Our practice represents esports athletes and we keep up-to-date on gaming industry legalities. Last week, while strolling through some industry news, we bumped into an article about international regulations affecting in-game loot boxes. Though not a common concern for gamers on the tournament circuit, it is one for developers. And since we work with developers and gaming startups, we thought it worth a quick post.
Gaming Law: Loot Box Profits
Every recreational gamer knows: “loot boxes” can be addictive, and thus a lucrative revenue source for developers.
What are “loot boxes”? They’re items that players can purchase within a game. Typically, they contain items that help gamers advance or strengthen characters.
So what’s the problem? The main issue watchdogs have with some loot box frameworks is that they tease the gambling line. It’s often the case that there’s an inverse relationship between item desirability and acquisition — i.e., more desirable items are far less likely to show up in loot boxes — which encourages over-spending in a futile quest for the proverbial golden ticket. Moreover, unlike, say, lottery tickets, the games don’t clearly disclose the win probability potential.
Countries Around The World Are Starting To Ban Certain In-Game “Loot Box” Schemes
Some nations are passing laws to combat what they see as the problematic issue of addictive and misleading loot boxes.
Loot Box Legislation in Belgium and the Netherlands
Belgium recently passed a new law that slaps game developers with a nearly $1 million fine for loot boxes that can be resold for actual currency. The fine jumps to $2 million when minors are involved.
In the Netherlands, officials have applied enough pressure to force the shutdown of marketplaces in the Dutch versions of Dota 2 and Counter-Strike: Global Offensive.
Japan’s Ban On Real-Money Loot Boxes
In 2012, Japan’s National Consumer Affairs Agency also banned certain play-to-win “kompu gacha” games that required players to purchase in-game items to advance.
China’s Stance On Loot Boxes
China also has a loot-box ban: Games must reveal the actual odds of getting the desired option before the purchase screen. Some companies circumvented this ban by introducing in-game currency since the regulation only applies to fiat currency.
European Countries Are Also Exploring The Gaming Law Issue of Loot Boxes
Fifteen European countries are currently working on a joint loot box law that will “address the risks created by the blurring of lines between gaming and gambling.”
Connect With A Gaming Law Attorney
The Gordon Law Group regularly works with tech companies, including game developers and distributors. We’ll walk you through compliance matters, provide support, and tirelessly represent your interests in any litigation conflicts that arise. Want to make sure your loot box is legal? Give us a call.
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