Operators in the e-gaming sector have been warned by the UK Gambling Commission (UKGC) that they must be licensed if they wish to offer gambling services in the country.
The UKGC outlined concerns over the sector in a new discussion paper in which it set out its latest thinking on virtual currencies, e-sports and social gaming.
The regulator said the paper has been prepared in response to, among other things, the blurring of lines between some social gaming products and gambling and technological advances and the expansion of digital or virtual currencies.
The UKGC recently updated a clause in its licence conditions and codes of practice to include the use of digital currencies, such as Bitcoin, as a valid method of transactions for its licensees.
However, there has been an increased focus on e-sports of late with concerns raised over skins betting and its appeal to minors.
Neil McArthur, general counsel at UKGC, said: “Our key concern is to ensure that consumers are protected and that children and other vulnerable people are not harmed or exploited by gambling. This discussion paper brings to the fore some areas where we see real issues for regulation, player protection and the protection of children and young people.
“We are concerned about virtual currencies and ‘in-game’ items, which can be used to gamble. We are also concerned that not everyone understands that players do not need to stake or risk anything before offering facilities for gaming will need to be licensed.
“Any operator wishing to offer facilities for gambling, including gambling using virtual currencies, to consumers in Great Britain, must hold an operating licence.
“Any operator who is offering unlicensed gambling must stop – or face the consequences.”
Concerns over gambling within e-gaming came to the fore recently when games developer Valve, the creator of Counter-Strike: Global Offensive (CSGO), became the subject of a $7.4 billion (€6.7 billion) lawsuit in the US over claims it allowed illegal gambling to be conducted through its Steam platform.
Valve subsequently banned skins betting operators such as CSGO Lounge from Steam.
McArthur added: “We are also concerned about betting on e-sports. Like any other market, we expect operators offering markets on e-sports to manage the risks – including the significant risk that children and young people may try to bet on such events given the growing popularity of esports with those who are too young to gamble.”
Interested parties have until September 30 to respond. The commission will also be looking for suitable opportunities during the autumn for direct engagement prior to issuing a position paper towards the end of the year.
Related article: Games giant Valve bars $7.4bn skins gambling market