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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DOJ Asserts Wire Act Opinion Doesn’t Cover Lotteries
In an effort to side-step the lawsuit filed against it by the New Hampshire Lottery (and others), the Department of Justice (DOJ) asserts that its recent reinterpretation of the Wire Act doesn’t apply to lotteries. As we previously reported, the New Hampshire Lottery has sued the DOJ to prevent enforcement of the DOJ’s opinion (issued in January 2019) reinterpreting the Wire Act. As we also reported, the January 2019 DOJ opinion reversed the position it took in 2011 that the entirety of the Wire Act is limited to sports betting. The new opinion concluded that only one of four parts of the Wire Act apply to sports betting, while the other three apply to any online betting.
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FTC Loot Box Workshop Announced
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.”
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DOJ Sued Over its Reinterpretation of the Wire Act
It didn’t take long. The New Hampshire Lottery has sued the Department of Justice (DOJ) to prevent enforcement of the DOJ’s opinion (issued last month) reinterpreting the Wire Act. As we reported last month, the DOJ reversed the position it took in 2011 that the entirety of the Wire Act is limited to sports betting. It newly concludes that only one of four parts of the Wire Act apply to sports betting, while the other three apply to any online betting.
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DOJ Wire Act Update – 90 Day Window for Compliance
This is a follow up to our recent blog post regarding the DOJ Opinion on its interpretation of the Wire Act. In a memo dated January 15, 2019, the Deputy Attorney General declared:
Department of Justice attorneys should adhere to the Office of Legal Counsel’s (OLC) interpretation, which represents the Department’s position on the meaning of the Wire Act. See 28 C.F.R. § 0.25.
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DOJ Does High “Wire Act” – Flip Flops on Legality of Online Gambling
The Department of Justice (DOJ) has issued an opinion (DOJ Opinion) that reverses its 2011 Memo, in which it opined that the prohibitions of the Wire Act are limited to sports betting. In the DOJ Opinion, the DOJ has concluded that the 2011 opinion was wrong! It now opines that only one of four parts of the Wire Act apply to sports betting, while the other three apply to any online betting. It also concludes that the 2006 enactment of the Unlawful Internet Gambling Enforcement Act (UIGEA) did not alter the scope of the Wire Act.
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How Blockchain Technology Can Improve the Music Industry
Blockchain is a revolutionary technology that has great potential to solve many of the fundamental challenges facing the music industry today. Blockchain technology including distributed, decentralized ledgers, smart contracts, and the ability to tokenize digital assets, is uniquely suited to address issues such as rights management, licensing, copyright ownership, royalty tracking and reporting and the primary and secondary ticketing markets for live events. Various aspects of the technology are currently being used to address some of these problems. Despite these current uses, blockchain adoption likely will be incremental and more evolutionary than revolutionary, at first. Longer term, blockchain technology could provide a more comprehensive solution for the industry.
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