Esports betting in Great Britain: what the Gambling Commission asks

Esports betting is offered in many countries, but in few of them has the regulator written down, in its own documents, how it sees the activity. Great Britain is one. Its gambling regulator, the Gambling Commission, keeps a page on offering bets on esports, and it published a position paper in March 2017 that looks at esports from three angles: licensed betting on matches, gambling with in-game items, and competitions played for a prize.

Those texts matter beyond the betting industry. Tournament organizers, teams with betting sponsors, publishers whose items are traded for money, and fans who follow matches on streams all meet the rules they describe. They also show how a regulator approaches a scene that has no single governing body, a large young audience and an economy of virtual items.

This guide sets out the British position as the Commission states it: who regulates, the starting rule that esports are treated like any other live event, the size of the market as the Commission measured it, the protections for young audiences, the integrity risks it identified and the practices it expects, the rules on betting while a match is live, the treatment of skins and other in-game items, and the line between a prize competition and gambling. It covers the market and its regulation only. It is not advice on any business's own position, and where the answer depends on the case, the guide says so.

Gambling Commission, Virtual currencies, eSports and social casino gaming, position paper, March 2017, paragraphs 2.2 and 2.13.

Who regulates, and the starting rule

Gambling in Great Britain is governed by the Gambling Act 2005, and the Gambling Commission is its regulator. The Act groups gambling into three activities. The Commission's discussion paper on virtual currencies, esports and social gaming, opened for comment from August 11 to September 30, 2016, sums them up as betting, gaming or participating in a lottery. It also notes that some activities combining spending and chance do not need a license at all.

The consequence of falling inside the Act is plain. The Commission's page on that discussion paper states that providing facilities for gambling without a license, or an exemption that applies, is a criminal offense. That sentence is the base on which everything else in this guide rests: an activity is either outside the Act, exempt, or licensed.

The rules below are the Commission's, for Great Britain, and they are not carried over to any other country.

Esports are treated like any other live event

The Commission's page on offering bets on esports, last updated on May 13, 2021, sets the starting position in a few lines. It describes esports as competitive computer gaming, from contests between two players to tournaments with hundreds of participants. A business that wants to offer bets on esports events to consumers in Great Britain needs a betting license.

The page then gives the Commission's view of the activity in one sentence: "Betting on electronic sports or eSports should be treated no differently as betting on any other live event." The rules that apply to a football match or a horse race apply, in principle, to an esports final.

The position paper reaches the same conclusion in its executive summary, where it says that applying the existing framework allows the risks of esports betting to be controlled in a proportionate way. The Commission's texts describe no separate esports license: esports sit inside the betting licenses that already cover other events.

Which license a business needs depends, the page says, on the types of betting it offers and on how it offers them. The page sends readers to the Commission's pages on betting licenses and to its position paper for the detail of which activities need a license.

The page adds one qualification. Esports events, it says, carry additional risks. It expects event organizers to mitigate them, alongside a business's own commercial assessment of which bets to offer in this market. The position paper sets out what those risks are.

How large the market was

The position paper of March 2017 describes esports as a small part of the British gambling market. It also notes that licensed operators had found the activity attractive enough to offer bets on matches, events and leagues, and it reads the growing number of betting markets as a sign of the industry's confidence.

The paper gives survey figures for participation: 8.5 percent of respondents had ever bet on esports, and about 3 percent had done so recently. It warns that online surveys may overstate participation, so the figures describe the survey rather than an exact count of bettors. The Commission also said it had consulted on new regulatory returns, the regular data that licensed businesses send it, so that the licensed esports market could be measured directly.

Those are the Commission's figures for that date, and the paper does not update them. They show the scale the regulator had in mind when it decided that the existing framework was enough, a conclusion the paper states in so many words: some respondents saw heightened risks in esports betting, but the Commission considered the rules already in place sufficient.

Young audiences and the existing protections

The paper takes the age of the audience seriously. It cites figures from the market research firm Newzoo showing that about 73 percent of esports enthusiasts were aged 20 or over, and it acknowledges in the same passage that esports have a large following among children.

The protections it points to are the ones that already apply to all licensed gambling. Licensed businesses must verify the age of their customers. The criminal offenses that underpin age verification are set out in Part 4 of the Gambling Act 2005. Marketing is restricted as well: the paper cites restrictions on featuring people under 25 in gambling advertising, and section 16 of the CAP and BCAP advertising codes applies.

The paper also records the view of video game industry respondents that esports betting is like betting on any other event. Because established controls already govern online sports betting, the paper says, esports betting is not uniquely contentious.

Integrity without a single governing body

Integrity is where the paper sees esports as different. It records concern about the lack of a recognized single governing body for esports, a concern sharpened by incidents of cheating and deliberate underperformance, and it warns that the absence of such a body risks a fragmented approach. It accepts that one body for all esports may be hard to achieve, given the variety of games and publishers, but says that this is no excuse for weak integrity.

It adds a point specific to the medium. Esports are played entirely through digital technology, and the paper notes that rules on equipment, from processors and power supplies to servers, help keep the playing field level. The paper says the risk that participants or equipment are manipulated grows as betting markets and prize pools grow.

To meet those risks, the paper lists good practice drawn from other sports:

1. a continuing assessment of integrity risks;
2. monitoring of betting markets for suspicious activity;
3. protocols for sharing intelligence;
4. codes of conduct for participants, including rules on betting;
5. investigations and sanctions;
6. education of players;
7. transparent controls where licensed gambling businesses have commercial deals with players, teams or leagues.

The paper's conclusion on the evidence was measured. The Commission said it had found no evidence so far of a serious integrity risk in the esports offered to British consumers, while warning organizers against complacency, since the absence of some controls could leave esports events under less scrutiny than other events people bet on. It also mentioned memorandums of understanding with other parties and its powers to intervene as a precaution.

The regulator did not write new rules for esports. It asked the scene to supply what other sports already had: monitoring, codes, sanctions and education.

Betting while a match is live

Esports are watched mostly online, as they happen, which brings them close to a form of betting the Commission treats with care. Its guide to in-play or in-running betting, first published in 2016 and last updated on June 28, 2021, describes it as betting while the event is actually taking place, mostly online through betting exchanges or the websites and apps of bookmakers. The guide does not mention esports.

The risks it lists are about time and information. A delay in a broadcast creates an inequality between people watching in real time and people watching a delayed feed, such as an online stream. Spectators at a venue may use live information before a business updates its prices, a practice known as courtsiding: the Commission does not regard it as cheating under section 42 of the Gambling Act 2005, though it may breach the terms of entry of an event. Fast software and automated programs can also exploit prices that have not yet moved.

The guide sets out what the Commission expects of licensed businesses. They need policies and procedures to manage the risks of in-play betting, monitored and reviewed. They use real-time data from the event to revise prices, suspend markets and settle bets accurately. They apply time delays between a bet being placed and confirmed, publish clear terms, and make the disclosures the Commission's Remote Technical Standards require: one standard covers the disadvantage a customer may face on a slower network or device, another covers in-play betting itself, and a third covers a business's policy on automated betting programs. Where a business offers to settle a bet early, known as cash out, its terms must say when the option is available, how it is accepted and how it is settled. Their customer interaction policies must also identify people at risk of harm across in-play and other gambling.

Skins and other in-game items

The second part of the paper concerns items inside games. In-game items are acquired through play, exchanged between players or bought from publishers, and include currencies, equipment and the cosmetic weapon finishes known as skins. The paper values skins by rarity, look, use and popularity, and gives a range of prices from under £10 to £300, with rare items above £1,000.

The paper records the games industry's position that such items sit in a closed loop, not meant to be exchanged for cash, and that misuse is occasional. The Commission did not accept that wording: given the number of websites offering to exchange items for cash, it considered that the word understated the problem.

The Commission's position turns on whether an item can leave the game. Items that can be converted into cash, or traded for things of value, have a real-world value and count as money or money's worth. Offering gambling with them therefore needs a license. Prizes that can only be used inside the game, by contrast, are not licensable gambling.

The paper describes a sharp rise in websites offering gambling with skins in early 2016, followed by disruption after publicity and action by large developers, with some sites withdrawing or changing their models. It states that every website offering gambling facilities in Britain must be licensed, and that licensing is how children and vulnerable people are protected. It also notes that video sharing, live streaming and social media were being used to promote unlicensed gambling, sometimes with misleading displays of winning streaks, and it cites a prosecution brought over one such website.

Publishers, cases and the Commission's priorities

The paper is careful about the role of publishers. It notes that the publisher, the developer and the network operator of a game may be separate from the parties who run gambling or cash-out services, and that the Commission had seen no evidence that publishers intentionally provided or advertised unlicensed gambling. It nonetheless says publishers should not be passive, since they supply the items and may benefit indirectly when players who lose their skins buy new ones. Its executive summary calls on publishers and network operators to act against the exploitation of players by third parties.

Crates and cases, where a player pays for a key that opens a random item, get their own paragraph. The paper says these mechanics resemble gaming machines and that, where the items awarded can easily be cashed out, they are likely to be licensable.

On enforcement, the paper sets priorities rather than a blanket rule. The Commission weighs the scale and availability of the facilities, where the operator is located, the payment and advertising routes used, and the risk to children. It accepts that zero tolerance of small, informal markets inside games may be impractical or disproportionate, and says it will keep working with publishers and network operators. Its executive summary adds that it would engage with parliamentarians and child protection groups about the gambling risks found in some video games.

When playing for a prize is not gambling

The third part of the paper looks at players rather than bettors. Gaming, under section 6 of the Gambling Act 2005, means playing a game of chance for a prize. The paper notes that esports had not been designated a sport by the Secretary of State, so they were not exempt on that ground.

An esports competition falls outside gaming when the game played is one of skill in which chance is insignificant. The industry told the Commission that its games are skill-based, and the Commission thought most professional events fall into that category. The paper still asks organizers to assess the elements of chance in a game before offering prizes, and it names formats that could make chance more than notional, such as random assignment of teams or random allocation of characters or weapons. It says the assessment is subjective and that the Commission also looks at how a contest is presented, its links to traditional gambling and the consumer protections already in place.

Players who stake on themselves

The hardest case the paper discusses is the match-up in which players put up stakes on their own result. Depending on how it is arranged, the paper says, this could be betting, pool betting, or the work of a betting intermediary, a business that brings parties together to bet against each other. It finds no basis in the legislation for a blanket rule that a stake on oneself is never a bet, citing the example of a professional sportsman staking on himself with a bookmaker or an exchange.

To tell the two apart, the paper sets out factors on each side. It describes a spectrum running from harmless entertainment to licensable facilities, and says the Commission focuses on commercial services that invite participants, children among them, to stake money on the outcome of games, with risks such as chasing losses, excessive spending and unfair or fraudulent play.

The paper says the Commission aims not to regulate activity of low risk. In judging a case, it also considers gambling imagery and links with gambling businesses, and it investigates complaints. For a tournament organizer, a team or a platform, the outcome rests on how the specific arrangement is built, and the Commission's texts set the factors rather than a ruling on any one of them.

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