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James Gatto

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Jim Gatto is a partner in the Intellectual Property Practice Group in the firm’s Washington, D.C. office. He is Co-Leader of the Artificial Intelligence Team, the Blockchain & Fintech Team, and Leader of the Open Source Team.

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The Consumer Financial Protection Bureau (“CFPB”) published a report on Banking in Video Games and Virtual Worlds (“Report”) that warns of greater scrutiny of and enforcements against the financial services offered in games and virtual worlds that increasingly resemble traditional financial products and services offered by regulated banking and payment systems. The Report is applicable to all types of games and virtual worlds, but creators and publishers of blockchain games and metaverses, in particular, should take note of this report.Continue Reading CFPB Report Targets Games and Virtual Worlds – What Blockchain Game and Metaverse Companies Need to Know

Roblox recently announced that it is working on generative artificial intelligence (AI) tools that will help developers who build experiences on Roblox, to more easily create games and assets. The first two test tools create generative AI content from a text prompt and enable generative AI to complete computer code. This is just the tip of the iceberg on how generative AI will be used in games and a variety of other creative industries. Music, film, art, comic books, and literary works are some other uses. AI tools are powerful and their use will no doubt be far reaching. In the near term, so too will the associated legal issues. Some of the legal issues include:Continue Reading How Generative AI Generates Legal Issues in the Games Industry

The rising prevalence of crypto and virtual currencies has invited the scrutiny of several regulatory bodies who continue to grapple with the unique challenges posed by blockchain technology, FinCEN being one prime example. The Financial Crimes Enforcement Network (“FinCEN”) is an arm of the United States Department of Treasury that seeks to impede financial crimes such as money laundering and terrorist financing, and was the first financial regulator in the U.S. to address virtual currency.Continue Reading Blockchain Game Developers and FinCEN: When are State Money Transmission Laws Applicable?

This was originally published by Esports Insider on June 4, 2021

Within the blockchain space, one of the fastest-growing areas is NFTs. Within the games space, esports is growing rapidly. So naturally the combination of NFTs and esports should have tremendous potential. This article will explore some opportunities at the intersection of these trends and some of the potential legal issues that might arise.
Continue Reading The Legal Considerations of Esports NFTs

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

Iowa enacted a sports betting law last May. Section 99E addressed fantasy sports contests and Section 99F addressed sports betting.

Under Section 99E: a “Fantasy sports contest” includes any fantasy or simulated game or contest …” and 99E.2 states: “The system of entering an internet fantasy sports contest as provided by this chapter is legal when conducted by a licensed internet fantasy sports contest service provider as provided in this chapter.”
Continue Reading Is Esports Betting Sports Betting in Iowa?

The Washington State Federal District Court recently issued a decision stating: “Washington’s definition of ‘gambling’ only reaches ‘staking or risking something of value upon the outcome of a contest of chance or a future contingent event not under the person’s control or influence’ and that “[m]ost games not derived from casinos involve some amount of skill and would thus be unlikely to meet the statutory definition.”
Continue Reading Most Non-casino Style Games Unlikely to be Gambling in Washington

In a controversial decision, the Illinois Supreme Court determined that a head-to-head, daily fantasy sports (DFS) contest was predominately skill based and thus not gambling. Despite agreeing with the appellate court’s conclusion that the DFS contest at issue was not gambling, the Court disagreed with much of the appellate court’s reasoning.
Continue Reading Daily Fantasy Sports Case Skillfully Comes to a Head

Microsoft has announced a partnership with Enjin to offer a blockchain based recognition program. Azure Heroes aims to reward individuals for verifiable acts of impact such as coaching, creating demos, building sample code, blogging about Azure or completing certain challenges. Community members that have demonstrated their contributions will be recognized with badges across a number of categories. Azure Heroes is branded as a new and fun way to earn digital collectibles for meaningful impact in the technical community.
Continue Reading Azure Heroes – Microsoft Partners With Enjin to Offer Crypto Collectible Rewards