Saudi Arabia: Fintech, Blockchain And Sports In The Middle East

Last Updated: 23 August 2018
Article by Raj Pahuja
Most Read Contributor in Saudi Arabia, September 2018

The technology revolution continues to rapidly gather pace on a global scale. Terms such as "FinTech", "blockchain" and "cryptocurrencies" are becoming every day terms. But how is the technology revolution relevant to the sports industry? The simple answer is, very. This article touches on various examples where blockchain technology can potentially be of benefit in the sports industry.

Blockchain & Smart Contracts

Many articles have been written about blockchain. Simply put, blockchain can be described as a public decentralized e-ledger of transactions or data enabling a network of computers to create an audit trail through the internet. It is, in essence, an online form of bookkeeping where the books are not owned by one person. For a single transaction for example, there will be different members of a network involved in the process who will act in accordance with the rules or protocol of the network and who all have visibility over the ledger. The record is secure and is virtually irreversible.

Smart contracts are an important element in a blockchain transaction. These are self executing contracts, the terms of which are written as code into a blockchain. A trigger event can be written into the contract for example, an expiration date or a strike price and once that event is met, the contract executes itself according to its terms.

The diagram below shows a high level process of how blockchain can work:

Blockchain's best attribute is that it any information that must be securely and verifiably transmitted between entities can benefit from using the technology. As blockchain is intended to make the transaction process transparent and safe, in sectors where payment fraud is a concern, the introduction of blockchain technology can be particularly appealing.

Although blockchain first gained widespread public attention as the technology underpinning the Bitcoin crypto-currency, blockchain is now recognised as having the potential to significantly impact many other sectors in the digital age, including the sports industry. Indeed, a blockchain-based sports microfinancing platform, SportyCo recently organized the World Sports Blockchain Summit, which was described as one of the largest live online events, targeting crypto investors, athletes and sports enthusiasts.

Sports Industry

eSports, which can be defined as competitive multiplayer gaming, is a sector that is relatively unregulated but gaining worldwide popularity. There are often security concerns in relation to financial transactions regarding eSports – such as how entrance fees are paid and recorded or prize money distributed.

In the eSports environment, various terms could be written as code into a blockchain creating a 'smart contract' which can define terms and obligations relating to a transaction. These smart contracts could allow gamers to register for a competition and pay entrance fees. It could also allow gamers to receive prizes as soon as games are won. Prizes could be cash or could take the form of tokens which could potentially be used to pay for items in a virtual environment.

Wearable Technology

Blockchain can also be used to aid and benefit more traditional sports. It is possible and increasingly common to track an athlete's performance by the use of wearable technology. Most elite sports teams now use such technology on a daily basis so that they can track its user's activities, heart rate, diet and performance. Such data is then used by the clubs to see how a player's performance can be improved. Such information can be very sensitive and by using blockchain technology, the data can be securely stored, verified and transferred.

Anti-Doping

Doping scandals are a huge issue in certain sports and can seriously undermine the integrity of a sport and damage an athlete's career. Often where a doping scandal exists, sponsors "run for the hills" and governing bodies will investigate an issue and sanction an athlete or a team if foul play is found. Access to accurate and credible medical records of a suspected athlete are key to any investigation. Blockchain technology can be used to better manage the security of medical records. Such records could include information on the test results of an athlete and drugs that they have taken. The authenticity of the information is according to the computer network system as in a traditional blockchain transaction before being added to the blockchain and suitably encrypted. Such a system could therefore provide a credible and reliable source of information relating to the testing of drugs.

Broadcast Data and Interaction

Broadcasters can also benefit from the use of a blockchain network. As consumers' viewing habits continue to change, broadcasters are also becoming accustomed to delivering content by way of different means. Where such content is being delivered by way of on-demand services, for example, a smart contract can be used to facilitate payment.

Blockchain technology can also potentially be used by sports clubs to further engage with its fans. Potentially, blockchain can be used to create a safe and credible ticket exchange between fans wishing to sell genuine tickets. The clubs could also have a stake in the system and which could potentially combat illegal ticket resales.

Potential Developments

Some commentators have suggested that in the future, blockchain could make it possible for sports clubs to introduce their own cryptocurrency. This could be used to purchase tickets, merchandising and provide other benefits which could even include purchasing hot dogs at matches. Sponsors could even get in on the act as there could be potential for them to engage and transact with fans by accepting such cryptocurrencies. There may be some way to go to achieve all of this, as it would be subject to such cryptocurrencies being subject to a proper regulatory framework within their jurisdictions of operation.

An interesting development in the sports industry is the use of Blockchain technology in relation to owning part of an athlete's IP rights. Subject to third party ownership restrictions, various blockchain startups are engaging with athletes to promote them and offer investors the opportunity to own part of their IP rights. The Jetcoin Institute is one such start up which has introduced a cryptocurrency named Jetcoin. Athletes (as well as entertainers and musicians) can enter into an arrangement with the Jetcoin Institute giving part of their image rights to the Institute. The Institute then offers such rights to be purchased by the Jetcoin holders through the Jetcoin platform. The idea is that as the athlete progresses in their career, revenue is generated in relation to their image rights which is distributed to the Jetcoin holders.

Globaltalent has a similar concept. It describes itself as a blockchain decentralization platform where clubs and athletes can seek funding by selling future revenue rights to fans worldwide. Investment is by way of a tokenized system through smart contracts. The tokens can also be traded on a secondary market. Again, as mentioned in the context of cryptocurrencies for sports clubs, there may be regulatory issues to deal with in relation to this platform.

Middle East Market

How does all of this apply to the Middle East? It is no secret that the Middle East region is rapidly adopting and developing blockchain based applications, including but not limited to FinTech. It is also no secret that the Middle East has an insatiable appetite for sports. An increasing number of sports events are held in the region, which already hosts two F1 Grand Prix (Bahrain and Abu Dhabi), cycling races, cricket matches and tennis tournaments. In addition, Qatar will be hosting the FIFA World Cup. The introduction of blockchain can be adapted to sports industry in the region. These could, for example, prove to be beneficial in developing players and teams in the region especially where wearable technology is used, promote sports events in the region when considering fan interaction, as discussed above, and promote or monetizing a home-grown player, in the form of selling IP rights.

In terms of FinTech generally, the government of Bahrain is actively promoting the technology. Bahrain used to be the main financial hub in the region and has been looking at ways to increase its competitiveness in this field. Fintech appears to have presented this opportunity. As has been widely reported, Bahrain has opened Fintech Bay, described by the Economic Development Board ("EDB") as the largest Fintech hub in the Middle East. In addition, the Central Bank of Bahrain has launched a "regulatory sandbox", which provides a virtual space for companies looking to test their Fintech solutions.

Blockchain is an important factor in the FinTech area but taking a step back, consideration needs to be given to the legal effect of a blockchain transaction and the validity of smart contracts from a Bahrain law perspective. The Bahrain Civil Code and the Bahrain Law of Commerce allows for parties to transact freely and agree terms between them subject to public policy issues. The elements of creating a contract in Bahrain includes, offer, acceptance and consideration. So as long as these elements can be evidenced and verified in a blockchain transaction through use of smart contracts, Bahrain law is likely to recognise such transactions. Bahrain also has in place an Electronics Transactions Law which states that unless otherwise agreed by the parties, an offer and acceptance of an offer or any other matter that is material to the formation of a contract (including any amendments, revocation or acceptance of the offer) may be undertaken in whole or in part electronically. Whilst the Electronic Transactions Law does not specifically deal with smart contracts and blockchain technology, the foundations are in place in Bahrain law to allow for the development of blockchain technology and FinTech generally.

Bahrain wants to become a pioneer in the burgeoning FinTech space and according to the EDB's Chief Executive, H.E. Mr. Al-Rumaihi, national adoption of blockchain technology will be a key enabler of this. The sports industry could therefore be a sector where Bahrain is well placed to apply blockchain technology in the region.

Conclusion

Whilst the use of Blockchain technology was initially focused within the financial industry, the Middle East and especially Bahrain could prove to be fertile ground to develop blockchain based solutions within the region for the sports industry. There will undoubtedly be issues that are unique from a cultural and local law perspective that will need to be considered in the use of blockchain relating to sports in the region, but the potential for development and utilsation is significant, considering the fact that countries in the region share a common language, a passion for sports and a relatively young population, which is quick to embrace new technologies.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions