It is sometimes difficult to understand the economic model of startups and unicorns. Take Sorare, the French nugget that sells virtual sports cards, all under the umbrella of NFT (Non Fungible Token) technology.
At first glance, Sorare’s activity could be seen as a digitization of old Panini stickers.
But this is not the opinion of the National Gaming Authority, which wonders whether its activities should not be classified in the category of games of chance and sports betting. This would greatly restrict the latitude of action of the young company, valued at 4.3 billion dollars. The Authority has already warned Sorare in this regard.
Betting game, or collection game?
For its part, Sorare offers to buy, via NFT, cards representing real players. These cards are then put into competition in free virtual tournaments offered to the service’s two million subscribers. The rewards for these tournaments scale based on the stats of the real players they represent. And to add to the complexity, the cards are subject to speculation.
Online betting is heavily regulated in France. Players in this market must benefit from a specific license and control the identity of their customers and subscribers. The taxation applied to this sector is also heavier, and these companies must put in place measures to avoid gambling addiction.
Sorare’s defense is simple. “What Sorare offers (…) does not fit into any existing framework” explains to Mediapart Nicolas Julia, the company’s founder and CEO.
The continuation of the case at the start of the school year
Still, the bad winds do not blow only in France. In the United Kingdom, the gambling regulator is also questioning the status of Sorare. And the platform is banned in Switzerland, pending the end of discussions between the authorities and representatives of the company.
The leaders of Sorare must return to the ANJ at the start of the school year to clarify their position and allow the authority to rule.
Sorare, launched in 2019, raised the biggest fundraiser in the history of French Tech – $680 million – at the end of 2021.