The move by CyLimit, a cycling-focused web 3 startup, to become the first JONUM operator to make its regulatory declaration to France’s Autorité Nationale des Jeux (ANJ) has shone a light on a company that most industry observers would have expected to be at the front of the queue. 

Of course since we are talking web 3, NFTs and fantasy betting, that company is Sorare. But, so far at least, the one-time unicorn has not submitted its own declaration to the country’s gambling regulator.

As the JONUM legal framework finally gets going in France, SBC-Gaming&Co wanted to find out why the leading web 3 fantasy betting company in the space was not first to submit a regulatory declaration so it could operate as quickly as possible in full compliance with the regulations of its ‘home’ country. 

A Sorare spokesperson clarified that there was “no delay and we are in ongoing and constructive discussions with the ANJ at the moment”. The group is also “taking the time to finalise the dossier properly and we will make the JONUM declaration promptly”.

“Our approach is to ensure that the submission is complete and robust from the outset,” they added, “the application file is comprehensive and requires a significant amount of detailed information to be provided”. 

However, there are a number of reasons that could be playing on the minds of Sorare’s leaders and, although they are not directly linked to its activities in France, it’s impossible to think the company would not be aware of them.

UK court case 

The first one is a case brought against the group by the UK Gambling Commission set to start on 15 June. The commission is suing Sorare for offering what it considers to be illegal gambling products without a license to consumers in the UK. 

A follow-on question for Sorare is therefore: if it states that it operates as a JONUM company in France (where users buy cards of football players as NFTs, with their value going up or down dependent on the on-pitch  performances of the players’ teams), could it be worried that it is like admitting that it is a real money gambling company? 

Not at all, says the company: “The JONUM framework should not be interpreted, in any way, as an admission that Sorare operates as a real money gambling company. The JONUM framework is actually recognising the unique nature of our activity and explicitly confirms that it falls outside the scope of gambling regulations. 

“This clarification provides an essential level of legal certainty, strengthens the confidence of our partners, investors and community, and represents a key step for the sustainable development of our model.”

EU questions 

A second question revolves around European legal questions. Claire Pinson-Bessonet, a former ARJEL executive and now a public affairs and gaming lawyer, noted on Linkedin that the European Commission has asked France how the JONUM framework fitted with the European eCommerce Directive of 2000 that allows for the free movement of information services between EU Member States.

French lawmakers responded that the legislation fell under “the exemption of ‘real money gambling activities’ provided for in the eCommerce Directive, which therefore does not apply to JONUM”. In other words, the EU directive does not apply to JONUMs because those products fall under the real money gambling exemption, which the directive doesn’t cover. 

“But in that case why did they (France) introduce specific legislation for JONUMs if the French authorities consider them to be games of chance?”, added Pinson-Bessonet. Interestingly, that seems to be what the Gambling Commission will try to demonstrate in its court case against Sorare in June. 

SBC-Gaming&Co asked Pinson-Bessonet if the EC enquiry about the eCommerce Directive suggests France considers that JONUMs are covered by the gambling exemption. “Yes it is,” she said, “hence the line between JONUMs and gambling remains very thin. And when it launched the experimentation in February, the regulator stressed that it would be very attentive to any cross-over.” 

Market realities 

No less important however have been Sorare’s business choices. From spending huge amounts on marketing and partnership deals with top tier football clubs in the English Premier League or France’s Ligue 1, to inhabiting a space where the company does not attract the high spending VIPs that populate many crypto sportsbooks while its own clients don’t generate enough volumes to sustain its ambitions, Sorare has struggled and not lived up to the hype of its early days, when it was valued at over $4bn.   

For the French authorities the whole project has also been a disappointment and taken up legislative bandwidth that could have been used to much better effect on other key topics – online casino regulation being an obvious one. 

Other than the custom regulatory treatment it received, for now the JONUM vertical will not make much difference to France’s real money gambling stakeholders, the market will also show whether the self-declared JONUM operators are successful or not. ANJ meanwhile enters a three-year regulatory  experimentation period where it will monitor companies like Sorare. How many will have entered or left the market by 2029 is another question.