The e-gaming ecosystem has expanded at an unprecedented rate in recent years, with e-gaming now considered as the most profitable form of entertainment in the world. In the GCC alone, the e-gaming market is predicted to be worth around USD 800 million during 2021.
E-gaming offers increasingly diversified revenue streams for a variety of stakeholders, including telecoms companies, platform providers and rights' holders, particularly where traditional revenue streams are less lucrative. The industry is commonly split, among others, into mobile gaming, e-sports streaming and console purchases and requires input from e-gaming distributors, publishers/creators and service providers (including data).
Both telecoms operators, Etisalat and Du, have seen the e-gaming boom as an opportunity to increase data usage and subsequent revenues. In 2019, Etisalat launched the first ever cloud gaming service to promote e-gaming in the UAE.
Many gaming activities now include gambling features, which may increase the current uncertainties as to the legal framework around the gaming industry in the UAE given that if any amount of money is involved, it could be construed as gambling – an activity strictly forbidden in the UAE.
Further, it is worth noting that a research report by the investment bank Morgan Stanley identified the following five primary types of convergence between gaming and gambling:
- an introduction of gambling features into social media games;
- use of social gaming features on online gambling sites;
- 'gamblisation' of games in which individuals have the chance to win a prize of value;
- the consolidation of similar games on non-monetary sites, where the operator of both non-gambling activities and online gambling activities are the same; and
- the cross-marketing of online gambling sites to social casino players.
The legal framework in the UAE
The Telecommunications Regulatory Authority (TRA) has implemented the Internet Access Management Regulatory Policy (Policy), in coordination with the National Media Council, Etisalat and Du. This Policy consists of certain frameworks and categories that must be taken into consideration by UAE internet service providers to ensure the security of the internet and to protect end-users from harmful websites containing materials that are contrary to religious and ethical values of the UAE, which includes gambling.
In addition, the Government has set national standards for media content and requires all local mass media institutions operating in the UAE to abide by them. As a result, local mass media institutions in the UAE should not only respect the regime of the UAE, its symbols and the political system but also refrain from offending its divine and Islamic beliefs.
Legal consequences
It is essential to keep in mind that the UAE is first and foremost a Muslim country, governed by Islamic principles and, as such, gambling remains forbidden. Article 414 of the UAE Penal Code sets out that those found gambling can be punished with up to two years of imprisonment or a fine of up to Dhs20,000 (circa £5,000).
If considered to be running a gambling operation in the form of a venue or in a public place, a maximum period of ten years' imprisonment can be imposed according to Article 415 of the UAE Penal Code. A foreign gambler may see his/her custodial penalty changed by the court to deportation from the UAE according to Article 121 of the UAE Penal Code.
Moreover, Article 17 of the Cyber Crime Law punishes individuals and moral persons, who publish, produce, exploit or transmit online gambling or any other material deemed to have the potential to prejudice public morals. Anyone found to supervise, establish or operate gambling websites, can be punished by imprisonment and fined between Dhs250,000 (circa £50,000) and Dhs500,000 (circa £100,000).
Given the boundaries between online gaming and gambling have become increasingly blurred, differentiating between online gaming and gambling is not necessarily straightforward but is nonetheless essential for those in the industry or looking to establish e-gaming platforms. It is clear that the UAE is moving towards a modern view of online gaming, offering great opportunities to the major players in this field as well as newcomers who wish to develop Middle-Eastern tailored online games. However, they will need to understand this region and comply with the complex legal infrastructure that governs this fast growing industry.
Should you require any assistance, please contact Tony Fielding and Soraya Salhi of our Gowling WLG Dubai office.
Footnote
[] Morgan Stanley, Social Gambling: Click Here to Play (Morgan Stanley Blue Paper, New York: Morgan Stanley Research, 2012).