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INTRODUCTION
Gaming is an integral part of the entertainment industry, with
gaming consoles finding a place in an increasing number of
households. According to some global studies, gaming consoles are the third most
common home entertainment device after televisions and DVD players.
Increased smartphone penetration and improved tech specifications
have further enriched the mobile gaming market in recent years with
several heavy hitting titles such PUBG and COD Mobile taking the
world by storm.
Recently, several video game adaptations have also found their
place in movie theatres and streaming platforms, with recent titles
such as the Super Mario Bros. Movie, Arcane (League of Legends),
The Last of Us, etc., creating quite a stir and introducing many
non-gamers to the world of gaming. The Super Mario Bros music,
officially known as the Ground Theme, also made it to the US
Library of Congress, the first music from a video game to enter the
registry as “the most recognisable video game theme in
history”.
The Middle East North Africa region (MENA) is steadily becoming
the go to place for gaming studios, publishers and talent in
general. In MENA, the revenue from gaming is estimated to reach
$2.8 billion in 2026. Saudi Arabia is the largest market by games
revenue and is considered the gaming powerhouse, with a 58.7% share
in the gaming revenue for the MENA-3 region (i.e., Saudi Arabia,
UAE and Egypt). UAE has the highest average revenue per user (ARPU)
out of the three markets.
The estimated number of gamers in the region is expected to rise
to 87.3 million in 2026. Egypt has the largest gaming population
with 58.2% and is the fastest growing market in the MENA-3
region.
The gaming industry in the UAE is poised to experience an
unprecedented boom, shaping a future filled with boundless
opportunities and remarkable growth:
People in the UAE spend 1 hour 25 minutes on a gaming
console;
Nine out of ten adults in the UAE currently play video games in
UAE; and
Player base is expected to reach 4.27 million users by
2027.
As a nation known for its progressive outlook and technological
advancements, the UAE has positioned itself as a regional hub for
innovation and entertainment. The UAE Government has taken several
initiatives to support the growth of the gaming industry in the
region, including:
AD Gaming; and
DMCC Gaming.
This newsletter focusses on the primary legal considerations for
gaming companies in UAE. Further, this newsletter lists some
options for setting up and incorporating in UAE.
GAMING VS. GAMBLING – LEGAL LENS
Laws on the real money aspect of games differ in different
jurisdictions. Most jurisdictions distinguish games basis skill vs.
chance. A game of skill is a game where the results of the game are
determined either predominantly or purely basis skill. Conversely,
a game of chance is a game where the element of luck plays a
significant role in the outcome. A game of chance has a higher
likelihood of falling under the category of gambling under relevant
regulations across several jurisdictions.
While jurisdictions like Sweden , United Kingdom & Malta
have extensive gaming and gambling regulations, some jurisdictions
like UAE ban any gambling activity. In UAE the regulations do not
distinguish between ‘game of skill’ and a ‘game of
chance’. Further, UAE does not have provisions parallel to the
three established approaches of US courts: (i) whether skill or
chance is the dominant factor in the outcome (Dominant Factor
Test); (ii) whether chance is a material element in the outcome
(Material Element Test); or (iii) whether any chance at all is
involved (Any Chance Test). To learn about the nuances, see our
article here.
In UAE, gambling provisions are scattered across several laws.
Considering this, it is crucial to understand the legal provisions
pertaining to gambling in UAE and screen the involvement of real
money in gameplay mechanics against such provisions.
PENAL CODE
The UAE Penal Code (Penal Code) provides a wide definition for
gambling under Article 413. Any activity which leads to the
transfer of money from one ‘losing’ party to another
‘winner’ in a game qualifies as gambling thereunder.
Articles 414 and 415 further makes provisions for detention, fines
and imprisonment for those found gambling and the
entities/establishments facilitating it.
CIVIL CODE
The Federal Law No. (5) of 1985 (amended by Federal Decree-Law
No. 30 dated September 27, 2020) On the Civil Transactions Law
(Civil Code) establishes the basis for gaming activities in UAE. In
interestingly, the Civil Code lists various provisions within
Chapter 4, which regulate the validity and exemptions for -
‘Aleatory Contracts’. Article 1012, states that ‘a
competition (for reward) is a contract by which a person is bound
to pay a sum of money, or give something else, as agreed upon, to
the one who succeeds in attaining the aim targeted in the
contract’. Further, Article 1014, states that ‘The validity
of a competition contract is contingent upon the following: (a) The
prize should be known and the one bound to pay it specified in
person; and (b) The object of the contract must be described in a
manner excluding any excuse of ignorance’.
Most importantly, Article 1019, establishes that it is
acceptable for the outcome of the competition to be payable by one
of the contestants or by a third party to the winner; but if the
two contracting parties agree that the winner shall be entitled to
a prize from the other party, then the same is illegal as the
contract shall qualify as a ‘gambling contract’. Further,
Article 1021 of the Civil Code establishes that any agreement
relating to gambling, or prohibited betting, is void.
CYBER CRIME LAW
The Federal Decree-Law No. 34 of 2021 Concerning the Fight
Against Rumours and Cybercrime (Cybercrime Law), under Article 38
penalises any party who creates, manages or supervises a website or
transmits, sends, publishes, republishes or propagates through the
information network, the practice of gambling activities, in other
than the permitted cases. The punishment for doing so includes
detention and /or a fine ranging from AED 250,000 to AED
500,000.
INTERNET ACCESS MANAGEMENT
The UAE Telecommunications regulatory authority’s (TRA)
internet access management policy (IAM Policy) retains the power to
block illegal and prohibited content. Entities licensed by the TRA
to provide telecom and internet services (for instance Du and
Etisalat) are required to block ‘Prohibited Content’ as
defined in the UAE IAM Policy. Prohibited Content categories in
accordance with Article 1 – 9 includes ‘gambling’. As
the term ‘gambling’ has not been defined in the UAE IAM
Policy references can be drawn from the Civil Code and the Penal
Code to establish what products or content is likely to qualify as
gambling.
CONTENT REGULATIONS
The UAE has in place several regulations concerning media
content. Primarily, the Media Regulatory Office (MRO) manages and
regulates media activities in UAE. Gaming companies are required to
procure specific license/approvals. Further, the UAE has a robust
age gating framework, where video games are classified basis
suitability for particular age groups. Additionally, the content of
the video games must abide by certain guidelines. Several games in
the past have been banned in the UAE for violations of such content
guidelines, such as Heavy Rain and Mass Effect 2.
DATA PROTECTION
Games often collect various categories of personal data from
players, including financial data, if there are in-game purchases,
and audio/visual communication information if the game has social
features. Further, games targeted towards younger audiences may
collect the personal data of minors. Recently,
Personal data protection in the UAE is primarily governed by
Federal Decree-Law No. 45 of 2021 on the Protection of Personal
Data Protection (PDPL). Companies collecting the personal data of
players must ensure that they comply with the regulations present
therein, such as, providing clear and concise consent mechanisms
(including cases where the players might be minors), and securely
storing and transmitting player data. By doing so, companies can
foster a secure and respectful environment that allows gamers to
fully immerse themselves in the gaming experience, confident that
their personal information is handled with utmost care and is not
unduly monetised.
INTELLECTUAL PROPERTY
Intellectual property is crucial for gaming companies. Apart
from protecting their own trademarks, copyrights and patents
(gaming hardware), companies must ensure that they are not
violating the intellectual property rights of other companies
(video games nowadays often contain intellectual property, such as
logos and music, belonging to other parties).
In UAE, the Ministry of Economy is the competent authority for
registration of copyrights, trademarks and patents. The following
regulations are pertinent:
Federal Law No. 38 of 2021 on Copyrights and Neighbouring
Rights provides copyright protections;
Federal Decree Law No. 36 of 2021 on Trademarks makes provision
for registration and protection of any distinguished form of names,
words, signatures, letters, figures, graphics, logos, titles,
hallmarks, seals, pictures, patterns, announcements, packs or any
other marks or group of marks; and
Federal Law No. 11 of 2021 concerning Industrial Property
Rights protects patents.
The UAE is also part of the Patent Cooperation Treaty and Madrid
Protocol which provides the means to facilitate the filing and
protection of patents and trademarks internationally.
SET UP AND ESTABLISHMENT IN UAE
UAE has over 50 economic fee zones to choose from. The free
zones offer several benefits, including tax benefits, low minimum
capital requirements, and expedited set up processes. Such free
zones typically offer special incentives and ancillary support
services to certain types of businesses and offer a wider spectrum
of trade licenses for such business, including gaming businesses.
Some of the freezones providing options for gaming set-ups are:
TwoFour54;
RAKEZ;
Sharjah Media City;
DMCC;
Dubai Internet City; and
Dubai Media City.
Businesses in UAE require trade licenses to operate. The types
of trade licenses vary from free zone to free zone. For gaming
related activities there are varied licenses, including, Gaming
Production Service Provider, Gaming Publisher, Gaming Studio and
40+ such activities which directly or indirectly relate to gaming.
Further, such freezones also make provisions for e-sports related
activities and have activity licenses for E-sports League Operators
and E-sports Organizations.
The cost for licenses and set-up varies from free zone to free
zone, and activity to activity.
CONCLUSION
The above list of applicable regulations is not exhaustive.
Gaming companies must delicately navigate the variety of
regulations in the UAE, to be able to benefit from the large market
and attendant incentives provided by licensing authorities. In
addition to the above legal considerations, gaming companies must
work with legal advisors to assess their fund and data flows to
ensure that they do not qualify as gambling. Minor modifications to
the gaming products can ensure this, thereby making the product
completely compliant with UAE regulations.
With the future of gaming bright in UAE, are you ready to press
start on your journey into the middle east gaming market?
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.