UK Gambling Commission charges eSports Youtube providers

United Kingdom

This article was produced by Olswang LLP, which joined with CMS on 1 May 2017.

Two British men face criminal charges for offences committed under the Gambling Act 2005, in what is thought to be the first ever criminal prosecution involving video games gambling.

Dylan Rigby and Craig Douglas, who set up the YouTube channels FUTgalaxy and NepentheZ respectively, appeared at Birmingham Magistrate’s Court on 18 September 2016 accused of advertising unlawful gambling under the Gambling Act 2005. Rigby also faces charges for providing facilities for gambling and Douglas for inviting children to gamble. The allegations were brought following the Gambling Commission’s investigation into the now deactivated a website that allows users to wager virtual items on the outcome of matches played on the popular football videogame FIFA. The Commission has confirmed that it won’t be issuing any further information on the case at this point, which has been adjourned until 14 October 2016.

As the first of their kind, the outcome of the cases will be of interest to any operators involved in the eSports gambling sector, which has recently started to be targeted by the Gambling Commission. In August this year the Commission published a discussion paper on eSports gambling, virtual currencies and social gaming (see here for our summary of the paper). The Commission’s interest in eSports gambling is likely partly a result of the recent class actions brought in the US against Valve, the developer of distribution platform and online marketplace Steam and the popular game Counter Strike: Global Offensive (or CS:GO). Both actions alleged that Valve was complicit in the operation and promotion of illegal gambling through enabling millions of Americans to link their individual Steam accounts to third-party websites where they could participate in skins betting in respect of CS:GO. Valve subsequently issued cease and desist orders to all skin betting sites found to be using the Steam trading system. 'Skins betting' consists of wagering covers or 'skins' for weapons (which can then be used in play) on eSports events as well as using these as casino chips in casino type games. In the case of Valve, it was claimed that, as such skins are available for purchase for real money on the Steam marketplace, and can be traded and used as collateral for bets placed on third party websites, 'skins betting' constitutes gambling.

Although it is yet to be seen what regulatory action will be taken against Valve, it is clear that regulators worldwide – as evidenced by the prosecution of Rigby and Douglas - are turning their attention to the eSports industry.