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Loot boxes have become a highly debated topic within the video game community in recent years. While these monetization schemes have largely avoided regulation in the EU, there are growing concerns among authorities and consumer protection bodies.
Whether you play on PC, console, or mobile, you are likely familiar with loot boxes, which are mystery packages of digital content that can be purchased for small amounts and provide random in-game items.
These items may offer advantages or customization options for players.
Research suggests that loot boxes share similarities with traditional gambling mechanics, drawing the attention of regulators and consumer protection organizations.
Despite this scrutiny, loot boxes remain a lucrative business, generating over US$15 billion for the industry in 2020.
In this article, we will explore the latest developments in EU regulations regarding loot boxes.
The European Parliament Calls for Improved Consumer Protection
In January 2023, the European Parliament passed a report advocating for standardized EU regulations to enhance player protection in the online gaming industry.
The report focused extensively on loot boxes, urging the European Commission to review their sale methods and implement a cohesive European strategy to safeguard consumers.
Emphasizing the importance of transparency, the Parliament called for gamers to be fully informed about in-game purchases like loot boxes before and during gameplay.
Additionally, they requested clearer information from game developers regarding the odds of obtaining items from loot boxes, including details about the algorithms used.
The Parliament also suggested considering whether to automatically disable in-game payments and loot boxes or to ban paid loot boxes to safeguard minors, prevent market fragmentation, and ensure consistent consumer protection regardless of location.
The Parliament’s report referenced another study by the Norwegian Consumer Council from May 2022, which examined the negative effects of loot boxes on the gaming industry. This study, supported by 20 consumer organizations across Europe, identified exploitative practices such as manipulating consumers through deceptive design and marketing, obscuring real-world costs with virtual currencies, and targeting minors with loot boxes.
Recommendations included banning deceptive design, disclosing in-game purchases in real money, excluding loot boxes from games for minors, and increasing transparency around purchase outcomes. A ban on paid loot boxes was suggested if other solutions failed to address the issues.
Germany has Expanded its USK Rating System – Significance of Casinos Ohne Oasis
The German age rating board, Unterhaltungssoftware Selbstkontrolle (“USK”), has broadened its testing criteria to include loot boxes, in-game purchases, and online chat as potential online risks when evaluating games. These updated guidelines went into effect on January 1, 2023. While loot boxes may not impact the overall age rating, the USK ratings will now inform consumers about additional features like loot boxes, online transactions, and online chat capabilities.
One significant system that has been implemented in Germany to address concerns around in-game purchases and online risks is the Oasis exclusion program and the reaction of gamblers trying to find a “Casino Ohne Oasis” (or “Casinos without Oasis”) as a result.
The Oasis regulation system was developed as a response to growing concerns about the impact of loot boxes and online transactions in video games, particularly on younger players.
Casinos Ohne Oasis have begun being listed on online platforms as a way to avoid the restrictions on games that contain elements of chance or gambling-like mechanics, which are there to protect players from potential harm associated with excessive and unregulated spending.
By broadening its testing criteria to include loot boxes, in-game purchases, and online chat as potential risks, the USK is taking proactive steps to inform consumers and protect players from potential harm.
The inclusion of these features in the evaluation process not only provides transparency for consumers but also encourages game developers to consider the impact of these elements on players.
This move aligns with Germany’s strong stance on consumer protection and reflects growing international concern over the influence of in-game purchases on gameplay experience and player behavior.
Overall, Oasis Casinos in comparison to a “Casino Ohne Oasis” represents an important development in the gaming industry, signaling a shift towards greater awareness and accountability for the potential risks posed by loot boxes and in-game purchases.
By implementing stricter guidelines and informing consumers about these features, Germany is setting a precedent for other countries to follow suit in protecting players, especially younger audiences, from the potential negative consequences of unregulated online transactions in video games.
Additionally, the conflict of regulated German casinos vs a “Casino Ohne Oasis” serves as a reminder to game developers and publishers working within the German market to prioritize player well-being and responsible gaming practices.
By promoting transparency and implementing restrictions on gambling-like mechanics, this system reinforces the importance of ethical game design and responsible gaming behavior.
As the gaming industry continues to evolve, it is crucial for regulators, developers, and players alike to work together to create a safe and enjoyable gaming environment for all.
The measures taken by the USK and the introduction of regulated German casinos to compete with “Casinos Ohne Oasis” are positive steps towards achieving this goal and ensuring that players are protected from potential harm associated with in-game purchases and online risks.
Belgium and the Netherlands Enforce Strict Measures
Before the reports mentioned above were created, some areas had already taken strong stances against loot boxes. Belgium, for example, classified paid loot boxes as gambling regardless of the target audience in a report published by the Belgian Gaming Commission in 2018.
The Commission determined that loot boxes in games like Overwatch, FIFA 18, and Counter-Strike: Global Offensive met the criteria for gambling due to the presence of key gambling elements. Despite concerns about enforcement, many large companies chose to either remove loot boxes from their games in Belgium or refrain from releasing certain titles, such as Diablo Immortal from Blizzard Entertainment.
The Netherlands, a country that has taken a strong stance against loot boxes, conducted a study in 2018 which found that four out of ten loot boxes reviewed violated gambling laws. The report stated that loot boxes containing random content with prizes that could be traded for real-world value constitute gambling and are illegal without a license.
Many companies disabled the ability to trade loot box prizes after this finding, except for Electronic Arts with its FIFA series. This decision resulted in a €10 million fine for EA, but the ruling was eventually overturned in March 2022 after an appeal, determining that loot boxes in FIFA games do not violate Dutch gambling laws.
The court’s decision was based on whether loot boxes constitute a standalone game or part of a larger game of skill with an element of chance, considering how players interact with the game. The court concluded that the trading of cards did not change this assessment, as whole accounts are typically traded rather than individual loot boxes.
Given that many video games typically must meet the criteria of being skill-based with chance playing a minor role, the ruling mentioned above significantly shifted from the previous strict stance.
Nevertheless, in November 2022, the Netherlands Authority for Consumers and Markets suggested a complete prohibition of loot boxes in video games due to concerns that transparency measures may not adequately protect players. As a result, it is likely that there will be further progress on this issue in the coming months.
In Conclusion
The examples above indicate that regulations on loot boxes in the EU are beginning to take shape. Due to legal uncertainties and similarities to gambling, there is a need for better protection, especially for minors.
Before implementing regulations, a comprehensive market analysis and industry consultation should be conducted to ensure fair gaming practices are not unfairly excluded.
Industry players should also take initiative in self-regulation, as successful examples have already been seen.
Overall, further developments on loot box regulations can be anticipated in the EU in the near future.
