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Video games and gambling: tackling the “blurred lines”

24 September 2018

Gambling regulators across Europe (and in Washington State) are seeking to tackle the blurred lines between gambling and video games.

On 17 September, Gambling regulators from 15 European countries (including the UK Gambling Commission) and Washington State released a declaration sharing their concerns that the characteristics of emerging gaming products and services are similar to those shown in online gambling products.

The concerns raised by the regulators relate to all digital entertainment but the specific reference to video games, and the fact that the declaration lists “skin betting, loot boxes, social casino gaming and the use of gambling themed content within video games available to children” as particular concerns, means that the games industry will surely be its prime focus.

Of particular concern to developers and publishers will be the specific reference to ‘loot boxes.’ Whilst gambling regulators in Belgium and the Netherlands have taken a hard line on their approach to loot boxes, the UK Gambling Commission (in both its position paper and press release) found that loot boxes would be unlikely to be considered gambling under UK gambling legislation if the in-game item won via a loot box was successfully restricted for use within the game and could not be cashed out.

It would be surprising if the UK Gambling Commission were to change its position on loot boxes on the basis of the law as it stands; however, many in the industry will be concerned that the declaration hints that further gambling regulation may be required to deal with emerging gaming products and services on the basis that they have “similar characteristics to those that led our respective legal frameworks and authorities to provide for the regulation of online gambling.”

We’ll have to wait to see whether this statement carries any weight but, in the meantime, it appears the UK Gambling Commission’s priority is going to be tackling “unlicensed third-party websites offering illegal gambling linked to popular video games” and policing games providers to ensure that “features within games, such as loot boxes, do not constitute gambling under national laws.”

One final point to note is that we think it’s particularly interesting that the declaration states that gambling regulators will look to tackle their concerns by working closely with “consumer protection enforcement authorities” (a point the UK Gambling Commission previously alluded to in its press release). This indicates that the next stage of the debate may not solely focus on gambling and we may see more of a focus on potential consumer rights issues.

Either way, the declaration shows that gambling regulators across the world have not forgotten about the games industry and we’re unlikely to see loot boxes (and other similar in-game monetisation techniques) disappear from the spotlight anytime soon.

Previously we have analysed the legal issues relating to loot boxes for Digital Business Lawyer, which you can read here.

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