UKGC’s FIFA Gambling Charges Open New Chapter Of Esports Betting Crackdown

Posted By Will Green on September 20, 2016 - Last Updated on January 22, 2018

[toc]The UK Gambling Commission late last week charged two men with violating the region’s Gambling Act of 2005 in the form of providing facilities for gambling, advertising unlawful gambling, and inviting children to gamble.

The defendants, FutGalaxy owner Dylan Rigby and YouTube caster Craig Douglas, allegedly facilitated gambling around the ecosystem of FIFA Ultimate Team, a game mode in EA Sports’ popular FIFA soccer video game series.

The case represents one of the first prosecutions by the commission of an unregulated sports betting site driven by virtual currency.

It could open up a second chapter of scrutiny pertaining to betting on sports-based video games, following a summer dominated by malfeasance of skin betting websites.

How FIFA Ultimate Team works

FUT is a mode of the FIFA game series similar to a “dynasty mode” in video games involving traditional American sports, but with an especial emphasis on the marketplace-driven acquisition of new players using a virtual currency.

Gamers in FUT mode develop their own team and acquire “coins” upon the completion of various milestones. Gamers can also purchase coins with “points,” which can be bought with real money from game maker EA.

Gamers can then use coins to improve their teams by acquiring new players when they purchase “player packs.”

Packs are acquired for different prices, and the sum of their contents (soccer players who have attached prices based on their skill level) often do not reflect the exact value gamers pay in coins for the packs.

FutGalaxy facilitated gambling in multiple ways

Sportsbook

FutGalaxy was perhaps best known for allowing gamers to wager coins on the outcomes of real-life sporting events, namely soccer matches across the major European leagues like the Premier League, Bundesliga and Serie A.

Gamers, for example, could bet 30,000 FIFA coins on the outcome of a match between two clubs at set odds, just as they could in real-money at a licensed, regulated sports book.

If the gamer won the bet, he or she could transfer their coins from FutGalaxy back to their EA account, and use them for normal gameplay functions such as purchasing players.

Player packs

FutGalaxy also facilitated the selling of player packs, just as FIFA’s in-game marketplace does.

Gamers could spend 25,000 coins, for example, to buy a “25K Pack,” and would then receive various players, similar to a pack of baseball cards. Gamers could either keep the players to put on their team or discard low-value players they might not want.

Sometimes, a 25K Pack on FutGalaxy delivered players with a total combined value several thousand coins less than 25,000.

Pack purchasing is an exciting albeit risky gamble for gamers spending hard-earned coins: You don’t know what you’re going to get. Thus, FutGalaxy could make a profit in coins off the sale of packs if it so chose.

Several gamers have complained that EA, the official seller of player packs on its online marketplace, also overcharges on packs in FIFA as well as the similarly-designed Madden NFL football video game series.

Twitch bets

The sportsbook section of the site even featured a makeshift platform for gamers to bet on the performance of other gamers.

Those wanting to bet on FIFA video game action could use the site’s “Twitch bets” feature to wager money on the outcome of two FIFA gamers playing each other on the casting site.

The Ireland-based FutGalaxy website says it is down in advance of the release of FIFA ’17, but that it will relaunch on Friday evening UK time.

A similar website, UTCoinbets.com, is also down in advance of the game’s release. No public action appears to have been taken by authorities against UTCoinbets.

The widely-anticipated FIFA ‘17 releases worldwide on Sept. 27, 2016.

UK commission recently took position on esports betting

The charges against Douglas and Rigby come one month after the UKGC outlined its position on esports gambling in a white paper.

It paid particular attention to the wagering of virtual currencies. Each of the forms of wagering offered by FutGalaxy appeared to violate the UKGC’s official policy requiring such sites to seek and acquire a license.

“Any operator wishing to offer gambling facilities to consumers in Great Britain, including use of digital currencies for real money gambling, must hold an operating licence,” the Commission wrote in the August position paper. 

It does not appear FutGalaxy sought or acquired any sort of gaming license.

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Sport-based video game betting presents new challenge for regulators

Dozens of websites facilitate coin betting over not just FIFA, but EA’s other sports titles as well, such as its Madden NFL and NHL video games.

Just as third-party skin betting sites popped up rapidly as skin gambling took off in popularity, the same could happen with EA’s coin-based currency across its titles.

Both FIFA and Madden are massively popular games, and gamers already have no shortage of unregulated options where they can bet, spend, or liquidate their coins.

With CS:GO skin betting, game maker Valve, and not regulators, was seen as the final arbiter of what type of skin betting activities would be permitted. After all, Valve owns all skins, and betting couldn’t be facilitated without the violative use of Valve’s proprietary marketplace.

But so far, betting on sport-based video games with EA’s virtual currency has attracted the action of law enforcement and gambling regulators, something which largely did not happen with Valve.

This underscores some of the differences between skin betting and coin betting.

Coins are not skins, but function similarly

Both can be bought and sold on third-party marketplaces

The UKGC’s treatment of virtual currency betting as real-money betting might seem overzealous.

But the fact remains that FUT coins, much like skins, can function as a virtual currency and have a convertible real-world value.

The marketplace for buying, selling, and trading skins is more centralized and robust, and includes third-party marketplaces like OPSkins.

But similar options exist in a more fragmented form for gamers wanting to acquire large amounts of FUT coins without buying points with USD, or taking the time to acquire coins through in-game achievements.

Websites like BuyFifaCoins.com and fifautstore.com, for example, facilitate the buying and selling of coins for real money.

Coins were designed as currency, skins were designed as cosmetic

Coins are a digital currency engineered specifically for in-game use by EA Sports. They have always been designed to act as a currency with which gamers buy and sell items, such as players, within EA’s proprietary marketplace.

Skins on the other hand are purely aesthetic items developed for in-game use by Valve, and whose original intent was to decorate a gun or a knife.

As skins attained more and more value and grew into the role of a digital currency, they became the items that were traded and purchased on Valve’s proprietary marketplace.

The UKGC defines skins in its recent position paper as “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.”

Neither FIFA nor Madden coins appear to fully meet this definition.

Real-world coin values are very small, skin values range vastly

The real-world monetary value of coins is also much smaller than most skins, which are unique and have widely differing values.

There is no widely adopted coins-to-USD exchange rate, as there is with a currency like Bitcoin. But 10,000 coins from the 2016 version of FIFA appear to commonly sell for between $5 and $10.

In addition to the third-party buying and selling of coins, abuse of coin trading has plagued EA’s own marketplace before, too.

Both are transferred between accounts by bots, but often for different reasons

Gamers have abused the transfer system within EA’s online marketplace by creating bots to purchase items before regular gamers can, or by “selling” low-value players for massive amounts of coins in order to facilitate the transfer of coins to another account.

This is similar to how skin gambling websites created trade bots not to complete a trade between two humans, but to facilitate the payment on Steam of gambling winnings (in skins) from an account that appears to be run by a human to the person who won the skins.

Both are often wagered on the esport responsible for their existence

Interestingly, just as skins act as a virtual currency that can be bet on any sport, most skins are bet on the outcome of esports.

In particular, they’re most often bet on matches involving Counter-Strike: Global Offensive, the virtual world which spawned skins in the first place.

Similarly, FUT coins are most often bet on the real-life games involving the sport—soccer—corresponding to the ecosystem of the game that originated the coins. 

Is FUT gambling esports betting or sports betting?

The betting facilitated by sites like FutGalaxy unequivocally utilizes a virtual currency. But the answer to whether or not these sites facilitate esports betting or regular sports betting could be more complicated to determine.

The UKGC only defined skins in its recent position paper, and did not define skin betting specifically.

Skin betting constitutes: wagering with skins, a digital product developed in an esports ecosystem for intended use within that closed ecosystem, outside of that ecosystem on a real-life competition involving gamers playing a professional esport.

But the majority of the FIFA coin betting offered by sites like FutGalaxy is slightly different.

It constitutes: wagering with coins, a digital product developed in an esports ecosystem for a intended use within that closed ecosystem, outside of that ecosystem on the real-life competition involving athletes playing a professional sport.

Soccer is a sport foremost, and an esport second. It is made an esport solely within the context of the FIFA video game itself.

So does taking a virtual currency that originated from an esports ecosystem and using it to bet on sports constitute unregulated esports betting, or unregulated sports betting?

This could be one of many questions regulators have to untangle in the weeks and months ahead.

Matthew Kaufman contributed to this report. 

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