Loot Boxes

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The allegations of gambling issues with games continues. Last week, a class action lawsuit was filed against  Apple relating to games in its App Store that include loot boxes. The complaint alleges that sale of such games are predatory practices enticing consumers, including children, to engage in gambling and similar addictive conduct in violation of California law. The suit alleges that loot boxes are like Vegas-style slot machines and allegedly constitute illegal slot machines when played on an iPhone or similar device.
Continue Reading Players Sue Apple Over Loot Boxes

Money laundering is no game. Yet, some games have been used for money laundering. That’s what prompted Valve to announce that it would end the online sales of loot box “keys” for its game Counter-Strike Global Offensive (CS-GO).

As of last week, Valve indicated that CS:GO container keys purchased in-game can no longer leave the purchasing account. Thus, they cannot be sold on the Steam Community Market or traded. Pre-existing CS:GO container keys are unaffected–those keys can still be sold and traded.

These CS-GO keys have historically been traded on the Steam Community Market as well as third party websites. The keys could be bought with money from the in-game shop or from Steam.
Continue Reading Laundering the Loot: Videogame Developer Valve Ends In-game Key Sales Because of Financial Criminal Activity

In the latest salvo in the ongoing debate about whether certain game mechanics are exploiting kids, Senator Josh Hawley (R-MO) announced that he has introduced a bill to ban the alleged exploitation of children through “pay-to-win” and “loot box” monetization. According to Hawley, “The Protecting Children from Abusive Games Act” would apply new consumer “protections” to games played by minors including:

  • Games targeted at those under the age of 18 (this would be determined by subject matter, visual content, and other indicators similar to those used to determine applicability of the Children’s Online Privacy Protection Act (COPPA))
  • Games with wider audiences whose developers knowingly allow minor players to engage in microtransactions

Continue Reading Senator Wants to Ban Loot Boxes and Pay-to-Win Aimed at Kids

The Federal Trade Commission FTC has announced that it will hold a public workshop on August 7, 2019 to examine consumer protection issues related to video game “loot boxes.” As we have previously reported, loot boxes have been under scrutiny by regulators around the world. In the U.S., these issues were recently raised in a November 27, 2018, Congressional oversight committee hearing. During this hearing, Senator Maggie Hassan (D-N.H.) described loot boxes as “endemic in the video game industry,” adding that “children may be particularly susceptible to engaging with these in-game purchases, which are often considered integral components of video games.” In response, FTC Chairman Joe Simons assured Sen. Hassan that the FTC would “investigate these mechanisms to ensure that children are being adequately protected and…[would] educate parents about potential addiction.”
Continue Reading FTC Loot Box Workshop Announced

As we have previously reported, as loot boxes have become increasingly popular in high-profile video games, they have come under greater legal scrutiny. Several jurisdictions have indicated they are not illegal gambling, but other jurisdictions have found some implementations to be illegal gambling. Even in the jurisdictions where loot boxes are not deemed gambling, regulators have raised concerns about whether loot boxes raise other issues. One alleged concern is the potential impact on children and the potentially addictive nature of loot boxes, though little, if any, hard evidence to date supports this.
Continue Reading Unpacking Recent Loot Box Updates

We previously reported, that the Belgian Gaming Commission has recommended criminal prosecution against certain game companies due to the allegedly illegal use of loot boxes. This report follows previous reports on findings by the Netherlands.

The Belgian Gaming Commission includes recommendations that extend to certain companies doing business with game companies, including Licensors (e.g., FIFA) and platform providers.

In its Loot Box Report, the Belgian Gaming Commission stated: “A wager (bet) of any type is sufficient to qualify as betting for these games. Use of money is not necessary. Just because virtual currency is used in a game does not mean that there is no wager. It must be possible to attribute a value to this wager, however. Value can be defined as the degree of usability. Specifically, items that the player finds useful or nice and for which he pays money.”
Continue Reading Belgium Gaming Commission Loot Box Report – Extends Beyond Game Companies to Licensors and Game Platforms

As we have previously reported, the subject of loot boxes has received increasing scrutiny around the world. In one of the most recent pronouncements, the Dutch Gambling Authority (the “Authority”) declared the loot box mechanics used in a number of games to be illegal gambling and warned that it will begin enforcement actions as of June 20, 2018. It also indicated that the Authority is in close contact with other European regulators, so this report may lead to similar investigations and/or outcomes in other EU member states. Additionally, the Authority declared that all of the loot boxes that were studied could be addictive, but did not provide suitable control measures to exclude vulnerable groups from loot boxes and/or to prevent addiction.
Continue Reading Netherlands Declares Certain Loot Boxes Gambling; Warns of Coming Enforcements

According to a recent news article, the Korean FTC fined three game companies for allegedly not making clear disclosures regarding the odds associated with certain loot boxes. Loot boxes are items that players can win or buy and that give the player a virtual item, but the players do not know which one until they “open” the box. According to the article, some of the games encouraged players to buy loot boxes to collect 16 puzzle pieces, and award players with special in-game items once the collection is completed. This mechanic, known as Kompu Gacha,  was once popular in Japan until the Japanese FTC raised concerns there.
Continue Reading Korean FTC Issues Fines Over Loot Box Advertising