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.
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.
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.
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.
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 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:
- Sharjah Media City;
- 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.
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.