In this week’s GME3 we have an update on the calls for Québec to create their own regulatory framework for online gambling, a hefty fine against TikTok from Ireland’s Data Protection Commission, and a unique approach to funding from esports team Sentinels. Find the full stories below!
Gambling
QOGC Powerplay
In May of this year, several online gambling operators, including brands like Bet99 and DraftKings, banded together to create the Québec Online Gaming Coalition (QOGC), an organization that aimed to work with the Québec government to create a new regulatory framework for online gambling.
The movement was based partially on the overwhelming public support to allow registered gaming in the province. In a survey conducted earlier this year, 66% of respondents were in favour of regulating private online gaming operators by establishing a licensing and tax system.
The QOGC has been relatively quiet since then, but that changed earlier this week when the NBA, CFL, and MLS voiced their support for the initiative. The leagues have taken the perspective that sports betting is a valuable way to enhance the fan experience, but only when it’s done in a way that sets safe and responsible gambling as a high priority.
From a post on the QOGC’s LinkedIn we can see that the Coalition is done with keeping a low profile: “Stakeholders from various sectors agree that modernizing Québec’s gaming system is the best way to promote responsible gaming and protect Québecers. Loto-Québec’s position, however, is clear: protect the monopoly at all costs, at the expense of public health.”
Only days later Montreal Public Health released a study recommending that the government establish an independent regulatory body for the gaming industry “in light of recent changes observed abroad, and current challenges related to gaming”. The report also emphasizes the vulnerability of men between the ages of 18 and 44 when it comes to problem gambling.
Ontario’s registered gaming framework has been a huge success, which raises the question of why the Québec government is so resistant to the change. It will be interesting to see if the QOGC (and their influential supporters) can bring them around.
Media
TikTok’s Privacy Penalty
The Irish Data Protection Commission (DPC) has slapped TikTok with a €345 million ($368 million) fine for violating the privacy of 13-17 year-olds while processing their data.
The investigation began all the way back in September 2021, and concerned TikTok’s handling of children’s data between July and December 2020. As a result of the investigation the DPC found that TikTok violated several articles of the EU’s General Data Protection Regulation (GDPR)
The findings included:
TikTok’s profile settings for child user accounts defaulted to public visibility, meaning taht all posted content was visible to anyone, within and outside the platform.
The ‘Family Pairing’ feature allowed adult users who could not verify their status as parents or guardians to link their accounts with those of minors aged 16 or older.
TikTok employed “dark patterns” during the registration process and while posting videos, subtly nudging the users toward selecting options that compromised their privacy.
In addition to the hefty fine, the DPC has given TikTok a three-month period to bring its data-processing practices into compliance with regulatory standards.
This is only the most recent trouble that TikTok has gotten in this year, and it may not be the last. The DPC is still investigating whether or not the company violated the GDPR by transferring user data to China, where ByteDance (the company that owns TikTok) is located. Make sure to follow us on LinkedIn if you want to stay updated on this story!
Entertainment
Sentinels’ Esports SOS
Last month, popular Los Angeles-based esports brand Sentinels took a new approach to funding their operations – begging for money on the internet. After 5 years of operating on investor funds, Sentinels took to StartEngine, a platform that allows people to invest in privately held companies
They’re looking to raise $1.23 million from this crowdfunding effort, but even that may not be enough to save the brand. However, Sentinels is currently operating at a burn rate of $695,000/month, including the funds needed for player and staff salaries, merchandise, and marketing
A significant amount of money is being dedicated to compensating the top-level employees. The combined salaries of the four C-suite executives add up to nearly $1 million a year. Even in the best-case scenario, where Sentinels manages to secure $1.23 million from crowdfunding and another $1.15 million from investors, this only buys the organization six more months. Clearly, some costs have to be cut. And if you want to see some more realistic projections for the next few months, check out this great article by Jacob Wolf.
As of the writing of this article in September 2023, Sentinels has only raised $147,376.70 of their over $1.2 million goal. This situation raises some interesting questions about the direction that esports organizations will take in the coming years. It’s becoming clear that many of these brands have inflated valuations compared to the actual earnings they can bring in, and with such high overhead costs, some significant changes have to be made if this burgeoning industry wants to be established as solidly as a traditional sports team.
GME Law is Jack Tadman, Zack Pearlstein, Lindsay Anderson, and Will Sarwer-Foner Androsoff. Jack’s practice has focused exclusively on gaming law since he was an articling student in 2010, acting for the usual players in the gaming and quasi-gaming space. Zack joined Jack in September 2022. In addition to collaborating with Jack, and with a keen interest in privacy law, Zack brings a practice focused on issues unique to social media, influencer marketing, and video gaming. Lindsay is the most recent addition to the team, bringing her experience as a negotiator and contracts attorney, specializing in commercial technology, SaaS services, and data privacy.
At our firm, we are enthusiastic about aiding players in the gaming space, including sports leagues, media companies, advertisers, and more. Our specialized knowledge in these industries allows us to provide tailored solutions to our clients’ unique legal needs. Reach out to us HERE or contact Jack directly at jack@gmelawyers.com if you want to learn more!
Check out some of our previous editions of the GME3 HERE and HERE, and be sure to follow us on LinkedIn to be notified of new posts, keep up to date with industry news, and more!
