Laws Surrounding Online Gaming in Dubai
Online Gaming in Dubai
INTRODUCTION
The United Arab Emirates (UAE) is a federation of seven Emirates, comprising – Abu Dhabi, Ajman, Dubai, Fujairah, Ras Al Khaimah, Sharjah, and Umm Al Quwain. The country has a federal constitutional monarchy, and as such, the seven Emirates in the UAE have to comply with the common federal laws applicable all throughout UAE, and further comply with the provisions of their respective laws. In this respect, Article 118 of the UAE Constitution23 requires all the member Emirates to “harmonize their legislation in the different fields to unify that legislation as far as possible.”
Further, in addition to the federal law and separate laws of the Emirates, the UAE also houses various Free Zones, which are areas where the federal laws enacted by the UAE government are not applicable. As per Article 121 of the UAE Constitution, the UAE has exclusive jurisdiction to inter alia, establish and regulate financial Free Zones. As regards the same, Federal Law No. 8 of 200424 (“Financial Free Zone Law”) of the UAE allows creation of a free zone in any emirate of UAE by a federal decree and exempts these zones from the federal civil and commercial laws otherwise applicable in the UAE.
This chapter details the jurisprudence surrounding establishment of a company, online media content, and even gambling, in UAE, since compliance with the federal law by any person/ entity/ corporate/ juristic body in any of the emirate of UAE is essential. In addition to the federal law, the Chapter also provides an analysis of the domestic law present (if any), in the Emirate of Dubai with regard to establishment of a company, online media content, and even gambling.
LEGAL JURISPRUDENCE AROUND GAMBLING IN THE UAE (also applicable in Dubai)
The UAE being an Islamic country forbids gambling under Chapter 6 of Federal Law No. 3 of 198725 (“UAE Penal Code”). In this regard, gambling, as per Article 413 of the UAE Penal Code involves, “games in which every party agrees to pay, in case of losing, to the other party, the winner, an amount of money or anything else agreed,” wherein,
- Article 414 of the Code stipulates imprisonment of two years or fine of not more than AED 50,000 for anyone found gambling;
- Article 415 prescribes imprisonment of not more than ten years and fine of at least AED 100,000 for anyone found operating or managing a gambling place to receive people, or organizes a gambling game in a public place;
- Article 416 further provides confiscation of money and tools used in gambling; and shutting down of the premises of such a gambling place, by an order of the court.As stated in Chapter 1, much like Singapore, the gaming landscape of UAE revolves around ‘gambling’ and as such, there exists no distinction between game of skills and game of chance in UAE, as it does in India. The implication of the same is that any arrangement that may lead to the prize being paid to a winning party would be illegal and subject to the criminal provisions that prohibit gambling.Moreover, Article 38 of the newly enacted Federal Decree-Law No. 34 of 2021 – “Combating Rumours and Cybercrimes,” even prescribes imprisonment and/ or a fine of at least AED 250,000 and maximum AED 500,00, for those who establish, manage, run a website, broadcast, send, publish, republish or promote gambling activities.
REGULARISATION OF ONLINE CONTENT
In UAE, the National Media Council (“NMC”) established under Federal Law No. 1 of 2006, is responsible for monitoring the content of materials published in the country, including electronic games. However, in June 2021, the National Media Council and the Federal Youth Authority was merged with the Ministry of Culture and Knowledge
Development of UAE, and renamed as the the Ministry of Culture and Youth. As such, the tasks previously undertaken by NMC are now performed by Media Regulatory Office (“MRO”), where among its many tasks, the Department of Media Licenses and Media Content Follow Up, under the MRO, issues licenses for media content.
In addition to this, the Telecommunications and Digital Government Regulatory Authority (“TDRA”) – the federal telecommunications regulatory agency in UAE, implements the “Internet Access Management” policy (“IAM Policy”) in UAE. The TDRA was established in pursuance of Federal Decree No. 3 of 2003 to ensure information communication and telecommunication across UAE, and to regulate the sector and service providers therein. The policy requires internet service providers to block access to websites providing illegal content or content that is inconsistent with the moral or public norms of the UAE. As a result, access to gambling related content is generally blocked from viewing on the internet in the UAE.
Since, the import of gambling vis-à-vis online games that predominantly involve use of skills has not been explored much in UAE, it is difficult to determine the extent of the applicability of the aforesaid laws and/ or policies.
ESTABLISHMENT OF ONLINE GAMING START-UP: NORMS OR COMPLIANCES
1. Compliance with the UAE Commercial Law
As per Article 3 of the UAE Federal Decree Law No. 32 of 2021 on Commercial Companies26 (“Commercial Company Law”), in order to set up a company in any of the emirates in the UAE, an entity has to comply with the UAE Commercial Law. In this regard, a company in UAE, as enumerated in Article 9 of the Commercial Company Law, can either be a:
- Joint Liability Company; or
- Limited Partnership Company; or
- Limited Liability Company; or
- Public Joint Stock Company; or
- Private Joint Stock Company,
where, any entity which does not adopt one of the above forms will be considered null and void. In this backdrop, Article 10 of the now repealed UAE Federal Law No. 2 of 2015 on Commercial Companies27 required every company to be established in any of the Emirates, to have at least (or more) UAE partner(s) holding at least 51 per cent of the share capital of the company. However, after the amending Commercial Company Law, the said is no longer a requirement, and even a foreign investor can now establish a company in any of the Emirates in UAE. Now, Article 11 of the federal law only mandates that a company which is to be established, has to obtain all the approvals and licenses as required for the activity. As such, the first step that an entity has to take to set itself up in any of the seven emirates in UAE is ‘obtain a trade/ commercial license’, which essentially validates the company as a legal entity.
1.1. Commercial/ Trade License:
In the Emirate of Dubai, as per Article 6 of Law No. 13 of 2011 – “Regulating the Conduct of Economic Activities in the Emirate of Dubai”28 (“Conducting Economic Activities Law”), an entity intending to do business in the Emirate of Dubai has to obtain a ‘business license’ issued by the Department of Economic Development (“DED”), which can be in the form of a:
- Commercial License for General Trading Business; or
- Professional License for Service-Related Business; or
- Industrial License for Manufacturing Goods; or
- Tourism License for Travel and Tours Industry.
With regard to economic activity being conducted in the Emirate of Dubai, license is awarded in the fields of commerce, industry, agriculture, fishing, mining, and services, where a company dealing in gaming such as game publishing/ content production/ operator etc., has to obtain a ‘professional license’ from the DED. The validity of the license issued by the DED, as per Article 8 of the Conducting Economic Activities Law, is of 1 (one) year and can be extended up to 4 (four) years.
2. Obtaining a Media License
A gaming start-up will also have to obtain the specific ‘media license’ issued by the MRO for conducting its media activity. Some of the different media activities for which the MRO issues licenses are – for sale, distribution, production of electronic video games, and provide internet services.29 The fee to be paid to obtain the said licenses are as follows:
- AED 8,000 – License for sale of electronic video games;
- AED 2,000 – License for production of electronic video games;
- AED 10,000 – License to provide internet services
EXEMPTION OF LAWS IN FREE ZONES
As previously stated, the UAE also houses various free zones which allows companies to conduct business in the country without complying with the laws otherwise applicable. These free zone companies are regulated by the local government in the respective emirate, and each free zone has its own set of laws and procedures. With regard to the Emirate of Dubai, the following are the laws that a company in Dubai’s Free Zones is governed by:
a. Federal –
- Federal Law No. 8 of 2004 concerning Financial Free Zones;
- Cabinet Resolution No. 28 of 2007 on Implementing Regulations of Federal Law No. 8 of 2004.
b. Domestic –
- Laws relating to Free Zones under Dubai Development Authority;
- Laws relating to Dubai International Financial Centre;
- Law No. 15 of 2006 on the regulations of free zones and special development zones;
- Law No. 25 of 2009 concerning the Dubai International Airport Free Zone;
The Dubai Development Authority (“DDA”) is a government entity established under Law No. 15 of 2014 in the Emirate of Dubai and has been tasked with the duty to regulate entities in free zones, business parks, and clusters within Dubai.
With regard to issuance of licenses in the free zones in the Emirate of Dubai, the same is regulated by Decision No. 1 of 2021 Concerning License Categories for Dubai Internet City(“DIC”), Dubai Media City (“DMC”), Dubai Knowledge Park (“DKP”), Dubai International Academic City (“DIAC”), Dubai Outsource City (“DOC”), Dubai Production City (“DPC”), Dubai Studio City (“DSC”), Dubai Science Park (“DSP”), Dubai Design District (“D3”), and Emirates Towers (“ET”).30 Here, as per Article 3 of the aforesaid License Regulation by DDA, the license categories for the said free zones are divided into segments and a number of activities can be carried out under each segment, wherein, the E-Services licensees (among others) have to comply with the requirements of the NMC, now MRA.
As regards licenses for online gaming in the abovementioned free zones of the Emirate of Dubai, both Dubai Internet City and Dubai Media City offer license for Gaming & E- sports (Segment 18.11). Further, as per Article 14 of the License Regulation, the license fee for Gaming & E-sports license in DMC is AED 15,000; and the license fee for Internet & Multimedia (which involves developing and/ or distributing gaming activities) in DIC is also AED 15,000.
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