Global Loot Box Regulation Update 2023

The loot box phenomenon persists in 2023, with various countries implementing regulatory measures. In recent years, the primary approach has been to determine whether loot boxes constitute 'gambling' under existing laws and, if so, regulate them accordingly. However, countries have begun exploring alternative options, such as enforcing consumer protection laws, requiring specific information disclosure, or demanding action from age rating organizations. This article provides an update on the policies discussed in the 2022 Loot Box State of Play report, as well as new developments. It highlights key takeaways from the author's academic research on global loot box regulation, available here. For those interested in more technical and legal details, including original language source documents, please refer to the link. When referring to 'loot boxes,' the author broadly encompasses any in-game purchases with randomized elements bought with real-world money or premium in-game currency. This includes social casino games, where the player is unaware of the exact outcome of their purchase. Belgium maintains its ban on loot boxes due to its uniquely broad gambling law definition. Although the regulator lacks resources to enforce the law, companies like Roblox Corporation have taken compliance measures. Major hardware platforms, storefronts, and publishers would naturally require compliance, advising companies not to breach the law. The Dutch administrative court ruled that loot boxes cannot be regulated under gambling law. However, policymakers found this unsatisfactory and proposed changing the law to align with Belgium's stance. The author received confirmation from the Dutch government in July 2023 that they were pursuing a loot box ban, with intentions to advocate for EU-level action. The outcome remains uncertain due to the ongoing election of a new government. Civil court decisions have considered whether loot boxes with transferable rewards constitute illegal gambling. If so, players would be entitled to refunds. Although Austrian lower court judgments are not publicly available, the author obtained seven relevant decisions, which yielded conflicting conclusions. At least two cases determined that loot boxes with real-world monetary value constitute illegal gambling, warranting refunds. In April 2021, Germany amended the Protection of Young Persons Act, requiring the USK age rating organization to consider 'gambling-like mechanisms' when making age rating decisions. Games with loot boxes must display a warning label indicating 'In-game purchases + random items.' This change led to practical differences, such as the USK 12 rating for EA Sports FC 24, whereas the ESRB and PEGI ratings remained unchanged. The author expresses concern that a football simulation game with no controversial elements, aside from loot boxes, is deemed unsuitable for young people under 12 in Germany. This might lead parents to disregard age rating advice, and the author suggests that companies should produce loot box-free versions for young people, allowing for more suitable age ratings. Australia has taken a similar stance based on age ratings, with more prescribed rules. Games with loot boxes must be rated at least M, while those with simulated gambling must be rated R 18+. Companies should avoid using traditional gambling motifs or allusions in Australia. Mainland China was the first to require companies to disclose the likelihood of obtaining rewards in 2017. Since then, probability disclosures have become increasingly required by law. Taiwan and South Korea have followed suit, with the latter expected to set out more specific rules on disclosures. The Dutch and Italian consumer protection agencies argue that not disclosing loot box probabilities is a misleading commercial practice, advising companies to make probability disclosures. The UK Government has asked UKIE to self-regulate loot boxes, resulting in the publication of 11 principles. These principles require probability disclosures, presence warnings, and parental consent for under-18s. Companies should also implement lenient refund policies and support the UK Government Video Games Research Framework. Many civil cases have been brought against loot boxes in the US and Canada, with most lacking merit due to unsustainable arguments or factual errors. However, Epic Games settled claims in the US and Canada without admitting liability, suggesting that some companies may want to resolve the loot box issue. Finally, the Spanish draft law, Finnish bill, and Illinois bill on loot boxes have stalled or died. However, the Brazilian bill to ban loot boxes is progressing slowly through the legislative process. Companies are advised to seek specialist legal advice, given the increasingly divergent regulations across jurisdictions. It is no longer sufficient to comply only with gambling rules, as national requirements must also be met.