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First Social Gaming Prosecution Succeeds

In the first prosecution of its kind, convictions have been secured against two prominent social gaming operators. The case, brought by the Gambling Commission, resulted in fines and costs orders exceeding £250,000.

Dylan Rigby operated a social gaming web-site named Futgalaxy. The site offered what appeared as traditional gambling games, including traditional sports betting, a form of lottery and a "higher and lower game". The games were widely advertised on social media, including through a YouTube channel operated by Craig Douglas, known by his alias Nepenthez, which had over a million subscribers.

The virtual currency used in the game was "Futgalaxy coins" which could be bought for cash. Mr Rigby had argued that since Futgalaxy coins were not themselves cash or exchangeable directly for cash, so the vital monetary component of regulated gambling was missing. This meant, in effect, that children could play the games, and the evidence was that they did.

But there was another dimension to the case. FIFA Ultimate Team, a legitimate social game operated by Electronic Arts, used a form of virtual currency called FUT coins. Its terms forbade the buying or selling of the coins for cash: they are just a fun currency for use in the game. But Mr Rigby operated businesses which enabled the purchase and sale of FUT coins for cash, without the authority of Electronic Arts. And he allowed Futgalaxy gamers to convert their Futgalaxy coins to FUT coins, and their FUT coins to cash. That, said the Commission, provided the monetary component which made Futgalaxy illegal.

Mr Rigby tried to place the business offshore in Costa Rica so as to avoid GB regulation, but that provides no assistance in the face of an Act which controls all provision of facilities to GB gamers.

After a trial set down for five days, the Defendants ultimately pleaded guilty to five offences between them, including providing facilities for gambling and also advertising illegal gambling, and were sentenced on 6th February 2017. The Court was shown video footage of a gambler as young as 12 losing "coins" on the site, which the District Judge said he found horrifying. The Court also saw how the evasion of GB regulation was discussed and planned from material culled from computer equipment seized under warrant from the Defendants' homes.

Philip Kolvin QC, standing Counsel to the Commission, explained to the Court that the aggravating features of the case included the length of time the offences continued, the failure to heed repeated warnings by the Commission and the involvement of children. Agreeing with him, District Judge McGarva described the offences as "very grave."

Philip has commented: "Although there is a line between unregulated social gaming and gambling which falls to be regulated under the Act, this case fell firmly on the wrong side of it. Gambling by children on-line is an important issue which requires vigilance, and also responsibility from operators to ensure that vulnerable people are protected. This was an important prosecution for the Commission and hopefully lays down a marker for the future."

Philip Kolvin QC is the Head of Cornerstone Barristers. He led Rachna Gokani of QEB Hollis Whiteman. They were instructed by David Whyte of the Gambling Commission.