ARJEL’s concerns over new technologies: is there room for some regulatory changes?

By Diane MULLENEX, Avocat à la Cour – Solicitor England & Wales and Guillaume BELLMONT, Avocat à la Cour

On the 14th March 2013 ARJEL (The French Regulatory Authority for Online Gaming) released a report entitled “Regulation of Online Gambling and New Technologies” conducted by their specialist committee, after the latter consulted various industry stakeholders (e.g. gambling  operators, Google, Facebook). The general purpose of this report is to explore new technologies that may have an effect on the current regulatory framework of gambling in France. The report addresses four key issues.

1) Social gaming

Firstly, the report explores the issues raised by the development of social networks and the subsequent explosion in social gaming. Quite logically, ARJEL first looks at the question of whether social gaming is in fact gambling, trying to set a legal criterion to distinguish one from another. ARJEL notes that, under French law, gambling is traditionally defined through four cumulative criteria: public access to the game, the existence of a wager, the hope of a material or monetary gain and the intervention of chance. ARJEL argues that most social games are not gambling as there is no real monetary gain. The virtual goods that are gained through the game cannot, in most cases, be exchanged for real money. Therefore, if the virtual goods won on social games were able to be redeemed for real money then the games would qualify as gambling products offered to the public without any proper license, thus being in breach of French regulations. Although ARJEL defines social gaming in contradiction to gambling due to the lack of monetary gains, they are still concerned about the effect that these games could have. According to ARJEL, social games and social networking could foster addictions to gambling, particularly amongst young people when they are at a formative stage in their lives. ARJEL is particularly concerned by the massive number of underage Facebook users, who are part of the target audience of social games. Currently, anyone over the age of 13 can access Facebook and therefore social games too. In response to this, ARJEL suggests imposing certain KYC requirements to social gaming operators: a minimum age limit of 18 and authentication of users prior to being allowed to play. However, the report is not clear as to the methods to be used (is the age limit to be controlled through Facebook’s data, which is not necessarily a reliable source, or by requesting a copy of the user’s ID?). Furthermore, ARJEL is concerned by the volatility of social networks and is worried that it may be difficult to monitor transactions on social networks and to ensure that social gaming operators comply with their anti money laundering obligations under French law.

2) The fight against payment fraud and money laundering

Another issue raised is that of the fraud risk that is present with online payments. In certain cases, the lack of linking between cards and bank accounts is raised, citing the example that a player could bet using a stolen card and then cash out all the funds. There have previously been calls for more stringent authentication of users but this has not initially been taken up due to the costs that would be incurred. Nevertheless, more and more operators have started implementing stringent authentication processes in order to avoid any liability for facilitating money-laundering. The committee, further to some operators’ suggestions, therefore recommends that the usage of stringent authentication methods be imposed for transactions over a certain threshold. However, the committee does acknowledge that this would be complex to enforce on mobile phones. ARJEL also questions the use of prepaid payment services for online gambling again referencing the problem with having a payment method that is not linked to a bank account. A reference is also made to the emergence of alternative payment methods (e.g. Bitcoins). In both cases, ARJEL is concerned with the difficulties in tracing the origins of the money, which gives these payment services the potential to be used for money laundering. Operators have objected that the amounts spent on pre-paid cards are usually negligible and thus unlikely to be of a significant enough sum to be used in money laundering.

3) Gambling on a mobile device

ARJEL is concerned by the increase in mobile gambling as they believe it is more addictive than computer gambling and far easier to access. In itself, allowing mobile gambling raises specific technical issues that will need to find regulatory answers. For instance, although mobile apps already have to go through the software homologation process that also exists for computer gambling, they can be downloaded from third party websites/platforms (e.g. Apple AppStore, Google PlayStore) which are not subject to any of the gambling requirements, which licensed operators are subject to. Hence, they also fear that the multiplication of sources to download those apps makes it harder for the operators and the regulators to ensure that such sources provide for a sufficient level of safety. With the aim of responding to these problems ARJEL suggests adapting regulatory requirements to the mobile environment. That would include providing for the regulatory specifications of warning
notices against addictive gambling on mobile phone screens (size of the notice, font style and size, etc.). ARJEL also suggests alerting operators to the risks that their clients could face if they download gambling apps off unofficial websites. On a side note, it also suggests creating a list of certified auditors for the homologation of gambling software, as there is with the licensing process.

4) The potential impact of interactive televisions

Finally, the report addresses the foreseeable issues that interactive televisions may have on the online gambling market. The interactive television could make gambling far easier by incorporating bets into reality TV shows such as betting which contestant will be evicted in a reality TV programme. Such a linking of the action on television and a betting service could of course cause problems with minors having access to betting and excessive gambling. The committee acknowledges that it is a fast moving area but as of yet seems unsure of how it should be regulated. Their principal recommendation on this issue is to monitor the situation carefully and act accordingly.

What this means for future regulation?

There are evidently a number of important issues raised in this report but it is unlikely that there will be an implementation of these recommendations any time soon. The report has been sent to relevant government members such as the Minister of the Budget and released on ARJEL’s website. Government commissions will probably focus on these issues and maybe present a draft bill for the Parliament to amend current gambling regulations. Indeed, it seems likely that the government will follow the recommendations of the report in the long term, as the committee worked with a number of significant industry stakeholders. This presents a perfect opportunity for other operators to make
their views known to the government. Ichay & Mullenex Avocats can lobby ARJEL and the government on behalf of interested parties with the aim of maintaining our clients interests in any future decisions made on the regulation of gaming.

Source: Ichay & Mullenex Avocats


Ichay & Mullenex Avocats is a French law firm focusing on all legal issues related to new technologies in France and abroad. They are  considered experts in intellectual property and Internet law, e-commerce, online gaming, data protection. Ichay & Mullenex Avocats also assists its clients on all issues related to financing, mergers & acquisitions, restructuring, etc. and advises them on their litigation and arbitration procedures.

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