Loot boxes have become a regular feature in many mainstream video games. However, while their popularity is clear amongst gamers, the legal issues and positions from regulators about their use,
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Players Sue Apple Over Loot Boxes
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.
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Is Esports Betting Sports Betting in Iowa?
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.”
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Most Non-casino Style Games Unlikely to be Gambling in Washington
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.”
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Daily Fantasy Sports Case Skillfully Comes to a Head
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.
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Azure Heroes – Microsoft Partners With Enjin to Offer Crypto Collectible Rewards
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.
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Laundering the Loot: Videogame Developer Valve Ends In-game Key Sales Because of Financial Criminal Activity
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.
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Federal Court “Discards” DOJ Interpretation Of Wire Act
In a closely watched case, a New Hampshire federal court has ruled that the Wire Act is limited to sports betting and set aside the DOJ’s recent opinion to the contrary. However, it limited the scope of its declaratory relief to the parties and deferred a decision on whether to extend the declaratory judgment to non-parties on behalf of the Lottery Commission, but gave the Lottery Commission 14 days to file an appropriate motion and supplement the record with adequate factual and legal support on that point.
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What Game Companies Need to Know About FinCEN’s Updated Guidance on Virtual Currency
FinCEN has issued updated guidance addressing the use of crypto currency and other convertible virtual currency (CVC). A portion of this guidance addresses the use of CVC in games. The guidance does not establish any new regulatory expectations. Rather, it consolidates current FinCEN regulations, guidance and administrative rulings that relate to money transmission involving virtual currency.
In 2011, FinCEN issued a final rule (“Bank Secrecy Act Regulations – Definitions and Other Regulations Relating to Money Services Businesses,” 76 FR 43585 (July 21, 2011)) defining a money services business (“2011 MSB Final Rule”). The 2011 MSB Final Rule made clear that persons accepting and transmitting value that substitutes for currency, such as virtual currency, can be money transmitters.
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Senator Wants to Ban Loot Boxes and Pay-to-Win Aimed at Kids
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
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EU Objects to Game Companies Geo-blocking Video Games
The European Commission has informed various game companies (platforms and publishers) of its preliminary view that the companies prevented consumers from purchasing video games cross-border from other Member States, in breach of EU competition rules.
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