EA gets a thorough ass whooping in the Dutch courts over lootboxes

[Master Disaster]

This one really made me smile.

 

Yesterday the Dutch gambling commission (KSA) won a 12 month court case against EA over them selling lootboxes in Holland. And when I say lost I really mean LOST!!

 

It all started in early 2018 when the KSA ruled that lootboxes do in fact come under current Dutch gambling laws and as such should be subject to the same restrictions as other forms of gambling in the country. They gave publishers an ultimatum, change the way lootboxes work/stop selling them in Holland by June 2018 or face the consequences. EA disagreed and refused to do so (which makes no sense since they did pull them from sale in Belgium).

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A Netherlands District Court this week ruled against Electronic Arts in a case over FIFA loot boxes, allowing the Netherlands Gambling Authority (Kansspelautoriteit, or Ksa) to proceed in fining the publisher €10 million for violating the country's Betting and Gaming Act.

 

"The Ksa believes it is crucial to shield vulnerable groups, such as minors, from exposure to gambling," the regulator explained. "For that reason, the Ksa supports a strict separation between gaming and gambling. Gamers are often young and therefore particularly susceptible to developing an addiction. As such, gambling elements have no place in games."

 

The Ksa informed developers in April of 2018 that it considered loot boxes violations of the Betting and Gaming Act, giving them eight weeks to make their games compliant.

This is where the story gets interesting. The June 2018 KSA deadline came and went with no action from EA so the KSA made good on their promise, in October 2019 the KSA fined EA 10 million euros for breaking Dutch gambling laws. EA saw fit to challenge the decision in the Dutch court system forcing the KSA to suspend the fine and announcement of the judgement until the case was settled.

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The EA fine was originally imposed last October, but EA contested both the fine and the Ksa's desire to reveal them to the public. The three-judge panel ruled against the publisher on both fronts, permitting the Ksa to levy the maximum allowable fine of €5 million to Electronic Arts and a second maximum fine to Electronic Arts Swiss Sàrl, and to announce them as well.

EA's argument was three fold. There's no official way to cash the prizes out, Fifa is a game of skill and not chance and that there's no scientific evidence linking lootboxes with gambling addiction. The courts disagreed on all 3 counts.

 

Unlike in other countries, Dutch law says that if a game of chance can be cashed out in any way, it doesn't have to be officially sanctioned, as long as the prize can be shown to have a real world market value, its gambling. Essentially EA created the game and by extension facilitated the creation of the market for the games prizes.

 

They said that players can choose to ignore the rest of Fifa and focus entirely on Ultimate Team which is 100% a game of chance.

 

Finally they said that evidence does exist and even if it didn't, that doesn't matter. Dutch law says that all games of chance will automatically be assumed to be harmful.

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According to the judgment, EA argued that FIFA loot boxes would not count as gambling under the Betting and Gaming Act because FIFA Ultimate Team packs (loot boxes) don't offer items of value because they cannot be directly converted into money, that FIFA is inherently a game of skill rather than chance, and that there is no scientific evidence linking the opening of Ultimate Team packs to gambling addiction.

 

The court was unswayed by those arguments, noting that there are ways for people to profit from Ultimate Team cards that can be valued at nearly €2,000, and that people can ignore the proper FIFA gameplay and "play" the Ultimate Team packs as their own sort of game.

 

As for the lack of scientific proof, the judges ruled it not necessary that every new game of chance be proven to cause problems, because the Betting and Gaming Act is based on the assumption that games of chance carry with them a risk of gambling addiction. They also pointed to an increasing body of scientific research and experts warning about loot boxes, as well as reports made to the Ksa by individuals who had been affected by them.

EA went on to argue that restricting lootboxes violates their rights to property and freedom of expression. Do I need to say any more? To quote Yong Yea "If I rob a bank then claim I was just expressing myself I still end up in jail". Obviously the courts saw right through this one.

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EA also argued that the Ksa's decision forbidding FIFA Ultimate Team packs in their prior form violated EA rights to property and freedom of expression.

 

In response to the property defense, the judges noted that the Ksa gave EA an opportunity to amend the FIFA games to fix the issue without any sort of sanction or fine, but the publisher neglected to do so. They added that EA itself still owns the game, and has control over how it decides to make it comply with the law.

 

As for the Ksa censoring the creativity of FIFA's game designers, the court ruled again that the Betting and Gaming Act's existence assumes that the interests of society to regulate games of chance outweigh the interest to preserve people's freedom to express themselves through games of chance.

Finally EA argued that disclosing the ruling and the fine to the public would damage their reputation. Yeah, no shit. You do a bad thing it damages your reputation. You know how to avoid that EA? Stop doing bad things.

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Finally, EA argued that disclosing the fine to the public would disproportionately harm its business and hurt its reputation, but the court ruled that the public interest in announcing the fines and warning the public about unlawful commercial practices outweighed EA's interest in preserving its reputation.

 

As for where upset FIFA players in the Netherlands can direct complaints, the Ksa advised them to take it up with EA.

 

"The game's providers are the parties that decided to include a gambling game within the game, thereby breaking the law," it said. "The Ksa has pointed this out to Electronic Arts Inc. and Electronic Arts Swiss Sàrl repeatedly. Electronic Arts Inc. and Electronic Arts Swiss Sàrl are therefore itself responsible for changing the game such that it is no longer in contravention of the law. How exactly it accomplishes this is at their discretion."

EA was given 6 weeks to appeal. It took them less than 24 hours to say they intend to appeal

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EA has six weeks to appeal the decision.

 

Update: An EA representative has provided the following statement to GamesIndustry.biz: "Players all over the world have enjoyed FIFA and the FIFA Ultimate Team mode for many years and as such, we are disappointed by this decision and what it may mean for our Dutch community. We do not believe that our products and services violate gambling laws in any way. We are appealing this decision and we seek to avoid a situation impacting the ability of Dutch players to fully experience and enjoy FIFA Ultimate Team.

 

"Electronic Arts is deeply committed to positive play. We seek to bring choice, fairness, value and fun to all our players in all of our games. We remain open to discussions with the Netherlands Gambling Authority and other stakeholders to understand and explore solutions to address any concerns."

https://www.gamesindustry.biz/articles/2020-10-29-ea-fined-10m-over-loot-boxes-as-dutch-court-sides-with-gambling-authority

 

Slowly but surely its beginning to happen. Holland and Belgium have both ruled against EA under current laws. The UK are looking at amending laws to fit lootboxes in. The EU parliament is looking into it for a Europe wide decision and law makers in the US have been sniffing around.

 

It cannot come soon enough for me.

[Ashleyyyy]

i love my country, doing what the USA can't. giving companies what they deserve. 

[Brooksie359]

11 minutes ago, Master Disaster said:

This one really made me smile.

 

Yesterday the Dutch gambling commission (KSA) won a 12 month court case against EA over them selling lootboxes in Holland. And when I say lost I really mean LOST!!

 

It all started in early 2018 when the KSA ruled that lootboxes do in fact come under current Dutch gambling laws and as such should be subject to the same restrictions as other forms of gambling in the country. They gave publishers an ultimatum, change the way lootboxes work/stop selling them in Holland by June 2018 or face the consequences. EA disagreed and refused to do so (which makes no sense since they did pull them from sale in Belgium).

This is where the story gets interesting. The June 2018 KSA deadline came and went with no action from EA so the KSA made good on their promise, in October 2019 the KSA fined EA 10 million euros for breaking Dutch gambling laws. EA saw fit to challenge the decision in the Dutch court system forcing the KSA to suspend the fine and announcement of the judgement until the case was settled.

EA's argument was three fold. There's no official way to cash the prizes out, Fifa is a game of skill and not chance and that there's no scientific evidence linking lootboxes with gambling addiction. The courts disagreed on all 3 counts.

 

Unlike in other countries, Dutch law says that if a game of chance can be cashed out in any way, it doesn't have to be officially sanctioned, as long as the prize can be shown to have a real world market value, its gambling. Essentially EA created the game and by extension facilitated the creation of the market for the games prizes.

 

They said that players can choose to ignore the rest of Fifa and focus entirely on Ultimate Team which is 100% a game of chance.

 

Finally they said that evidence does exist and even if it didn't, that doesn't matter. Dutch law says that all games of chance will automatically be assumed to be harmful.

EA went on to argue that restricting lootboxes violates their rights to property and freedom of expression. Do I need to say any more? To quote Yong Yea "If I rob a bank then claim I was just expressing myself I still end up in jail". Obviously the courts saw right through this one.

Finally EA argued that disclosing the ruling and the fine to the public would damage their reputation. Yeah, no shit. You do a bad thing it damages your reputation. You know how to avoid that EA? Stop doing bad things.

EA was given 6 weeks to appeal. It took them less than 24 hours to say they intend to appeal

https://www.gamesindustry.biz/articles/2020-10-29-ea-fined-10m-over-loot-boxes-as-dutch-court-sides-with-gambling-authority

 

Slowly but surely its beginning to happen. Holland and Belgium have both ruled against EA under current laws. The UK are looking at amending laws to fit lootboxes in. The EU parliament is looking into it for a Europe wide decision and law makers in the US have been sniffing around.

 

It cannot come soon enough for me.

Does this mean game with randomized drops are now considered gambling? I mean it is a game of chance so does that not make it gambling? Or are they only counting when money is involved? Also are card packs illegal there as well if the packs are randomized? Its an interesting situation for sure. 

[Master Disaster]

Just now, Brooksie359 said:

Does this mean game with randomized drops are now considered gambling? I mean it is a game of chance so does that not make it gambling? Or are they only counting when money is involved? Also are card packs illegal there as well if the packs are randomized? Its an interesting situation for sure. 

There has to be a way of selling the prizes for real world money.

[Rauten]

8 minutes ago, Master Disaster said:

There has to be a way of selling the prizes for real world money.

Hrm; what of the Steam marketplace?

Can CS:GO, Dota2 etc. skins be bought/sold on the Steam marketplace in Belgium/Netherlands?

[LeChef]

41 minutes ago, Rauten said:

Hrm; what of the Steam marketplace?

Can CS:GO, Dota2 etc. skins be bought/sold on the Steam marketplace in Belgium/Netherlands?

Probably not for long. If there is any way to have a black market for the random in-game items it will be considered gambling. Only games where the in-game items are account bound and thus cannot be traded whatsoever will be allowed.

[Master Disaster]

54 minutes ago, Rauten said:

Hrm; what of the Steam marketplace?

Can CS:GO, Dota2 etc. skins be bought/sold on the Steam marketplace in Belgium/Netherlands?

The difference is you don't have to buy the rewards from Valve games, they're given to players for free as a reward for playing. Thats not a game of chance since there's no chance of you losing anything.

[Rauten]

7 minutes ago, Master Disaster said:

The difference is you don't have to buy the rewards from Valve games, they're given to players for free as a reward for playing. Thats not a game of chance since there's no chance of you losing anything.

In most cases, they "gift" you the box but then you need to buy a key for like, 1.50€ and then the lottery starts.

[Master Disaster]

4 minutes ago, Rauten said:

In most cases, they "gift" you the box but then you need to buy a key for like, 1.50€ and then the lottery starts.

Fair point and actually, you gotta wonder if that's intentional by Valve to exploit some loophole somewhere?

 

They used to give other stuff out aside from crates though. In TF2 for example you could unlock guns, outfits, hats and more just from playing. Not sure if they still do, haven't touched a Valve game in years.

 

Plus you can always sell the box on to someone else without opening it.

[Rauten]

6 minutes ago, Master Disaster said:

Fair point and actually, you gotta wonder if that's intentional by Valve to exploit some loophole somewhere?

 

They used to give other stuff out aside from crates though. In TF2 for example you could unlock guns, outfits, hats and more just from playing. Not sure if they still do, haven't touched a Valve game in years.

 

Plus you can always sell the box on to someone else without opening it.

True, but there is a random chance involved -after- you cough up some money, and then if you win big you can cash it out on the marketplace.
I know nothing about Dutch law, but it feels as though this should have the same consideration as FIFA ultimate team...

[Brooksie359]

1 hour ago, Master Disaster said:

There has to be a way of selling the prizes for real world money.

But didn't they say that even unofficial ways to sell it for money would  count? I mean you can trade guns in borderlands between players and you could technically sell them for real world money unofficially. So would that not constitute gambling in their eyes? I just think their definition of gambling is unclear and full of issues. If you include unofficial ways to sell randomized things as gambling then almost anything randomly generated is considered gambling. 

[Doobeedoo]

Yeah extinguish it. 

[Arika]

Interested to see if this could be extended to Gacha games or even to TCGs Like MTG and pokemon card game booster packs. 

 

I do enjoy Gacha games myself but they are not much different than loot boxes

[Helly]

Didn't EA make one change to the packs? I read that you can see the player you get before you open the pack. But you can't skip to the next pack without first buying it. Well they didn't agree with the change making things better...... which is of course a surprise to no one, as it doesn't even change anything.

[Parideboy]

Those aren't lootboxes, those are "surprise mechanics"

The comments on this video... majestic

[S w a t s o n]

39 minutes ago, Parideboy said:

Those aren't lootboxes, those are "surprise mechanics"

 

I love how she compares them to Kinder Surprise. Because you know, Kinder Surprise eggs really just incorporate all those psychological triggers that gambling does such as : highly rare prize options (Any 1% "drop rate" kinder surprise toys? No, none of them are rarer than the other of a given series), exaggerated sound and video effects when you open them, the fact that literally no one places any value on a kinder surprise toy, whereas in game items can be worth substantial amounts and be easily marketable, sometimes within the game.

 

The lootboxes are randomized via computer code at the instant of purchase or opening rather than being a physical object created at a factory, have a variable drop rate table for the prizes (usually not advertised), confer a competitive or social benefit which creates value, have all the same psychological triggers. It's clearly gambling. Praise be the dutch.

[Mooshi]

One could argue nothing in a game has any real world value. Everything is programmed so any rare item is only artificially rare and not really worth anything. 10mil is also pocket change to a major company and I'm sure EA isn't going to lose any sleep from losing the Dutch market.

 

I don't care about EA, just feel this huge win isn't that big in the grand scheme of things.

[Master Disaster]

6 minutes ago, Mooshi said:

One could argue nothing in a game has any real world value. Everything is programmed so any rare item is only artificially rare and not really worth anything. 10mil is also pocket change to a major company and I'm sure EA isn't going to lose any sleep from losing the Dutch market.

 

I don't care about EA, just feel this huge win isn't that big in the grand scheme of things.

Just an FYI, Holland is the third biggest market for Fifa and Football in general in the whole of Western Europe, Spain is second and the UK is the biggest. That's why EA didn't care about losing Belgium but are fighting over Holland to the death, losing that market would mean they lose a pretty big chunk of the MTX cash.

 

Remember, its not just 10 mil, they also lose out on the money they would be making from Dutch football fans.

[Delicieuxz]

As EA's arguments in this case once again demonstrate, these companies (EA, Ubisoft, Bethesda, ActiVision) are psychopathic and the truth means nothing to them. They will lie every which way to make themselves richer, while showing complete disregard for everything you, as a gamer, personally care about if it comes into conflict with them enriching themselves. They are without humanity and they should be harshly castigated in every country.

 

4 hours ago, Master Disaster said:

There has to be a way of selling the prizes for real world money.

Did the court say that?

 

A Google translation of the court's judgment quotes the court as saying: "It is also irrelevant whether prizes can be converted into real money, which is otherwise possible and also happens with the plaintiffs' prizes."

 

Gambling, in the literal sense, has nothing to do with the winnings having monetary value, but is the act of putting-up something of value on a game of chance - AKA, gambling that item. So, I would find it incongruous with the meaning of gambling if there was a legal condition that the winnings had to be able to be converted into real money in order for the gambling to fall under gambling laws.

[AldiPrayogi]

6 minutes ago, Master Disaster said:

Just an FYI, Holland is the third biggest market for Fifa and Football in general in the whole of Western Europe, Spain is second and the UK is the biggest. That's why EA didn't care about losing Belgium but are fighting over Holland to the death, losing that market would mean they lose a pretty big chunk of the MTX cash.

 

Remember, its not just 10 mil, they also lose out on the money they would be making from Dutch football fans.

Added opinion: UK, France, Italy, Spain and Germany are the big five leagues of football so it's natural for the UK and Spain to have such big football following. Kinda surprised that the Netherlands is included tbh. But once the UK and the rest of the big fives get their act together and stand against lootboxes then we'll start seeing EA hurting from it.

[Master Disaster]

12 minutes ago, Delicieuxz said:

Did the court say that?

The KSA said that back in April 2018 when all this started.

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The Dutch gaming authority said it had looked into loot boxes in 10 games (it sounds like they picked the 10 most popular games on Twitch), and found four contravened its Betting and Gaming Act. It said the content of these loot boxes was determined by chance and, crucially, the prizes could be traded outside of the game. Therefore, the prizes have a market value.

https://www.eurogamer.net/articles/2018-04-19-the-netherlands-declares-some-loot-boxes-are-gambling

 

As far as the law is concerned, a game of chance is only gambling if prizes can be converted into real money.

[Fasauceome]

5 hours ago, Brooksie359 said:

Does this mean game with randomized drops are now considered gambling? I mean it is a game of chance so does that not make it gambling? Or are they only counting when money is involved? Also are card packs illegal there as well if the packs are randomized? Its an interesting situation for sure. 

you don't typically have to pay for randomized drops. In team fortress 2 for example, you can play for free and playing more gets you more items. Not really gambling if there's no money on the line.

[Master Disaster]

2 minutes ago, AldiPrayogi said:

Added opinion: UK, France, Italy, Spain and Germany are the big five leagues of football so it's natural for the UK and Spain to have such big football following. Kinda surprised that the Netherlands is included tbh. But once the UK and the rest of the big fives get their act together and stand against lootboxes then we'll start seeing EA hurting from it.

The Dutch are football crazy and Holland is MUCH smaller than Germany & France so per capita there are more football fans in Holland than Germany or France.

[Delicieuxz]

29 minutes ago, Master Disaster said:

The KSA said that back in April 2018 when all this started.

https://www.eurogamer.net/articles/2018-04-19-the-netherlands-declares-some-loot-boxes-are-gambling

I wonder if the Dutch Gaming Authority were making an interpretation of the part of the Betting and Gaming Act that the court in this case refers to here:

 

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7.3    The court considers as follows.

According to Article 1, first paragraph, opening words and under a, of the Betting and Gaming Act, it is prohibited to give the opportunity to compete for prizes or premiums if the winners are designated by means of any determination of probability over which the participants generally cannot exercise a predominant influence. unless a permit has been granted for this under this Act.

 

The decisive factor for the question whether a game qualifies as a game of chance within the meaning of the Betting and Gaming Act is whether the components of this prohibition, probability and prize (or premium), have been met.

 

According to the court's citation of the Betting and Gaming act, a game counts as a game of chance (and is therefore regulated under gambling laws) not specifically on the basis that winnings can be converted into real money, but on the basis that people are playing for premiums or prizes based on probability rather than skill.

 

The words "prize", "premium", and "probability" don't directly infer monetary value. Yet, the court says that these are the criteria which determine whether a game falls under gambling law. So, I wonder what the Dutch Gaming Authority's earlier comment, if it was translated correctly, is referring to.

 

 

The court also says:

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7.4    For the question of whether Packs is a game of chance, it must first be assessed whether Packs should be regarded as a separate game or whether Packs are part of a game of skill (game). The respondent's investigation into loot boxes, which are being built into more and more games, shows, among other things, that loot boxes are part of a game, but can also be played as a game in itself. The legislator has noted the following about this in the legislative proposal on Remote Games of Chance: "The loot box is a stand-alone game of chance that is offered within a game" and: "this means that games with loot boxes with prizes that can be valued in money may not be offered" ( Parliamentary papers II 2017/18, 33996, G (MvA), p. 71-72 and I (MvA), p. 9).

 

There, the court is quoting another party's recommendation on regulating loot boxes. But in that example the legislator specifically identifies prizes that can be valued in money.

[Master Disaster]

23 minutes ago, Delicieuxz said:

I wonder if the Dutch Gaming Authority were making an interpretation of the part of the Betting and Gaming Act that the court in this case refers to here:

 

 

According to the court's citation of the Betting and Gaming act, a game counts as a game of chance (and is therefore regulated under gambling laws) not specifically on the basis that winnings can be converted into real money, but on the basis that people are playing for premiums or prizes based on probability rather than skill.

 

The words "prize", "premium", and "probability" don't directly infer monetary value. Yet, the court says that these are the criteria which determine whether a game falls under gambling law. So, I wonder what the Dutch Gaming Authority's earlier comment, if it was translated correctly, is referring to.

 

 

The court also says:

 

There, the court is quoting another party's recommendation on regulating loot boxes. But in that example the legislator specifically identifies prizes that can be valued in money.

The problem with being so open in the definition is you start to encroach on legitimate games of skill. The example thrown around is card games like MTG or Pokemon but it goes even beyond that. Sticker packs, kinder eggs, those kids toy dispensers, arcade games like the claw machine, skiball and even fun fair type stuff like coconut shys, shooting galleries etc would all be classed as gambling if they were so loose.

 

The real world value qualifier is there to make sure only games of chance with a real chance of loosing money are covered.