French startup Sorare is one of France’s most promising companies with a valuation of $4.6 billion. Regulators believe that its activities are in some ways confused with sports betting. Sorare will have to prove that this is not the case before the fall. Otherwise, it will have to comply with the strict regulations of sports betting platforms, which could upset its hitherto flourishing and very profitable model.
Avoid sports betting legislation
The French company launched in 2019 and valued at 4.6 billion dollars (4.2 billion euros) is under the spotlight of the National Gaming Authority (ANJ), which aims to characterize a new genre of gaming in line.
On the platform, players can auction virtual cards in the form of NFTs (non-fungible tokens, unique digital assets exchanged online) corresponding to athletes, the value of which changes according to their performance in real life. Purchases can be made with cryptocurrencies, especially ether.
Sorare currently employs a hundred employees and 137,000 players worldwide with at least one NFT, and it maintains strong ties with the world of sport: evidenced by its collaborations with L’Equipe or with stars like Kylian Mbappé or Zinédine Zidane. , as well as the construction of a very active community of poker or sports bettors.
It is in this context that the leaders of Sorare are to meet ANJ agents in September. Co-founder Nicolas Julia believes that while there is no doubt that oversight of his company’s activities is required, the rules to be followed should not be those related to sports betting.
Logic: seeing Sorare fall under this legislation would greatly disrupt its development, forcing the platform to carry out more checks and verifications. As a result, the company would have no choice but to seek ANJ’s approval to verify users’ identities and ages, prevent addiction, and pay more taxes.
The ANJ questions the speculation model
The Inside Security Code considers the game to have all similar characteristics to the rules and game of sports betting. Although Sorare is a unique new model, using new technology, it falls under the category of games of chance according to the Internal Security Code.
Users buy football cards based on the actual performance of the player depicted on the card. Cards can increase or decrease in value, depending on player performance. Users can then sell their cards, like we did with Pokemon cards and Panini stickers, hoping to make a profit from their card purchase.
The National Gaming Authority (ANJ) has suspicions about Sorare as they believe it could be a sports betting site. If the company is unable to convince the ANJ that it is not a sports betting company, then it will have to submit to strict regulations like Winamax, Unibet and Betclic.
Sorare will have to put in place checks on the identity of its users, on the money circulating in its system and face greater taxation. The application will have to ensure that minors do not have access to the game, which represents a large part of its audience.
Sorare’s model has been wildly successful so far, claiming over 1.8 million users, a lucrative business (rare in the startup world) since June. The game, which has achieved huge success in less than three years, was launched in 2019, attracting many investors. On his list: the biggest fundraiser ever in France with 680 million dollars.