially “raises a red flag” under English gambling legislation.
In the first instance – relevant ventures need to consider (and think) re: the ‘condensed’ detail of the relevant English gambling law – which relevant ventures need to keep in mind re: a relevant venture’s (proposed) operations (and particularly as regards their intended dealings with their payment services providers)
The relevant legislation etc. defines “Gambling” (in English law) = which is what you should aim to avoid being – as it imposes regulatory requirements – As a term that defines a number of different activities.
At its simplest, English law distinguishes between three forms of (regulated) gambling, being: betting, gaming and lotteries.
The current relevant legislation, the Gambling Act 2005 (GA), defines each of the forms of gambling.
To keep this post reasonably short – We have disregarded any consideration of betting and lotteries (in relation to a relevant venture’s proposed activities) – but if there is any concern about those areas – then matters will need to be re-examined.
However, “Gaming” needs closer examination (= the writer suggests – not least because many online leisure activities are colloquially referred to as “gaming” – which the writer suggests relevant ventures should [seek/]continue to avoid as a phrase relating to the description or marketing of a relevant ventures proposed activities).
It is largely for this reason – that the phrase “esports” appears to have gained prominence in recent years (and broadly, should be encouraged).
“Gaming” is defined for the purposes of (the relevant sub-limb of the definition of) gambling – as the playing of a game (being a game of chance – or – a game that combines skill and chance) for a prize.
Sport is specifically excluded from the definition of gaming (although the concept of sport is not further defined).
As to the issue of skill or chance, the amount of chance that is required to fulfil the test (of “gaming”) is not defined.
Whether a game is a game of chance is a question of fact – ultimately for a court to determine in a disputed case.
There is no formal “de minimis” (i.e. or: significant = above -v- insignificant = below) level, and certainly not a balancing act to see which of the two factors predominates in the outcome (as is the case in some legal systems).
Consequently, any material amount of chance in a game will satisfy the definition of “gaming”.
Thus (in practice) any involvement of a playing card or a dice – will almost certainly lead to an analysis that “gaming” is involved (= a regulated form of gambling).
Having said that, tiny amounts of chance in an otherwise fully skilful activity (such as the toss of a coin to see who will start a game of chess – or an online football match) are not considered to have the necessary impact on the result and are discounted.
Ventures need to carefully consider the explanation that the writer has provided above re: “Gaming” (within the wider definition of regulated “Gambling”) – and – Please feel free to discuss with the writer – if a proposed venture has any doubt that their proposed activities will fall outside of the definition (because of the absence of chance).
The concept of a prize is widely drawn to mean essentially anything of value – but to keep this post short – that aspect will need to be considered separately if relevant.
Generally – the chance -v- skill analysis is crucial.
Please feel free to discuss any aspects/issues arising with the writer.
With Kind Regards and My Very Best Wishes
Founding Principal and Business Law Solicitor
+44 (0) 20 8780 3319 : London D.D. Landline Tel.
www.EquitableLaw.com – Solicitors For Business
P.S. Amongst the best “free resources” on English Law in this area, we suggest a review of:-