Legal Aspects of Ethereum Based Fantasy Games

Blockchain and Fantasy Games

While centralized fantasy games are very popular, they are a big problem for consumers. In centralized fantasy games, the companies hold all the power and users have no recourse. As a result, users are forced to take their companies’ word for it. Blockchain technology is a solution for this problem. Blockchain offers a number of benefits for fantasy games. The blockchain is transparent and non-duplicable, which eliminates the need for centralized management and transparency. Players can register with one blockchain address to avoid being associated with multiple identities. This allows for anonymity and decentralization, which are two big issues in fantasy sports. The decentralized nature of blockchain makes it a great choice for fantasy gaming. It eliminates the risk of fraud and bias, which are two other problems in traditional fantasy games. Using Blockchain technology to make the game easier to play is a huge step forward. The gaming ecosystem may be based on the Polygon and Ethereum blockchains and can provide a platform for fantasy sports fans to trade digital assets based on real-world sports events. Hence, blockchain and Ethereum based NFT fantasy gaming platform like Sorare may need legal review of business model for proper implementation. Accordingly, blockchain attorneys need to be well-versed with the latest developments in blockchain and cryptocurrency to provide a strategic legal analysis of the business model.

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Blockchain Gaming Business Model

With the international commercial market venturing into Non-Fungible Tokens (NFTs) as a new medium of buying and selling rare digital assets, Sorare has developed its own sports blockchain platform in an attempt to expand its product portfolio. They have adapted the concept of NFTs to their platform by way of introducing NFT trading cards that represent legendary football players that are actively playing in real-life tournaments or have retired but are known as icons in football.  

Blockchain Business Structuring

Sorare is a French-based startup that has raised a significant funding round. SoftBank’s Vision Fund led a $680 million Series B round, valuing the enterprise at $4.3 billion. Sorare has created a fantasy football (soccer) platform established on NFTs, or non-fungible tokens. Every digital card is recorded as a distinctive token with a unique stamp on the Ethereum blockchain. Players can purchase and trade in these cards from other players and all such transactions are documented on the Ethereum blockchain. 

 

Sorare is the first game that introduces proprietary blockchain cards. It allows users to authenticate their digital cards, which can further be bought, sold, or traded with other online users. Every card indicates an official digital collectible, which is certified by a club or league. These non-fungible tokens are based on the Ethereum blockchain. There are three levels and every card has its level of scarcity and rareness. The three levels are Rare, Super Rare, and Unique. With every season, the Superteam states the level of supply of each player card. This is done to ensure and confirm the scarcity as well as the uniqueness of the card with the total supply of the cards in circulation. At present, there are five-a-side games available. Sorare is designed to be used in fantasy football competitions on the platform. Players can gather these cards, exchange them and contribute to various gaming activities. Sorare sells the player cards in packs, which can be purchased individually with Ethereum or cash. In the events, Sorare similarly rewards winners with added cards and Ethereum payouts.  

Working of Blockchain Games

To bid for a player on Sorare, one must enter the Transfer Market to look for the players that are up for sale or to be bid. Once the player is selected then upon clicking the “place bid” button will open a box where the bidder can enter the maximum bid. After the maximum bid has been placed and confirmed, the bidder will be prompted to enter their account password. After which, the bidder would be notified if his bid was the highest bid or not. If being outbid, the bidders can re-bid to get the desired players as cheap as possible. Sorare also introduces a platform or a market where traders can list their cards for sale. To buy cards from other managers, simply press the transfer market and then choose the ‘Manager Sales’ option, which will bring up all of the cards which other managers are currently selling. This would help to pick the player of choice. The process to sell players is easy as they are easily available on the bidder’s gallery area which is a showcase for all of the playing cards. One can easily select the card that they want to sell, which will bring up a popup box. A “sell my card’ option will pop up. Click this and enter the desired price to receive for the player. The card will be put up for sale, available for other managers to purchase. This must not be considered as any process of auction, as it’s a simple and mere market where another trader would meet the asking price and trade immediately. If the card is not sold within 2 days, the sale will be automatically being canceled. The bidder can put the player back up for sale if they think that the initial sale of the player was put up way too cheaply. To sell the desired player, it’s best to get an estimation of the market. To do this, search for the card that one wants to sell.  

Blockchain Gaming Rules

The game introduced by Sorare i.e., “SO5” has been designed as a virtual tournament that uses the real-time performance of the football players and allows users to create their team through their Collectibles. The game has no time-limit and the time and frequency of every tournament are executed at the discretion of the Organizer. A user can make only one profile on the website and to participate they must have at least 5 collectibles. Of these, there must be one goalkeeper, a defender, a midfielder, and a forward player. Further, the entry period for every tournament is indicated on the website through a countdown and the user can only access the gaming arena to build their team. There are many kinds of tournaments based on the shortage of the collectibles making up their teams. Involvement in these tournaments depends on the limitations in terms of team composition. This composition ranges from the all-star league, under 23 league, regional leagues, training league, and the weekly challenges. A winner is presented for each Tournament.  

NFT Fantasy Sports Case Study

To date, multiple NFTs have taken the root of using art collectibles as a means of transaction. The business model that Sorare proposes is rather unique, and thus many present prominent figures in the NFT platforms do not consider their sports initiative as a direct threat to their enterprise. However, with the concept of NFT now being expanded to include legendary collectibles of celebrities, companies have begun signing athletes as a means of raising the worth of their collectibles. Thus, while new in its inception the success of the business model of Sorare largely depends on its ability to secure its Intellectual Property and blockchain patents by signing and maintaining the player or athletes they plan to introduce in their trading cards.

Our team of advanced patent attorneys assists clients with patent searches, drafting patent applications, and patent (intellectual property) agreements, including licensing and non-disclosure agreements.

Advocate Rahul Dev is a Patent Attorney & International Business Lawyer practicing Technology, Intellectual Property & Corporate Laws. He is reachable at rd (at) patentbusinesslawyer (dot) com & @rdpatentlawyer on Twitter.

Quoted in and contributed to 50+ national & international publications (Bloomberg, FirstPost, SwissInfo, Outlook Money, Yahoo News, Times of India, Economic Times, Business Standard, Quartz, Global Legal Post, International Bar Association, LawAsia, BioSpectrum Asia, Digital News Asia, e27, Leaders Speak, Entrepreneur India, VCCircle, AutoTech).

Regularly invited to speak at international & national platforms (conferences, TV channels, seminars, corporate trainings, government workshops) on technology, patents, business strategy, legal developments, leadership & management.

Working closely with patent attorneys along with international law firms with significant experience with lawyers in Asia Pacific providing services to clients in US and Europe. Flagship services include international patent and trademark filingspatent services in India and global patent consulting services.

Global Blockchain Lawyers (www.GlobalBlockchainLawyers.com) is a digital platform to discuss legal issues, latest technology and legal developments, and applicable laws in the dynamic field of Digital Currency, Blockchain, Bitcoin, Cryptocurrency and raising capital through the sale of tokens or coins (ICO or Initial Coin Offerings).

Blockchain ecosystem in India is evolving at a rapid pace and a proactive legal approach is required by blockchain lawyers in India to understand the complex nature of applicable laws and regulations.

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