## Solarez: Shifting Gears Amidst Regulatory Scrutiny – Technology and Innovation – iGB
Solarez has adjusted its operations in France, and the gambling regulator ANJ is still evaluating the adjustments. Jake Pollard states that the French government is establishing new regulations for Web3 firms, highlighting the significance of this sector to them.
**Solarez: Adapting to New Rules**
Solarez announced on Medium that they have altered their plans for the time being.
This shift occurred due to directives from the French gambling authority. They have introduced a modified approach for French users to engage with the platform.
Solarez now enables French players to participate in their fantasy sports leagues without any cost. The French version of their announcement varies slightly from the English one, but it clarifies that this new method of participation does not necessitate blockchain cards.
**A Reflection of Regulatory Pressure**
Solarez’s modifications demonstrate the substantial pressure the ANJ has exerted over the past year.
Last December, iGB reported that Solarez employed virtual player cards as NFTs. Players acquired these cards on the Ethereum platform and utilized them to construct their own fantasy teams.
The performance of athletes on the playing field influences the worth of the cards, which can change. These cards can also be exchanged on Sorare’s digital platform.
The effect of real-world athlete performance on card value, reflecting the win-loss aspects of sports wagering, has sparked concerns from the ANJ.
As part of ongoing dialogue between the two parties, the ANJ has requested that Sorare provide players with more chances to participate in free-to-play modes and ensure they have a fair opportunity to win, regardless of whether they pay to play.
The organization had until March 31 to revise its system. The deadline was later extended to May 26.
A New Game Mode
Sorare’s new mode enables French players to take part in its tournaments without buying NFT/blockchain cards. ANJ President Isabelle Falque-Pierrotin told Les Echos that this option “eliminates the idea of financial sacrifice (wagering), which is one of the factors considered for real-money games.”
She added that if Sorare does not modify its system, it could face the possibility of being prohibited by the ANJ.
However, further analysis of the news raises additional inquiries, such as:
“If French users choose to play using this new method for any given game week, they cannot submit a different lineup containing NFT-backed cards they possess in the same game week,” Sorare told iGB.
Sorare Awaits ANJ Decision
The second point is vital;
As a French enterprise, France is likely one of Sorare’s most significant markets. As a French enterprise, France is likely one of Sorare’s most significant markets. Based on their response, existing account holders can decide to participate using their NFT/blockchain cards or a free-to-play method.
This signifies that Sorare can continue to profit from its player base in a nation that could be a substantial source of income.
“This latest update is an optional, alternative free-to-play method for all French users,” Sorare explained. “This includes existing Sorare account holders and new users, as long as they are in France and have registered a phone number and provided appropriate documentation to confirm their residency in the nation.”
However, the organization will have to wait and see if the ANJ is content with the new arrangement. The regulator told iGB that it has taken note of Sorare’s new measures but “has not validated any operational solutions,” beyond the principle that free-to-play options must offer the same chances of winning as real-money products.
Now, it will take time to evaluate Sorare’s new solution, but did not provide a timeframe for when it will release its opinion, whether the solution meets its regulatory standards.
Web3 Legislation
It remains to be seen whether the ANJ will be pleased with Sorare’s adjustment to its operating model in this crucial market. While the group continues to operate in this grey area and hopes its compromise will work for the ANJ, considering recent technological news, its idea of buying time might have taken on a new meaning.
In actuality, a recent report in the French publication *Les Echos* asserts that the French government is devising a strategy to establish a regulatory structure to supervise Sorare and other Web3 enterprises that operate what the government labels “interchangeable digital object games.”
The French government intends to regulate companies such as Sorare, Socios, or Binance, but will not subject them to the same regulations as conventional gambling businesses.
Under the new guidelines, these companies will not be required to obtain a permit from the ANJ (French Gambling Authority). They will be exempt from the gambling gross revenue tax imposed on traditional operators, but will be subject to a 20% value-added tax on digital goods sales.
The French gambling industry has not yet reached a unified opinion on the regulatory matter.
According to media reports, French gambling groups have diverse viewpoints on these proposals.
The French lottery operator Française des Jeux desires Sorare and similar companies to be taxed as traditional gambling operators. Land-based casino groups are primarily focused on online casino regulation (they presented a draft law to the French Parliament last week). Sports betting companies are reportedly divided on these proposals.
According to *Les Echos*, tax officials have submitted their analysis to the French Ministry of Finance, which will assess it and propose a draft law.
France has been dedicated to becoming a leading European hub for French tech companies and international startups, so the new regulatory news is not unexpected.
As a singular entity in the Web3 realm, Sorare is a leading example of this movement and appears to have the backing of France’s top political figures.
🇫🇷 is fostering the tech behemoths of the future. Our leader, our government is altering the rules of the game to unleash a surge that will create a vast number of jobs and immense worth. Web3 and sports will pave the way. I was privileged to converse with @EmmanuelMacron. pic.twitter.com/PjUgatJ8xL [@EmmanuelMacron](https://twitter.com/EmmanuelMacron?ref_src=twsrc%5Etfw)
— Nicolas Julia (@ni2las) December 8, 2022 [December 8, 2022](https://twitter.com/ni2las/status/1600802524709392384?ref_src=twsrc%5Etfw)
Digital Games
Sorare does not categorize its players by nation, but it boasts 3 million registered users worldwide and has generated approximately $300 million in income over the past year, according to the website.
Compare these figures to the broader French online sports betting sector, where ANJ-authorized operators reached a record high in 2022, with gross gaming revenue increasing by 2.5% to nearly €1.4 billion, and betting volume reaching €8.3 billion, largely due to the Qatar World Cup, which alone generated €597 million in bets.
The ANJ noted in its annual report that the industry is gradually stabilizing after the record activity levels of 2021, following the global health crisis.
However, it now largely depends on how the ANJ views Sorare’s new free-to-play setup in France, and whether it will grant approval.
It will be intriguing to observe how ANJ and the French government’s leading officials discuss this matter.
It’s captivating to contemplate what regulations the government will establish for businesses that provide “interchangeable digital object games.” Sorare must be pleased with this announcement.
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