Beyond Gambling: The Evolution of Loot Box Regulation in 2023
Elen StelmakhLoot boxes are a popular part of modern video game packaging and are becoming an automatic inclusion for many game developers. However, some countries are beginning to regulate them. The traditional approach has been to determine if loot boxes are considered gambling and then regulate them using existing laws. Countries are now exploring other options, such as enforcing consumer protection laws and requiring disclosure of information.
This article provides an update on the policies discussed in Loot Box State of Play 2024, as well as summarizing new developments. It highlights key points from academic writing on global loot box regulation. More detailed technical and legal information can be found in the provided link. When referring to 'loot boxes,' I am broadly defining them as in-game purchases with randomized elements bought with real-world or premium in-game currency. This includes social casino games.
Belgium: The Ban Remains in Effect
Belgium's ban on loot boxes remains in place, as the country's gambling laws have a broad scope that prohibits the sale of loot boxes to both children and adults. Although the law has not been effectively enforced due to limited resources, companies like Roblox Corporation have begun taking steps to comply. Despite the lack of enforcement, companies are urged to adhere to the law to avoid potential consequences. Major hardware platforms, online stores, and video game publishers are likely to require compliance with the ban.
The Netherlands: A Proposed Ban is Currently Unresolved
The Dutch government's decision on loot boxes last year, as ruled by the highest administrative court, determined that they do not fall under gambling laws. However, policymakers now find this decision inadequate and are considering changing the law to align with Belgium's stance. In July 2023, the previous Dutch government was working towards a ban on loot boxes and even planned to advocate for this on a European level. With a new government being elected, the future regarding loot boxes in the Netherlands remains uncertain.
Germany: Players Turn to Casinos ohne Oasis as an Alternative
The Oasis restrictions in Germany have significantly limited the options for online gamblers in the country, with many popular casino games and betting options no longer available on regulated gambling sites. As a result, a growing number of German players are seeking alternative options to satisfy their gambling needs. One such alternative is seeking a casino ohne Oasis, which refers to online casinos that do not abide by the strict regulations imposed by the Oasis system. These casinos offer a wider variety of games and betting opportunities, giving players more freedom and choice in their online gambling experience. As the popularity of these casinos ohne Oasis sites continues to grow, more and more gamblers are turning to them as a reliable and unrestricted alternative to German-regulated gambling sites.
Austria: Some Loot Boxes Could Potentially Qualify as Illegal Forms of Gambling
Several civil court rulings have examined the legality of loot boxes that allow rewards to be transferred to other players for real-world money, potentially constituting gambling. If deemed illegal, players could be refunded the money spent on such loot boxes.
Regrettably, Austrian lower court judgments on this matter are not publicly available. However, I have acquired copies of seven relevant decisions involving loot boxes, including appeals. These rulings present conflicting views as they were issued by different courts, leading to varying conclusions on the legality of such loot boxes. Nonetheless, in at least two cases, the court decided that loot boxes with transferable rewards constitute illegal gambling, and players were entitled to refunds.
The companies involved have chosen not to challenge these decisions, as they do not establish binding precedents for future cases. Conversely, other rulings found that the same loot boxes did not constitute illegal gambling. Players supported by litigation funders have brought these cases forward, indicating a willingness to pursue more legal actions. As such, I advise caution for companies operating in Austria.Taiwan and South Korea: Push for Transparency
Mainland China set the precedent for companies to inform players about the likelihood of receiving rewards starting on 1 May 2017. Industry groups, such as the ESA and Video Games Europe in 2019, have pushed for this requirement to be implemented globally, making it a standard practice through industry self-regulation.
Since then, the disclosure of probabilities has become increasingly mandated by law. Taiwan implemented this requirement on 1 January 2023, with South Korea following suit on 22 March 2024. In addition to probability disclosures, Taiwan also mandates a warning message that states: 'This product offers a chance to win prizes. Purchasing or participating does not guarantee specific products.' South Korea is expected to establish more detailed guidelines for probability disclosures in the future.UK: Regulating Loot Boxes and Ensuring Transparency in Video Game Advertising
Another way to provide players and parents with more information is by requiring games with loot boxes to include a warning label that states: 'In-game Purchases (Includes Random Items).' This requirement is mandated by major age rating organizations and platforms worldwide. Blizzard Entertainment was fined by PEGI for not disclosing the presence of loot boxes during the rating process, resulting in Diablo Immortal operating without the required label for a year. The fine was only €5,000, a small percentage of the game's revenue on some platforms in its first year. Companies should always disclose all relevant content to age rating organizations to avoid potential reputational damage.
Additionally, the UK advertising regulator found that Hutch Games violated advertising rules by not disclosing the presence of loot boxes on its games' Apple App Store and Google Play Store listings. It is important for companies to ensure that all video game advertising, including on social media, includes the necessary information to comply with the law. As UK advertising rules are based on EU consumer protection law, it is likely that similar legal requirements exist in other EU countries. Efforts are being made to ensure that relevant regulators enforce these laws.The UK Government has tasked UKIE, the main industry body, with improving self-regulation of loot boxes. UKIE has since released 11 principles, including the requirement of disclosing probabilities and warnings about the presence of loot boxes. It is essential that loot boxes are not sold to minors without parental consent. In addition, companies should offer easier refund options for parents and support the Video Games Research Framework by providing data on loot box spending to academic researchers.
US and Canada: Class Action Lawsuits are Ongoing
Numerous civil lawsuits regarding loot boxes have been filed in the US and Canada. In my opinion, many of these cases lack merit due to weak arguments or omissions of stronger ones. However, Epic Games settled the claims in both countries without admitting fault, indicating some companies may prefer to resolve the loot box controversy rather than engage in lengthy legal battles.In conclusion, the regulation of loot boxes continues to evolve as countries explore new approaches to addressing concerns about their impact on consumers. By moving beyond the simple classification of loot boxes as gambling, policymakers are seeking to protect individuals through consumer protection laws and increased transparency. This article serves as a valuable resource for understanding the current state of loot box regulation in 2024, drawing on insights from academic research and providing further information for those interested in delving deeper into this complex issue. The ongoing debate surrounding loot boxes highlights the importance of balancing innovation in games with responsible business practices to ensure the well-being of players.
Elen Stelmakh is a creative individual dedicated to advancing gaming culture through articles and visual design. As a full-time EGamersWorld author and designer for a gaming website, Elen not only creates content but also infuses it with energy and creativity.