Monday, September 19, 2016

FIFA 16 Gambling Site Operators Charged In UK

I wrote about the CS:GO gambling scandals back in July. Since then I just watch for news on the class-action lawsuits filed in Florida and Connecticut. The only real update occurred in August with the filing of a third class-action lawsuit in Washington state. Despite some rumblings about FTC involvement in the situation, the legal action in the United States is confined to civil court.

A second front with different rules opened up Friday with the arrest of Craig Douglas and Dylan Rigby, both from Essex, in the UK. According to the gambling news site, the UK Gambling Commission (UKGC) charged the pair with promoting a lottery, advertising unlawful gambling, and inciting individuals to gamble. In August, the UKGC sent cease-and-desist letters to over 100 gambling sites operating without a UKGC license, with most owners complying with the order.

I think I found the video that the UKGC will use as exhibit A in their case. Douglas, better known as Nepenthez on YouTube, published a video hawking a site called FutGalaxy. If the formatting holds, you can see the segment I think is most damning. If not, the segment in question runs from 3:10 to 3:24.

"The best part about this site is the sports bet section. So if you guys are into betting -- and you don't have to be eighteen for this because it's a virtual currency -- this is the place for you."
A domain lookup on ICANN shows the registrant contact for the website is Dylan Rigby. Turner Sports eSports commentator Richard Lewis linked the two as business partners in the company Game Gold Tradings Limited in a video uploaded to YouTube yesterday.

In the video, Douglas recommends using FIFA Comfort Trade for cashing out of his site. FIFA Comfort Trade works with three illicit RMT companies in doing the transfers. The user is asked to give one of the illicit RMT companies his account login information and then the company deposits the funds into the user's account. Quite frankly, not recommended behavior.

Douglas' statement about gambling with virtual currency is contrary to the position of the UKGC. In a white paper published in August, the UKGC wrote the following concerning skins gambling:
3.4 We are also paying close attention to the growing popularity of other forms of virtual currencies or ‘in-game’ items, which can be won, traded, sold or used as virtual currency to gamble with and converted into money or money’s worth. These include digital commodities (such as ‘skins’) which can be won or purchased within the confines of computer games and can then be used as a form of virtual currency on a growing number of gambling websites.

3.5 We recognise that the term ‘skin’ can mean different things in different games. In the context of this paper we are referring to in-game items that provide aesthetic upgrades to a player’s game play where those in-game items can also be traded as commodities on a marketplace within a platform operated by the game’s developer or distributer. In some cases, the inventory of the player’s account can be connected to websites where the user can use the ‘skins’ they have bought or won to bet or stake in casino style games. These types of ‘skins’ have a monetary value derived from the current market price and can be converted into money.

3.6 Where ‘skins’ are traded or are tradeable and can therefore act as a de facto virtual currency and facilities for gambling with those items are being offered, we consider that a licence is required.
The UKGC has a concept referred to as "money's worth" which comes into play. The term is interpreted very broadly and simply means something which has a financial value to the player. The commission laid out three criteria for determining if the prize or winnings of a game is considered money's worth:

  • Can they be converted to money via third parties?
  • Are they tradeable with others to obtain goods or services?
  • Can they be used as virtual currencies to pay for goods or services?

If the answer to one or more is yes, then the prizes or winnings is money's worth. Watching the video, Douglas and Rigby fell afoul of the money's worth criteria for determining if an activity falls under the jurisdiction of the UKGC.

Back in July, the scandals involving Counter Strike: Global Operations gambling sites and the resulting class-action lawsuits initially only targets the big pockets of Valve. Friday's news was the first sign of governments stepping into the area. Governments, unlike private litigation lawyers, usually don't care about the size of the settlement. Gambling site operators need to exercise a lot more discretion and/or care about following the law in the future.

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