Blockchain-based fantasy soccer platform Sorare is among the companies shortlisted by the English Premier League for its first ever NFT (non-fungible token) partnership.
But a deal would raise eyebrows because the French company’s business model is being investigated by the UK Gambling Commission. The regulator is trying to determine whether Sorare’s services require a pool betting license, as is the case with traditional fantasy sports models.
The EPL is eager to cash in on the red hot NFT market. NFTs are digital tokens that can represent ownership of a virtual item, such as sports trading cards or a work of art. Each NFT is unique and cannot be duplicated because ownership is tracked on the blockchain, the digital ledger of transactions that underpins cryptocurrencies like bitcoin.
What is Sorare?
Sorare is the darling of this fast-evolving new space, recently receiving a $680 million cash injection led by SoftBank. That will have caught the attention of EPL chiefs, as will a deal signed in September between Sorare and Spain’s La Liga.
The terms of the La Liga deal were not disclosed, but it is reportedly long-term and exclusive, with the league receiving royalties on the sale of NFTs tied to its players.
Sorare currently has more than 500,000 registered users and expects to generate at least US$200 million in transactions by the end of the year.
The company earns revenue by issuing and selling new trading cards. Users can simply collect cards, or they can add them to a “team” of players to earn points based on real-world performances. These teams complete in leagues and tournaments to win non-cash prizes.
It’s this fantasy sports aspect that interests the gambling commission. The regulator is treading carefully as it has in the past been accused of being slow to react to new technological trends.
Pending the conclusion of the investigation, it has warned UK consumers to “proceed with caution” because Sorare does not have a gambling license.
Sorare says it does not need one because its games are free to play and don’t pay out in cash. But of course, players must first buy a team before they can enter a competition.
Deal Could Be Worth $590M
In October, the company said the legality of its contests has been confirmed by “expert legal opinions” at every stage of its development.
“We will always engage and have an open dialogue with authorities who reach out to us to learn more about our game,” it added.
The DM reports that the bids for the EPL NFT partnership range from £220 million (US$299 million) to £434 million (US$590 million) over four years. This dwarfs deals recently signed by the NBA and the NFL with Dapper Labs, which are estimated to be worth US$20 million a year each.
Dapper Labs is also in the running for the EPL deal, as is Candy digital, which has already partnered with MLB. New York-based ConsenSys is also in the mix.
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