Sports and Events Management Focus
Neil MorganSenior Counsel,Head of Sports and Events
Minal SapraParalegal,Digital & Data
In the past few years, we have seen an active and growing gaming population across the Middle East region, particularly in the United Arab Emirates (UAE) and the Kingdom of Saudi Arabia (KSA).
There is a major push from the UAE government to develop eSports within the UAE and we therefore envisage that gaming (both online and offline) will become a key area of focus in the media and entertainment industry.There are several factors that make the UAE particularly attractive for gaming. The UAE possesses the infrastructure, as the key contender in the emerging technology space, such as blockchain, artificial intelligence and augmented reality, that allows the growth of the digital gaming ecosystem. The UAE government has also established specific non-financial free zones supporting this industry. These free zones provide commercial trade licenses for most activities that fall under the gaming sphere, which include, e-gaming, developing and publishing games, digital services and event management.
However, gaming activities can trigger a multitude of legal considerations, depending on how the game is structured, and what is sought to be enabled in, and through, the game. For instance, games with native wallets are likely to attract stored value facility regulations. In a similar manner, all games that collect personal data must comply with data protection and privacy laws. This article specifically explores the legal issues concerning in-game betting and prize rewards in the UAE.Generally, “sales promotions”, such as raffles and sweepstakes with a skill-based element, are permitted in the UAE provided they have been approved by the licensing authorities. Whereas chance-based games are generally not permissible as they would be likely to fall within the scope of ‘gambling’.Sales promotions are regulated on an Emirate-by-Emirate level, and permits are issued to operate such sales promotions by the relevant licensing authorities. Running a sales promotion without a permit can attract penalties, which substantially vary depending on the nature of the sales promotion and the authority in question. In determining if a permit is required for a sales promotion, a key consideration for the relevant Department of Economic Development (DED) would be the extent to which the sales promotion appears to be clearly targeting consumers located in the UAE.
Given the prohibition of chance games (gambling) in the UAE, neither the free zones nor the mainland licensing authorities currently offer licensing options for gambling or betting related activities. Whilst there are certain licensing regimes for activities relating to gaming, e-sports and amusements, it should be noted that these are limited in one way or another to exclude the possibility of legally conducting gambling activities.
Extreme care should therefore be taken when considering in-game betting within any gaming activities. Gambling is an activity strictly forbidden in the UAE under the UAE Constitution and Penal Code. There are a range of local laws setting out the prohibitions on gambling; some of which expressly set out the prohibition, while others deal with it indirectly. These laws not only apply to those in the UAE, but may also have extra-territorial application, depending on the specific case.
The Penal Code makes gambling a punishable offence by way of imprisonment and/or a fine.
The below lists out the main laws in relation to gambling related activities in the UAE:
The Penal Code makes gambling a punishable offence by way of imprisonment and/or a fine. It also prohibits the opening or managing of a venue for gambling, or organizing a game of chance in a public place or in a venue for gambling. For reference, gambling is defined under the Penal Code as being “a game whereby each of the parties thereto agrees - in case he is the loser - to pay to the winner a certain sum of money or any other thing agreed upon.”
The Cyber Crimes Law sets out a penalty of imprisonment and/or a fine for anyone caught establishing, managing or running a website, or transmitting, sending, publishing or re-publishing through a computer network gambling activities. It also prohibits producing, creating, preparing, sending or saving for exploitation, distribution or display to others through a computer network, gambling activities and/or anything else which may afflict public morals.
The Telecommunications Regulatory Authority implements an “Internet Access Management” policy. This policy requires internet service providers to block access to websites providing illegal content or content that is inconsistent with the moral or public norms of the UAE. As a result, access to gambling related content is generally blocked from viewing on the internet in the UAE.
The UAE’s National Media Council (which has now been replaced by the Ministry of Culture and Youth, MCY, through their Media Regulatory Office, MRO) is responsible for monitoring the content of materials published in the country, including electronic games. The principal regulations pertaining to the media licensing and age rating framework are Resolution No. (30) of 2017 and Resolution No. (26) of 2017 respectively.
Given the increasingly blurred boundaries between gaming and gambling related features, differentiating between prize rewards, gambling and non-gambling related features is not necessarily straightforward but is nonetheless essential for those in the industry or those looking to launch games within the UAE. It is clear that the UAE is moving towards a modern view of gaming, offering great opportunities to the major players in this field as well as newcomers who wish to develop Middle-Eastern tailored games. However, they will need to understand the specificities of the region and comply with the complex legal infrastructure that governs this fast growing industry.
For further information,please contact Neil Morgan.
Published in October 2022
