2022 Loot Box Regulatory Update: Global Developments in Policy and Law

The controversy over loot boxes and in-game microtransactions has been ongoing for several years, with debates surrounding their potential harm to players and similarities to gambling. Despite initial regulatory efforts in countries like the UK, Denmark, Belgium, and the Netherlands between 2017 and 2018, little progress was made until 2022. This year saw significant shifts in regulatory positions and proposals globally, which are summarized below, categorized into substantial developments that have altered the regulatory landscape and draft laws that may become law in the future. In 2018, the Netherlands Gambling Authority determined that loot boxes with real-world monetary value constitute gambling, leading to enforcement actions against companies like Electronic Arts. However, in March 2022, the highest administrative court in the Netherlands ruled in favor of EA, deciding that the 'Player Packs' in FIFA games do not violate Dutch gambling law. The court's reasoning was that loot boxes must be considered as part of the overarching game, rather than standalone, to be assessed as gambling. This judgment effectively makes most video game loot box implementations lawful in the Netherlands, unless they offer traditional gambling. In response, Dutch legislators have proposed banning loot boxes, potentially adopting the Belgian regulatory stance, but this has not yet been implemented. Belgium's Gaming Commission ruled in 2018 that all loot boxes purchased with real money constitute gambling, necessitating a gambling license, which video game companies cannot obtain. Consequently, paid loot boxes are illegal in Belgium, even for adults. Despite this, a study found that 82% of the top-grossing iPhone games in Belgium still contained paid loot boxes, indicating ineffective law enforcement. The use of VPNs allows players to access and purchase loot boxes from removed or unpublished games. The Belgian Minister of Justice acknowledged the difficulty in enforcing the law due to limited resources. This suggests that a complete ban on loot boxes might not be practically achievable. In July 2022, the UK government decided against redefining gambling to include all paid loot boxes, instead opting for industry self-regulation. The UK government will require the industry to ensure that under-18s cannot buy loot boxes without parental consent and that all players have access to spending controls and transparent information. Specific requirements are expected to be announced in 2023. For effective self-regulation, it is recommended that the industry adopt standard rules, monitor compliance, and include robust enforcement mechanisms. Involving foreign companies in regulatory processes is also crucial, as many instances of non-compliance stem from a lack of local awareness rather than intentional lawbreaking. Since July 2022, Taiwan has legally required probability disclosures for loot boxes, a measure previously mandatory only in Mainland China. A bill proposed in the Finnish Parliament in September 2022 aims to amend the legal definition of a 'lottery' to include all paid loot boxes, indicating that some countries are still open to regulating loot boxes as gambling. In July 2022, Spain's Ministry of Consumer Affairs published a draft law to establish a regulatory framework for loot boxes separate from traditional gambling. The proposed law would apply to loot boxes with rewards of real-world monetary value, requiring real-life identity verification, restricting advertising, and providing spending histories and self-exclusion options. Infractions could result in warnings, fines, or the cessation of game operation. A bill proposed in the Australian Parliament in November 2022 seeks to classify video games with loot boxes as suitable only for those aged 18+ and to append a warning label. However, the wording of such warnings is crucial, as recent research has shown that current labels are poorly understood and do not effectively alert consumers to potential harm. No loot box-related actions were taken by the Illinois legislature in 2022, although a bill introduced in 2021 may be reintroduced in the future. The proposed warning label implies a causal link between loot box purchases and real-life gambling addictions, which lacks a solid scientific basis, highlighting the need for balanced and scientifically grounded warnings. The loot box regulatory landscape is rapidly evolving, with significant developments in 2022. Companies must stay informed about policy changes in all operating countries and strive to provide a higher standard of consumer protection than the minimum required by law.