Lawful Neutral: Why Josh Hawley’s lockbox regulation Senate bill is dead-on-arrival

    
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Kick it down the road.

There’s a special place in my heart for lootboxes and exploitative monetization, and that place is somewhere below the revulsion I feel for Martin Shkreli or going for a swim with the shit demon from the movie Dogma. Lockboxes and other exploitative monetization mechanics have had a demonstrably negative impact on gamers by relying on psychological manipulation or exploiting pre-existing issues, while publishers utilizing exploitative mechanics in their games continue to amass Scrooge McDuck-style towers of money.

We’ve been waiting for legislators to get off their fannies and deal with this, and as we’ve reported, a recent bill from US Senator Josh Hawley appears to be getting more attention than previous attempts. His bill, the Protecting Children from Abusive Games Act (PCAGA), targets pay-to-win transactions and lootboxes that appeal to children under the age of 18.

Unfortunately, this is not the lockbox bill most gamers are looking for. There are many holes and vaguely defined terms in the bill, such that even if passed, it will likely be overturned.

The PCAGA aims to make it illegal to target pay-to-win transactions and lootboxes at minors. On the surface, this seems like a good thing as it’s children who are most likely to be taken in by manipulative monetization. But the reality is that bill is poorly written, resulting in a vast over-reach that if adopted would result in a chilling effect against manipulative and non-manipulative mechanics across the game-o-sphere.

The scope

The logical place to start is with what games the bull is intended to apply to, and the literal answer from the bill says a “minor-oriented video game.” This brings to mind games like Roblox, Club Penguin, Free Realms, Toontown. But the reality of what games this bill covers is a lot more broad.

“The term ‘minor oriented video game’ means an interactive digital entertainment product for which the target audience is individuals under the age of 18, as may be demonstrated by:
(A) the subject matter of the product;
(B) the visual content of the product;
(C) the music or audio content of the product;
(D) the use of animated characters or activities that appeal to individuals under the age of 18;
(E) the age of the characters or models in the product ;
(F) the present in the product of–
(i) celebrities who are under the age of 18
(ii) celebrities who appeal to individuals under the age of 18
(G) the language used in the product
(H) the content of materials used to advertise the product and the platforms on which such materials appear;
(I) the content of any advertising materials that appear in the product
(J) other reliable empirical evidence relating to
(i) the composition of the audience of the product; or
(ii) the audience of the product as intended by the publisher or distributor of the product
(K) other evidence demonstrating that the product is targeted at individuals under the age of 18.”

I think it’s important to understand just how far-reaching this is. The bill uses the phrase “appeals to individuals under the age of 18,” which as any reasonable person would tell you is relatively meaningless, as that lots of things that are targeted at 18+ crowd appeal to the 18-and-under crowd as well. How does one even identify that the visual content of a game appeals to minors? Or that the game music or audio content appeals to minors? Under this proposal, any video game that contains a model of a child appeals to minors. Putting any celebrity in game means that the game then appeals to minors – because show me a celebrity who isn’t idolized by kids.┬áThe scope is so vague that someone could say title screen music appeals to minors therefore falls under the umbrella of this bill.

The entirety of the bill reads as if were written by someone who understands about 50% of the gaming world — enough to be able to ape the language, but not enough to really understand the implications of what’s being said. I think most of the criteria are intended to prevent developers, publishers, and distributors from exploiting loopholes to get around the bill. But instead of plugging loopholes, the terminology expands the scope of the bill so much that nearly every game would be considered minor-oriented.

What qualifies as pay-to-win?

While the MMO community has been debating the term pay-to-win for the better part of two decades, this bill steps in and defines it in a way that manages to be surprisingly problematic given how games monetize today. The bill defines pay-to-win as any add-on transaction that eases a user’s progression through content, assists a user in accomplishing an achievement, or receiving an award that is otherwise available without purchase of the add-on transaction.

The key phrase here is that all of these things allow you speed up content that is already available in the game, without the add-on transaction. I’d wager that the majority of gamers are generally OK with pay-to-win or consider it fair as long as the items in question are obtainable through regular gameplay. But the bill’s understanding of pay-to-win actually turns that whole concept on its head. We’d consider an item not-pay-to-win if it’s available through regular gameplay, but Hawley’s idea is that being obtainable through regular game play is exactly what makes it pay-to-win.

Other things that would be legally qualified as pay-to-win under this definition are things like levels boosts, experience potions, speed potions, infinite harvesting items (for example, in Guild Wars 2), the ability to skip the main story quest (for example, in FFXIV), and purchasable teleport tokens.

Additionally, any purchase that allows the user to access game content that had previously been accessible to the user but has been made inaccessible after a time or a limited number of gameplay attempts is also pay-to-win. By our reading, that means purchasing past seasons’ old living story content in Guild Wars 2 is P2W. If you could buy a pass to limited part of the game that was once generally accessible, it’s P2W.

Finally, in competitive games or in competitive elements of games, any purchase that gives you an advantage over someone who didn’t make a purchase is P2W. This is what most people think of when they think of P2W. In a competitive environment, making a purchase gives you an advantage over someone who didn’t make a purchase. We often hold up examples of cash shops that sell best-in-slot or near-best-in-slot items as P2W. The bill agrees, but seemingly only as an afterthought.

There are a few exclusions for P2W in the bill, such as new difficulty modes, cosmetic alterations that affect only the user’s visual representation, and additional game content as long as it doesn’t violate any of the previous P2W criteria. Game expansions are not considered P2W as long as they don’t do anything to ease the player through existing content. That means that the last several World of Warcraft expansions that came with a level boost for pre-ordering make the expansion P2W, whereas without the level boost they otherwise wouldn’t be.

The lockbox section itself is surprisingly boring. The bill defines lootbox in such a way that it’s hard to find much fault with it: as an add-on transaction that in a “randomized or partially randomized fashion unlocks a feature of the product or add to or enhances the entertainment value of the product.”

The second definition is a little bit more confusing: It adds anything that allows the user to make one or more additional transactions that she could not have made without the first transaction and the content of which is unknown to the user until after she’s made the first transaction.┬áThe best example I can think of for this part is using real money to buy in-game currency, which you then use to buy the lockbox. I think. In all honesty, this section is confusing and I’m not entirely clear what use-case Hawley’s bill-writers are trying to address here.

So what’s the damage?

The bill is overly inclusive in its definition of “minor-oriented.” It’s not easy or clear to define something as minor-oriented as done here, even for those us who spend all of our free-time in video games. The enumerated definitions of “minor-oriented” actually increase the over-inclusiveness of the bill as opposed to limiting it. The net effect is that there is no reliable way to say something is not “minor-oriented” as the vagueness would allow anyone to say that a part of the game appealed to minors. We can refer back to the Supreme Court video game case Brown v. EMA, where Justice Alito opined that “violent video game” is impermissibly vague. “Minor-oriented video game” is similar enough to “violent video game” that we could expect the same standard to be applied.

Additionally, there’s an argument to be made about whether monetization is protected speech. It sounds a bit ridiculous, but a developer could argue that his P2W implementation or lootboxes are part of content of the game, so restricting it therefore restricts the designer’s First Amendment right. A studio has a reasonable chance of succeeding with the “monetization as content” argument because quite honestly, we don’t have a good reason as to why it’s not content, and therefore it’s protected speech.

And Brown v. EMA already established that video games are protected speech. As a result, limiting the content of video games requires that the bill pass strict scrutiny. The issue addressed in the bill has to be a compelling government interest and is narrowly drawn to serve that interest. We’ve already established that “minor-oriented video game” is not narrowly drawn, so the bill fails that requirement. Barring that, Hawley and friends would need to demonstrate the problem they are solving and show that only through government intervention can the problem be solved, which is a standard that they won’t meet. They won’t be able to clearly define a problem they are trying to solve, nor show that the only solution is through the limiting of the content of the game – and therefore limiting speech.

The PCAGA is (probably) a bill with its heart in the right place, but it has fatal issues that I think make it dead-on-arrival, despite all the publicity around it. It’s too broadly defined, impacting developers far outside of the mass-market “save the children” appeal they are making. There’s also an argument to be made that limiting a monetization model based on age violates the First Amendment as video games are protected speech.

Monetization is getting increasingly exploitative and we absolutely need to put guardrails on how video games can monetize their games, and that includes gambleboxes. But this bill isn’t going to get us there, and it’ll be lucky if it manages to hobble out of the legislative gate before it face-plants.

Every other week, Andy McAdams braves the swarms of buzzwords and esoteric legalese of the genre to bring you Massively OP’s Lawful Neutral column, an in-depth analysis of the legal and business issues facing MMOs. Have a topic you want to see covered? Shoot him an email!
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