Gambling and gaming are two sides of the same coin. You guys wouldn’t believe how many gambling companies request to put ads on MOP every month (unsuccessfully!), so clearly advertisers believe there’s plenty of overlap in the groups. And the debate over gambling in video games – whether we’re talking about lockbox monetization schemes or watching bureaucrats home in on skin gambling – isn’t going away. In fact, it’s about to get much bigger as gamblers are walloped from still another direction.
This week the Supreme Court effectively overturned PASPA – the 1992 Professional and Amateur Sports Protection Act – in deciding Murphy v. National Collegiate Athletic Association. The ruling hinged on the section of PASPA that basically barred local governments from licensing betting on sports games, reserving that power for the federal government. The act had been interpreted to include e-sports once e-sports became a thing as well. The state of New Jersey and the NCAA went to war over the statue, battling in court over the last seven years, and now, New Jersey, or at least the gambling institutions of New Jersey, has won.
Back in 2017, at the height of mainstream outrage over lockbox shenanigans, Belgium became one of the very first countries to take the problem seriously (instead of just passing the buck). The Belgian committee assigned to investigate concluded in November that “the mixing of money and addiction is gambling” and pledged to ban them. At the end of April of this year, the country effectively did just that. Its Gaming Commission spent several months investigating multiple games, ultimately finding that Overwatch, FIFA 18, and Counter Strike: Global Offensive are operating in violation of its laws specifically because of their lockbox mechanics.
At the time, we had only a few scattered quotes from a translated press release, but this week the Commission has released its entire report (and there’s even a version in English). Its goal is clear: to examine “whether the use of loot boxes in video games constitutes a gambling operation in the sense of the Belgian Gaming and Betting Act. ”
EA’s quarterly financial report and investor call turned out to be a doozy this year with quite a bit of useful news. To wit:
BioWare’s Anthem is set to ship “in the last quarter of the year, and in the last month of that quarter,” so if we’re counting by fiscal quarters, that’s March 2019, and no wiggling out of this latest delay, EA. According to PCGN, multiple execs inflated the hype, arguing it’s a “stunning and ambitious” game with a “fundamentally social experience.”
Also, in spite of industry interviews to the contrary, it appears that EA learned basically nothing from the Star Wars Battlefront II fiasco that drove the ancient lockboxes-are-gambling argument out of weary corners of the online gaming market and into mainstream politics. The plan going forward appears to be fighting the perception – now codified in Belgium – that lockboxes are gambling in the first place. “We don’t believe that FIFA Ultimate Team or loot boxes are gambling firstly because players always receive a specified number of items in each pack, and secondly we don’t provide or authorize any way to cash out or sell items or virtual currency for real money,” CEO Andrew Wilson said during the call.
Back in 2017, at the height of mainstream outrage over lockbox shenanigans, Belgium became one of the very first countries to take the problem seriously (instead of just passing the buck). The Belgian committee assigned to investigate concluded in November that “the mixing of money and addiction is gambling” and pledged to ban them.
Now, the country has effectively done just that. Its Gaming Commission spent several months investigating multiple games, ultimately finding that Overwatch, FIFA 18, and Counter Strike: Global Offensive are operating in violation of its laws specifically because of their lockbox mechanics.
So here’s an interesting case that could impact online game development in the US. Apparently, a few weeks ago the Ninth Circuit of U.S. Court of Appeals determined that a casual game, Big Fish Games’ Big Fish Casino, includes illegal gambling. You might be thinking, duh, it’s got casino in the name, of course it’s gambling, but that had nothing to do with the appeals decision, which returns the case to the lower district to reconsider. The ruling instead hinged on the fact that users have to keep buying chips (if they fail to come out ahead in their winnings of said chips, which they probably do because that’s how casinos work) to keep playing.
“Without virtual chips, a user is unable to play Big Fish Casino’s various games. […] Thus, if a user runs out of virtual chips and wants to continue playing Big Fish Casino, she must buy more chips to have ‘the privilege of playing the game.’ Likewise, if a user wins chips, the user wins the privilege of playing Big Fish Casino without charge. In sum, these virtual chips extend the privilege of playing Big Fish Casino.”
If you had expected the Netherlands to be leading the fight against lootboxes, you may be more clairvoyant than the rest of the population. After investigating 10 games, the Dutch Gaming Authority has found that four of the games tested feature lootboxes that violate the Better Gaming Act. That may not sound too serious until you consider that the offending games have eight weeks to make changes to the lootboxes to comply with the law.
Failure to do so can result in fines or just straight-up forbidding the games from being sold in the Netherlands. That’s a pretty big deal.
While the DGA did not specifically name games, the Dutch paper reporting on the situation cites FIFA ’18, Dota 2, PlayerUnknown’s Battlegrounds, and Rocket League as the offending titles. The remaining six titles are not in violation of the law but were still sharply criticized for the lootbox implementation, which is said to target younger players and encourage gambling. It’s also worth noting that each of these violations specifically pertains to tradeable items for real money, which just squeaks in as a gambling option.
Nexon isn’t the only Korean studio that has been targeted by the government and fined for dishonest practices with its online games and lockboxes. The South Korean Fair Trade Commission has handed out $950,000 in fines to the country’s studios for deceiving players and failing to provide accurate odds for winning any particular prize.
The three studios punished for their transgressions are Nexon ($875,000), Netmarble ($55,000), and NextFloor ($4,600). The Korea Herald notes, “The [South Korean] FTC’s actions have signaled alarm across the Korean game sector, as it could hurt the sales of in-game items — particularly randomized items, which users tend to continuously buy until they get a desired result — that contribute immensely to profits.”
Is this enough of a penalty to make the eastern market be more responsible with its lockbox policies, or are these fines merely a slap on the wrist? We will see.
Readers of Massively OP will recall that over the past few years, skin trading in games like CSGO have made international headlines when the FTC raided skin traders for facilitating gambling and regulatory bodies hassled Valve over facilitating the facilitation of gambling. Wheee. Anyway, Valve’s apparently had enough of the scofflaws running amok with skin trading and is curbing the practice hard with a seven-day cooldown.
“Steam trading was created to allow customers to easily exchange items with each other, and each day we see thousands of customers using Steam Trading in this way. Recently we’ve been looking into ways to reduce some negative unintended uses of trading in CS:GO (such as fraud and scams), with the goal of preserving trade between players,” says the company. Specifically, it seems Valve’s goal is to thwart the third-party services that make use of automated Steam accounts to make mass trades, as it says most individuals trade a specific item just once a week.
Don’t call it a victory – nobody wins forever in the Star Wars universe – but there’s still reason to cheer in Star Wars Battlefront II today. EA has announced that it’s overhauling the entire progression system for the game. Readers will recall that outrage over the game’s lockbox gambling was the final chunk of kindling in the monetization dumpster fire that finally blazed over into mainstream media coverage at the end of 2017. (The “a sense of pride and accomplishment” line was being quoted in government hearings last month.)
“With this update, progression is now linear,” EA declares. “Star Cards, or any other item impacting gameplay, will only be earned through gameplay and will not be available for purchase. Instead, you’ll earn experience points for the classes, hero characters, and ships that you choose to play in multiplayer. If you earn enough experience points to gain a level for that unit, you’ll receive one Skill Point that can be used to unlock or upgrade the eligible Star Card you’d like to equip.”
Just for the record, we are not the only ones engaged in the discussion and controversy surrounding lockboxes and lootboxes as of late. YouTube channel Extra Credits put together an entertaining and informative video that brings everyone up to speed on what’s happening with all of this, even if you’ve been out of the loop.
The video does raise some concerns about what might happen if and when governments get involved in legislating lootboxes under gambling laws. Some of these concerns have to do with states that consider gambling illegal, access to games with “gambling” if you are under 21 years of age, varying forms of lootboxes, and studios worrying about lawsuits from players over bans if that person has digital property with monetary value. Regular readers will recall a few months back when our SWTOR columnist considered the direct implications for his own game too.
“There are a whole bunch of effects this legislation could have on gaming beyond simply restricting lootboxes as a model,” the video argues. “So we have to be incredibly careful about how we approach this legislation.”
Loot boxes might not be as welcome in Sweden come next year. A Public Administration minister told a news station that in-game lockboxes could be classified as gambling by 2019 as the government moves to “regain control” of the gambling sector.
“I don’t want to rule out the possibility [of classifying loot boxes as gambling],” said Minister Ardalan Shekarabi. “It is obvious that there are many people suffering from gambling addiction, who also get stuck in this type of gambling and lose money because of it.”
Currently, loot boxes — as in many countries — are not covered by gambling laws and do not have governmental oversight. With the increase in exposure over the business model practices recently, some politicians in various countries have proposed legislation and regulation.
Hawaiian politicians are getting some company on the lockbox front from a compatriot in Washington state.
State Senator Kevin Ranker has introduced legislation there that forces the gaming industry and state gambling officials to determine whether lootboxes/lockboxes in video games constitute gambling under state law – and whether they target minors. According to the Tacoma-based News Tribune, Ranker is pushing specifically for regulation that results in the publication of odds for lockbox mechanics in video games.
“If (parents) realized how predatory these game are then they wouldn’t want them under their Christmas tree, they wouldn’t want them going to their kids,” he reportedly said.
Should the provisional bill pass, the determination must be made by December of this year.
“It’s as easy as one, two, insert your credit card number here!” So begins the parody at the beginning of the first of two recent Game Theory videos all about 2017’s favorite-and-least-favorite topic, lootboxes. Rather than overtly picking a side, the vloggers attempt to sort out how lockboxes work – whether they’re just annoying business model glitches or deliberately manipulative end-runs around gambling laws, all by examine the science.
Now, contrary to the first video’s claim, lots of people are indeed talking about the science of lockboxes, but it nevertheless contributes a funny and clear-headed angle on the psychology of lockboxes from skinner boxes and dopamine to loss aversion, the sunk cost fallacy, and the illusion of control. The chilling idea is that we actually get our dopamine blast from opening the box – not from getting what we wanted. Lockboxes, like casinos, exploit the crap out of that, adding deadlines and exclusive loot to ramp up the pressure.