The Boundaries between Loot Boxes and Games of Chance Clarified in the Netherlands
A recent decision of the Administrative Jurisdiction Division of the Council of State in the Netherlands clarified the criteria under which loot boxes in games would fall or not under the ambit of the gambling legislation adopted in the European country.
The decision from March 9, 2022, concerned the game FIFA22 by Electronic Arts (EA) and came after a prolonged battle involving sanctions by the Netherlands Gaming Authority KSA and a district court litigation that had backed the penalty imposed by KSA dismissing EA’s appeal against it.
The Division’s ruling held that loot boxes added an element of chance to FIFA22 – a game that was indisputably one of skill, but did not constitute a standalone game of chance offered within another game and therefore did not require a license under the Netherlands Betting and Gaming Act.
According to the quashed ruling of the district court, KSA had been right to conclude that FIFA22 loot boxes were a standalone game of chance since it was possible to play them separately from the FIFA football matches, and players could buy loot boxes and by opening them they could win objects of high economic value purely by chance. Moreover, the won object could be traded not only within FIFA22, but also on the black market for real money.
The Administrative Jurisdiction Division, however, agreed with EA’s argument that it should be considered how the majority of users play the game as per a standard previously developed by the Netherlands Supreme Court. Even though it was possible for loot boxes to be bought separately from the FIFA22 game and the won object to be sold at the black market, most players acquired and used loot boxes within the game and black market trade involved mostly sale of whole player accounts, and not in-game items.
What is a Loot Box and How are They Similar to Gambling?
Generally speaking, loot boxes are packs with a hidden content that a player can acquire via playing the game or can purchase with game coins or real money. After that, the gamer may open the box and see what the “loot” is – it can have significant in-game value, or almost none at all, and sometimes the gained items can be traded outside the game. The fact of purchasing a loot box and the element of chance related to the unknown result of opening it more often than not place these items in the realm of gambling.
Gambling is defined by the Cambridge Dictionary to mean “the activity of risking money on the result of something, hoping to make money”. It could be argued that, given the player typically pays money to obtain an uncertain “lucky” advantage in the game, the act of opening loot boxes and acquiring its contents may well be considered as an act of gambling – or that it at least satisfies the criteria of what people would commonly call gambling,” as per the explanation of Uday Walia and Surbhi Soni from Touchstone Partners, a prominent Indian lawyer firm.
Not All Loot Boxes Would Pass the Netherlands Criteria and Not All of Them are Safe
In many cases, a player’s advance in a game is largely, or even totally, dependent on the continuous purchasing of loot boxes with real money. Such a game can be quite similar in its gambling essence to a game played at the Pure Win Casino for example, but would not have undergone the strict licensing procedure that such a site has taken, and would not be observing the responsible gaming rules required by the license. Thus, the loot-box dependent game would be far from passing the Netherlands’ Division test unlike FIFA22, but also would raise many questions about safety.
“Just as someone would spin a slot machine over and over again for the chance of hitting a big win, a person can purchase loot box after loot box with the hope of landing that sought-after item. The main difference is that, while one of these activities is strictly only allowed by those of 18 years of age or older, the other can be done by literally anyone able to press the screen of a smartphone. And I’ve seen toddlers do that.” writes Felicia Wijkander, Chief Editor at India’s biggest casino comparing platform SevenJackpots.
Indeed, such games would be able to reach anyone under the disguise of casual gaming with no protection against gambling problems and addictions offered to participants, and no possibility of having limits on betting amounts. Open access is provided even to children, who are generally more vulnerable and can play without the knowledge of their parents for a long time risking dangerous consequences.
“There are two things I believe need to happen when it comes to loot box gambling in India; Age Verification and Regulating Online Gaming,” Felicia continues. The country needs rules regarding what games can be offered to what people, and India’s Aadhar identity system is a suitable tool that can be easily used to limit access to minors to unsafe instances of loot box gaming.
