The Czech Republic government has decided to take part in an international group of regulators made of 14 others European countries and Washington State in the US to take actions to defend children from gambling in video games. The team has formed to respond to the widespread concerns about the risks that are caused by the blurring of lines between digital entertainment like gaming and gambling.
In the last decades, video games have increased in popularity thanks to the improvements in technologies and mobile devices. The competition has also increased as a result, and this has pushed some game designers to look for alternative revenue streams like ‘soft’ gambling: ‘loot boxes’ are a clear example where players are paying real money for a loot box that might or might not have items that player’s avatar can then be used in the game.
The explosion of loot boxes
Loot boxes started to appear in the US with the release of Star Wars Battlefront II, by Electronic Arts. Players began to flag that with the increasing presence of loot boxes they were being forced to gamble to improve their gameplay.
This is a clear reflection of the challenges that the video games industry has had to face since the late 1990s: production costs have continued to increase, but retail prices have remained stagnant. Loot boxes offer the opportunity to increase revenue and were firstly available in Blizzard’s Overwatch (2016) but are not regular features also in video games like FIFA 17, Middle-earth: Shadow of War, Halo 5, Gears of War 4, Forza Motorsport 7, and Star Wars Battlefront II.
In 2017 the Entertainment Software Rating Board (ESRB), which is the regulator that classify games in regards to sex, violence and other age factors refused to classify loot boxes as a type of gambling. In 2018, however, the ESBR released a new label for games that do include loot boxes or similar features.
Until now, however, there hasn’t been a single approach to the problem with different legislators that have had different views on the subject: in Belgium, for example, the gaming regulator said that Battlefront II has loot boxes that involve money and addiction: the result was that both Belgium and Netherlands have banned games that have loot boxes.
Areas of Concerns
There are specifically four areas of concerns that have been identified, and those are:
Skin Betting: This is third-party sites that do permit users to bet money or in-game items to get better items. Those are considered skin-gambling schemes and Valve has already had pushback from Washington State authorities in this regards.
Loot Boxes: These are in-game purchases that give randomised gifts. Similar cases have already been identified and ruled illegal in both Netherlands and Belgium while others are in review in the US.
Social Casino Gambling: This is regarding some apps like Big Fish Casino where users can invest money on virtual gambling chips if they are not willing for the in-game currency to increase their bankroll. A US court has already declared Big Fish Casino illegal, and several lawsuits are considering similar apps.
‘It is clear that some casino brands are attempting to appeal to youngsters by creating some blurred gaming themed content that can well integrate into video games’ said John Pentin, CEO of CasinoBiggestBonus.com, which is one of the biggest casino aggregators in the UK. ‘This is not surprising, and it is the effect of increased competition in the gambling industry coupled with the lack of Pan-European and international consistent gambling regulation. In the industry, we welcome the initiative taken by the Czech Republic as a more universal approach to gambling from the regulators will only benefit the genuine operators and caused problems to rogue casino sites which are unfortunately still there and usually managed by the criminality’.
The international group will be working together to analyse the characteristic of video games and social gaming and set some clear boundaries that will work in all the countries that have different regulations.
In addition to that, the regulators will engage actively with the video and social gaming industries as they believe that it is in the interest of those companies to ensure that children will not be misled into gambling or targeted with such messages. The 15 European Countries that have adhered this project are covering a population of more than 278 million people which are around 54% of the entire European Union. The Czech Republic has been very active in promoting the need for this group, and the same can be said for the UK that has lots of experience in gambling regulation.
The UK Gambling Commission will, therefore, involve very actively and share learnings with governments like the Czech Republic that have less experience in the field: ‘We have joined forces to ensure that concerns about the risks of gambling in video games will be addressed,’ said the UK Gambling Commission Chief Executive Neil McArthur. McArthur also added that he is keen to work with video games companies so to take the necessary actions to protect children in Europe and around the World.
The countries that will join force in this group are the following: Austria, Czech Republic with Karel Blaha that is the director of the State Oversight Over Gambling Department, France, Gibraltar, Ireland, Isle of Man, Jersey, Latvia, Malta, The Netherlands, Norway, Poland, Portugal, Spain, UK, The Washington State.