The French service, based on the speculative purchase of virtual football cards, could be seen as a proposed disguised sports betting platform.
The start of the school year should be hectic for Sorare. As informed by BFM Business, the National Gaming Authority (ANJ) has translated a warning to the young company, at the origin of the biggest fundraiser (680 million dollars) of French Tech. By the fall, Sorare, valued at $4.3 billion, will have to prove that it is not a disguised sports betting platform.
To understand the accusation that weighs against Sorare, we must go back to how it works: customers can buy virtual cards (whose ownership takes the form of an NFT), more or less rare, associated with a football player, in order to to speculate on their increase according to the evolution of the latter’s notoriety.
The purchase of the cards in question
They then use those same cards to participate in virtual tournaments, which earn rewards based on player stats associated with the cards, in real matches. For example in the event of a decisive goal or pass. It is this use that crystallizes the ANJ’s doubts.
“Are deemed to be games of money and chance and prohibited as such are all offered to the public, under any name whatsoever, to give rise to the hope of a gain which should, even partially, be at random and for this the financial sacrifice is required from the participants” specifies article L320-1 of the Internal Security Code.
A definition to which the activity of Sorare could respond, which comes from the recruiter Kylian Mbappé as an investor and ambassador, in the eyes of Frédéric Guerchoun, legal director of the ANJ.
“For there to be gambling, there must be an offer made to the public, a gain in kind or in cash, as well as a financial sacrifice. In our eyes, the financial sacrifice as understood by the case law is an expense. Or in the case of Sorare, it is imperative to buy cards to participate, ”says Frédéric Guerchoun, from BFM Business.
This notion of financial sacrifice is not perceived in the same way by Sorare, who defends the operation of his platform.
“As the current laws stand, our analysis is that Sorare does not fall within the scope of gambling regulations. […] On Sorare, there is no notion of stake or financial sacrifice, depending on a sporting event. When a Sorare card is played in our fantasy game, it is never lost. This card can be played 1 time or 500 times, during the first season as well as during the tenth season” defends the company, with BFMTV.
Big potential consequences
However, the French regulator is not the only one to take a dim view of Sorare’s activity. In October 2021, the British equivalent of the ANJ opened an investigation into the young company, for these same reasons.
“We issued a warning and requested information from this company. We have already received a series of arguments from them, on which we still have serious doubts. We are waiting to see at the start of the school year what the representatives of Sorare will present to us. If this difficulty has proven to persist, we have led in series to take a position” warns the framework of the ANJ, who recalls in particular the blocking power of the institution.
For Sorare, this threat could weigh heavily. French law prohibits gambling, despite certain exceptions such as the casino, or sports betting. If the purchase of virtual cards to earn money on the basis of sports performance is characterized as sports betting, then Sorare should submit an application to the ANJ to become an authorized operator online, in the same way as Betclic, Winamax and consorts.