Gambling Commission nets first virtual currency convictions

The Gambling Commission has secured two convictions in the first prosecution involving virtual currencies, leading to fines and costs exceeding £250,000.

Its case concerned Dylan Rigby, who operated a social gaming website named Futgalaxy, which offered gambling games, widely advertised on social media, including through a YouTube channel operated by Craig Douglas - known as Nepenthez - which had more than a million subscribers.

The virtual currency used in the game was Futgalaxy coins, which could be bought for cash. Mr Rigby had argued that since Futgalaxy coins were not cash or exchangeable directly for cash, the games lacked a monetary element and so could be so played by children.

However the legitimate social game FIFA Ultimate Team, operated by Electronic Arts, used a form of virtual currency called FUT coins, which could be used only as a ‘fun’ currency in the game and not be exchanged for cash.

Mr Rigby though operated businesses which enabled the purchase and sale of FUT coins for cash, without the authority of Electronic Arts, and Futgalaxy coins could be converted to FUT coins, and them FUT coins to cash.

The commission argued that provided the monetary component which made Futgalaxy illegal.

Both defendants pleaded guilty to five offences between them, including providing facilities for gambling and also advertising illegal gambling.

Philip Kolvin QC, head of Cornerstone Barristers and standing counsel to the commission, said: “Although there is a line between unregulated social gaming and gambling which falls to be regulated under the Act, this case fell firmly on the wrong side of it.

“Gambling by children on-line is an important issue which requires vigilance and also responsibility from operators to ensure that vulnerable people are protected. This was an important prosecution for the commission and hopefully lays down a marker for the future.”