IMGL Magazine April 2022

Singapore market reform

Expanded definition of “gambling” The definition of the term “gambling” has gone through substantial amendments. The traditional three heads of gambling, namely betting, gaming and participating in lotteries, have been amended as follows: a. Betting: The scope of betting has been enlarged beyond horse-races and sporting events to also include other similar events or processes taking place in Singapore or elsewhere, as well as to include placing a stake on the likelihood of anything occurring or not occurring in Singapore or elsewhere, or whether anything is or is not true. b. Engaging in gaming activity: Gaming was previously defined as playing a game of chance for money or money’s worth. The GCA has expanded the definition of a game of chance to include a game that involves an element of chance that can be eliminated by superlative skill, and a game that is played with a gaming machine, being inter alia a device adapted, designed or constructed for betting, participating in a lottery or playing a game of chance. The concept of money’s worth has also been replaced with money equivalent or anything else of value. c. Participating in lotteries: The GCA makes it clear that lotteries include those arrangements, schemes, competitions or devices which do not require payment to participate, but instead require the participant’s presence or some other condition or qualification. The GCA also stipulates that one of the key aspects of lotteries is that the distribution of prizes depends on an element of chance, even where other respects of the arrangements, schemes, competitions or devices involve a genuine or purported exercise of skill. It is clear from these amendments that the authorities are seeking to adopt an extremely wide definition of the term “gambling”. One of the reasons for this is to ensure that the definition of “gambling” is technology-neutral in order to capture existing and emerging gambling products. However, with such a wide definition, many activities could potentially be deemed to be “gambling”, including even those not traditionally perceived to be “gambling”. For instance, many competitive sports contain elements of chance, even though the result is usually determined by the skill of the player. Two examples would be snooker and chess, which are widely recognised as games of skill. In these games, the player who goes first would gain an advantage over the

other player. Coin tosses (which constitute an element of chance) are usually used to determine who goes first. While a superior player who loses the coin toss may still emerge victorious due to his higher skill level, snooker or chess may nonetheless be deemed to be games of chance under the GCA. Accordingly, chess or snooker tournaments which accept entry fees and which distribute prizes may be deemed to be illegal. Interestingly, the GCA also contains carve outs for certain activities, such as financial investments or claw machines which yield prizes of less than S$100. These exceptions comport with the MHA’s concerns that gambling elements in certain games have become increasingly commonplace, especially as the value of prizes increases since this induces gambling behaviour. Nonetheless, there remains significant ambiguity about how many other activities not carved out in the GCA would be treated by the authorities. With marketplaces no longer confined to physical stores but digital ones, different valuations of the same prize may be found where there are similar products sold in online platforms like Carousell or Shopee, such that the retailer’s value is no longer the sole reference point to determine the true market value of the product. In response to a question in Parliament as to whether trading in non-fungible tokens or NFTs would constitute gambling due to the amount of speculation involved, the Minister of State for Home Affairs Mr Desmond Tan clarified that creating or trading in NFTs will not be considered as gambling, unless there is an element of chance involved in their creation or trading. However, should an NFT have the characteristics of a capital markets product under the Securities and Futures Act, it will be subject to the regulatory requirements of the Monetary Authority of Singapore, and in turn, exempted from the definition of betting in the GCA. Changes to what constitutes the conduct of gambling In addition to the changes in the definition of “gambling”, the GCA also clarifies what constitutes the conduct of gambling in terms of activities. There is now greater clarity on the types of activities that would constitute the conduct of a betting operation. Understandably, such activities include accepting or receiving bets, operating a totalisator, organising pool betting, and laying or offering odds. The conduct of gaming also includes controlling or operating a computer server located in Singapore that allows persons, whether in or outside of Singapore, to play games of

IMGL Magazine • April 2022 • 25

Made with FlippingBook flipbook maker