The signed PDF version of this legal document is available upon request; full text below.
DATE: 18 March 2022 TO: WEB4 LTD (THE COMPANY) FROM: Jacque Law LLC SUBJECT: Opinion relating to ICE Poker
1.1 We are a law firm incorporated and licensed in Singapore, and are qualified to practice law in Singapore.
1.2 We have been instructed to provide this advice solely on the question of whether the "ICE Poker" product offered by Web4 Ltd (the Company) would be regulated as gambling activity under the Remote Gambling Act 2014 (the RGA), the Common Gaming Houses Act 1961 (the CGHA), or the Betting Act 1960 (BA).
2.1 The gambling laws are not intended to cover games whereby there is no staking or wagering of money or money's worth. Solely considering the design of ICE Poker as set out in Annex A and Annex D, we are of the view that, in itself, the design of ICE Poker:
(a) would not constitute "gambling", "betting", "lottery" under the RGA;
(b) would not constitute "common gaming house", "gaming" or "lottery" under the CGHA;
(c) does not constitute a "common betting house" or "betting information centre" under the BA; and
(d) would generally not contravene the aforementioned gambling laws.
2.2 Our detailed analysis is set out in Annex B.
3. We understand that the Company has developed the "ICE Poker" product, which is described as a distributed application that is currently running in the Decentraland Metaverse and on the Polygon Network (the Blockchain), using autonomously deployed smart contracts (each, a Smart Contract), which allow players to (i) participate in a remastered peer-to-peer free-toplay poker simulation game incorporating a variety of skill-based and creative challenges, and (ii) own, transfer, activate, and upgrade their own ICE Poker wearable NFT (ICE NFT).
4. ICE Poker is visualized on a website that the player can interact with. Through the front-end application, players may play ICE Poker to earn tokens, interact with other players, view their assets, and use the Smart Contracts to acquire and trade assets with other players.
5. ICE Poker is a remastered peer-to-peer free-to-play poker simulation game incorporating a variety of skill-based and creative challenges. It allows players to earn "ICE" token rewards for playing and winning, thereby incentivising and encouraging daily gameplay and competition amongst players. We understand that ICE Poker also introduces elements which distinguishes it from Poker by introducing skill-based challenges (e.g. side challenges / memory games for last 5 drawn cards, mini-games requiring dexterity or speed, stylistic points) as part of the overall ICE Poker experience.
6. ICE Poker is free-to-play, so players do not need to spend any money to participate. Instead, players which hold ICE NFT will get a daily balance of "chips" to play games in ICE Poker and compete with other players. Chips are non-transferable tokens that hold no value or functionality other than to keep score when players play ICE Poker. Chips balances are reset daily at midnight UTC, and each day, all active players will receive certain ICE token rewards, with top performers receiving greater levels of rewards.
7. ICE NFTs enable players to earn ICE by completing daily challenges playing poker with chips. Players may view, buy, and delegate their ICE NFT wearables on the Account page.
8. Players do not transact with or make transaction requests with the Company, but all transactions will be carried out directly between players, peer to peer, via the Smart Contracts deployed on the Ethereum/Polygon networks, in a non-custodial manner.
9. Neither the Company nor Smart Contracts collect or retain any information on players – in particular it do not collect any private keys of players and hence do not have control over any player's digital assets.
10. Players are not be allowed to participate in the event that their participation is deemed to be covered by any applicable laws.
11. Players are prohibited from using ICE Poker and the Smart Contracts in connection with any gambling, wagering, moneylending, extortion or other similar activities.
12. If users choose to interact with ICE Poker, any financial transactions will be conducted solely through the Blockchain via the user's chosen electronic wallet service such as MetaMask. The Company has no insight into or control over these payments or transactions, nor does it have the ability to reverse any transactions.
13. In Singapore, all forms of online gambling in respect of casino-style games, games of chance, public lotteries, horse racing and other sporting events are generally prohibited under the RGA. The RGA defines "gambling" as "betting", "gaming" or "participating in a lottery", which are each defined as follows:
“betting” means the staking of money or money’s worth —
(a) on the outcome of a horse-race or sporting event (whether or not the horse-race or sporting event has already occurred or been completed); or
(b) on any other event, thing or matter specified or described by the Minister, by notification in the Gazette, to be betting for the purposes of [the RGA];
"gaming" means playing a game of chance for money or money’s worth;
“game of chance” includes —
(a) a game that involves both an element of chance and an element of skill; or
(b) a game that is presented as involving an element of chance,
(a) means any game, method, device, scheme or competition whereby money or money’s worth is distributed or allotted in any manner depending upon or to be determined by chance or lot, whether the same is held, drawn, exercised or managed inside or outside Singapore; and
(b) includes any other game, method, device, scheme or competition specified or described by the Minister, by notification in the Gazette, to be a lottery for the purposes of this Act;
14. Critically, all 3 definitions of the activities associated with gambling focus on playing/staking for "money" or "money's worth", so it is important to examine the definition of "money’s worth", which is defined as "any thing recognised as equivalent to money and includes virtual credits, virtual coins, virtual tokens, virtual objects or any similar thing that is purchased within, or as part of, or in relation to, a game of chance".
15. Where players have to pay money or money’s worth to participate, and stand a chance to win money or money’s worth, then such games would be prohibited by the RGA (and gambling legislation generally). However, such games will likely not be considered as gambling as long as there are no in-game monetisation facilities that allow players to exchange the virtual prizes for real-world pay-outs.
16. ICE Poker can be distinguished from the more traditional understanding "poker" (which is gambling) in one key aspect – it does not require players to spend any money to participate. Instead, it sells ICE NFT which functions as a long term subscription to play the game. These ICE NFTs are collectible virtual avatars and may be customised in any number of ways. ICE NFT is the only way to access ICE Poker - players which hold ICE NFT will get a daily balance of "chips" to play games in ICE Poker and compete with other players.
17. We understand that chips are non-transferable tokens that hold no value or functionality other than to keep score when players play ICE Poker, and so are a form of a digital scorecard. Chips balances are reset daily at midnight UTC, and each day, all active players will receive certain ICE token rewards, with top performers receiving greater levels of rewards. This allows players to enjoy games in a virtual "no loss" environment.
18. Even if a player were to lose all the games played or their daily Chips, this will not affect the ICE NFT which they hold. As such, ICE Poker functions effectively as a virtual world accessible by users paying an upfront cost to acquire ICE NFTs. Given the circumstances, it is likely that a regulator or court would likewise conclude that there is no playing, staking or wagering of any money or money's worth, and so it is not possible for ICE NFTs to comprise any form of betting, gaming or lottery.
19. "Money's worth" also includes "virtual credits, virtual coins, virtual tokens, virtual objects" and so we would need to consider if Chips may be considered money's worth. There is no definition of the phrase "virtual credits, virtual coins, virtual tokens, virtual objects", but it is indicated that it would be "recognised as equivalent to money" so we would reference the only other legislation in Singapore which deals with digital assets, being the Payment Services Act 2019 (No. 2 of 2019) (the "PS Act"). To allow for consistency across the different pieces of legislation, it is likely that the scope of "virtual credits, virtual coins, virtual tokens, virtual objects" would be heavily referenced to the categories of regulated digital assets under the PS Act.
20. The terminology used in the PS Act is slightly different and it refers to "digital payment token" and "e-money" instead of "virtual" credits/coins/tokens/ objects. The definition of "digital payment token" and "e-money" is set out below:
“digital payment token” means any digital representation of value (other than an excluded digital representation of value) that —
(a) is expressed as a unit;
(b) is not denominated in any currency, and is not pegged by its issuer to any currency;
(c) is, or is intended to be, a medium of exchange accepted by the public, or a section of the public, as payment for goods or services or for the discharge of a debt;
(d) can be transferred, stored or traded electronically; and
(e) satisfies such other characteristics as the Authority may prescribe;
“e-money” means any electronically stored monetary value that —
(a) is denominated in any currency, or pegged by its issuer to any currency;
(b) has been paid for in advance to enable the making of payment transactions through the use of a payment account;
(c) is accepted by a person other than its issuer; and
(d) represents a claim on its issuer, but does not include any deposit accepted in Singapore, from any person in Singapore;
It is also worthwhile to note that in the Frequently Asked Questions (FAQs) on the Payment Services Act (updated 31 March 2021) (the "PS Act FAQs"), the Monetary Authority of Singapore has (at Q23) indicated that most "stablecoins", generally recognised as equivalent to money, would in general not meet the definition of “e-money”, but may be regulated as “digital payment token” instead.
21. Applying these to Chips, it does not appear that Chips would constitute "e-money" as there was no monies paid in advance to any issuer of Chips, and Chips does not represent a claim for any value against any entity. There is no inherent "value" or guarantee of the monetary value of Chips, nor any kind of buyback or repurchase mechanism. Further, Chips is non-refundable and cannot be exchanged for cash (or its equivalent value in any other virtual currency) or any payment obligation by the Company or any affiliate.
22. Similarly, it does not appear that Chips would constitute "digital payment tokens" either, given that Chips are non-transferable tokens that hold no value or functionality other than to keep score when players play ICE Poker (Chips balances are reset daily at midnight UTC).
23. Accordingly, we are of the view the Chips are likely to fall outside the definition of "virtual credits, virtual coins, virtual tokens, virtual objects" under the RGA, and hence the winning of Chips (which keep score only and are reset daily) should not be viewed as the winning of "money's worth".
24. Further and in the alternative, we also turn to consider the definitions of "betting", "gaming" or lottery". Applying these to ICE Poker:
24.1 It is not likely to be "betting" because ICE Poker is not a horse-race or sporting event.
24.2 It is not likely to be "gaming" or "game of chance". Aside from the poker game playable on ICE Poker, there are also a variety of skill-based challenges which the player can participate in (e.g. side challenges / memory games for last 5 drawn cards, mini-games requiring dexterity or speed, stylistic points) as part of the overall ICE Poker experience.
24.3 It is not likely to be "lottery" because users need to play the games to exercise skill, and there is no money or money’s worth distributed or allotted in any manner depending upon chance.
25. The CGHA and BA contemplates the provisions of these two Acts do not apply to or in relation to any remote gambling within the meaning of the RGA (they are to apply to physical gambling only). However, given our conclusion (above) that ICE Poker is not covered under the RGA, we would need to turn to consider whether ICE Poker is nevertheless covered by the gambling activities as scoped out within the CGHA and BA.
26. The CGHA defines "common gaming house", "gaming" and "lottery "gambling" as follows:
“common gaming house” includes any place kept or used for gaming to which the public or any class of the public has or may have access, and any place kept for habitual gaming, whether the public or any class of the public has or may have access thereto or not, and any place kept or used for the purpose of a public lottery whether the public has access thereto or not;
“gaming”, with its grammatical variations and cognate expressions, means the playing of any game of chance or of mixed chance and skill for money or money’s worth;
“lottery” includes any game, method, device, scheme or competition whereby money or money’s worth is distributed or allotted in any manner depending upon or to be determined by chance or lot, whether the same is held, drawn, exercised or managed within or without Singapore;
27. For the same reasons described at paragraphs 6 to 8, it is unlikely that ICE Poker will be viewed as "gaming" or "lottery" under the CGHA, and there is no staking or wagering of money or money's worth.
28. The CGHA regulates “common gaming house”, which it defines as a "place" kept or used for gaming, habitual gaming or public lottery. We observe from the comments from the MHA that CGHA are really only intended to regulate physical places. This is in contrast with ICE Poker which exists in the form of autonomously deployed Smart Sontracts on the relevant Blockchain.
29. Neither the Company nor Smart Contrasts collect or retain any information on players – in particular it do not collect any private keys of players and hence do not have control over any player's digital assets.
30. Accordingly, we would view it as very unlikely that ICE Poker would be viewed as a physical "common gaming house" within the meaning of the CGHA.
31. The BA defines "common betting house" or "betting information centre as follows:
“common betting house” means —
(a) any place kept or used for betting or wagering on any event or contingency of or relating to any horse-race or other sporting event to which the public or any class of the public has or may have access;
(b) any place kept or used for habitual betting or wagering on any such event or contingency as aforesaid, whether the public has, or may have, access thereto or not; and
(c) any place used by a bookmaker for the purpose of receiving or negotiating bets or wagers on any such event or contingency as aforesaid whether the bets or wagers reach the bookmaker by the hand of the person placing the bet or his agent or the bookmaker’s agent or through the telephone or by post or by telegram or by any other means;
“betting information centre” means any place kept or used for receiving or transmitting by telephone or other means any information relating to any horse-race or other sporting event for the purpose of betting or wagering in contravention of this Act;
32. While the definitions under the BA do not expressly refer to money or money’s worth, The BA was enacted to deal with gambling problems posed by horse-race or sporting event, which are both not applicable to ICE Poker. In any case, it would be prudent for the Company to avoid activities connected to horse-race or sporting event on the platform.
33. In conclusion, we are of the view that, in itself, the design of ICE Poker would generally not contravene the aforementioned gambling laws.
Responsible Gambling (RG)
34. Notwithstanding our conclusion at paragraph 33 that ICE Poker would not contravene gambling laws, we would note that Singapore had introduced The Responsible Gambling Code of Practice (RGCP) in 2007 to minimise the potential harm gambling poses. This sets out key measures such as the provision of information about the risks of gambling, and the availability of help services.
35. To further lower the risks associated with ICE Poker and demonstrate responsibility, we would recommend that the Company incorporate the measures mentioned by the RGCP where relevant.
36. This would include, without limitation, (a) providing warnings regarding responsible gaming, (b) imposing minimum age requirements of 21 years, (c) prohibiting advertising and promotions or other games related to gambling/casinos/alcoholic beverages, (d) avoiding chance-based games such as mystery boxes or sporting events/horse-races, (e) monitoring games for illegal or suspicious activities such as money laundering or money-lending, (f) discouraging players from moving on to play "real money" games outside of the platform, and (g) generally educating regarding potential gambling addiction.
A. We have not considered any other issues, other than that as set out at paragraph 1.2 of the first page, and in particular we will not be aware of the status of any past / future rights or features that may be added to or removed from ICE Poker, have also not conducted any independent enquiries or due diligence in respect of the services provided, and we have not had sight of, and express no opinion whatsoever with respect to any other agreements or documents which are mentioned or referred to in any of the Documents. This advice is based on Singapore law as at 9.00 am of the date hereof, is limited to the matters expressly specified herein and must not be read as extending, by implication or otherwise, to any other matter.
B. We have not examined or expressed any views on, nor will we be deemed to have examined or expressed any views on, any regulatory requirements, restrictions or prohibitions (a) under the laws of any other jurisdictions that may be applicable, (b) in connection with the Company’s (or its affiliates') activities, the network/ecosystem, or the circumstances or conduct of the Issuance or the commercial aspects of any of the foregoing, or (c) any blockchain network or digital asset/token which may be issued/created in connection with the operation of ICE Poker (i.e. ICE token or ICE NFT). Where any reference or opinion is related to the foregoing or expressed beyond the jurisdiction of Singapore, we accordingly disclaim reliance thereupon and any obligation arising therefrom, and you are advised to obtain legal advice regarding these issues as applicable. This advice should be read together with the annexes appended hereto, which form an integral part of this advice and will be governed by, and construed in accordance with, Singapore law.
C. Please also note that our advice does not cover any other areas of law such as tax law, privacy and data protection laws, issues relating to the licensing of information technology, intellectual property, money laundering and countering the financing of terrorism, or regulatory advice (save as mentioned at paragraph 2 of the first page), and we do not assume any responsibility to update this advice after the date hereof.
D. The views expressed in this advice are solely our views as to the issues expressly dealt with in this advice. Our advice does not constitute an assurance, guarantee or warranty that the Singapore regulatory authorities or Singapore Courts would necessarily agree with the views stated in this advice or that any challenge would not be made or would necessarily fail. This advice is not intended to be used, and cannot be used, for the purpose of avoiding penalties that may be imposed by any applicable law.
E. As of the date hereof, to our knowledge there has been no court case nor any formal notice published by the Ministry of Home Affairs (MHA) or Gambling Regulatory Unit (GRU) which directly address the issues raised in this advice. Accordingly, the MHA or GRU may reach an alternative conclusion different from the one provided in this advice.
F. This advice is given on the basis that Jacque Law LLC alone, and none of Jacque Law LLC's shareholders, directors, employees or consultants, hereby incurs potential liability to you in relation to the matters set out in this advice.