UKGC to Monitor Digital Currencies

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The 2015-2016 Annual Report of the UK Gambling Commission includes a statement from Chief Executive Sarah Harrison. The Chief Executive refers to computer gaming and e-sports (competition based video game tournaments) as raising questions for the UKGC, as the conduct or setting for such activities “blur the lines between gambling and social gaming”, in particular the exchange of “in-game” prizes for value.

The Gambling Act 2005 prohibits “providing facilities for gambling” unless licensed. Gambling includes games of chance/skill or betting, both of which involves staking on an unpredictable outcome for a “prize”. Section 6 of the Gambling Act 2005 denotes a “prize” as being “money or money’s worth”.

It follows that “money’s worth” may relate to the convertibility of a digital asset. ‘Legal’ convertibility is the game operator providing a market to extract spendable value from prizes; however, even if the game operator prohibits such exchanges then, in practice, it can be difficult for the game developer to enforce such a prohibition. For instance, WOW Gold is a virtual currency used in World of Warcraft. Although the game developers do not sanction secondary markets, WOW is a fairly liquid asset which can be bought and sold outside of the game itself.

It is therefore prescient that the Chief Executives at the same time of stating that the UKGC will be monitoring “emerging products” such as e-sports, considers “digital currencies” as a “further area for continuing future focus”.