EA Faces Action Over Loot Boxes
EA and its Swiss subsidiary have been ordered to remove loot boxes from its popular FIFA 21 football sim, or it could face legal action. The county’s regulator has recently been granted the power to impose a potential €5 million fine on the game developer should it fail to remove the controversial mechanics from one of its most popular franchises. This authority was granted by the courts after a lengthy legal battle between the two parties.
The problems began back in 2019, when the Kansspelautoriteit (KSA), the gambling regulator in Holland, issued an administrative order back in 2019. This order, which is subject to a penalty, ruled that loot box mechanics constitute a form of gambling. This gambling is of a form that is not permitted under the current regulations that are in place in the country.
This decision came after another order that was made in 2018. This occurred after a study suggested it would be beneficial for all game developers and publishers to remove loot boxes. These mechanics are highly controversial because critics argue that they offer randomly generated in-game rewards for real-life money. This constitutes a form of gambling that is often aimed towards a younger generation.
The 2018 study made the assertion that there was a correlation between people that played games that feature loot boxes and the development of gambling addictions later in their lives. This rather worrying finding was what prompted the KSA to take swift action and recommend that loot boxes be removed from games in the country.
This order went down without any problems with the majority of game developers in the country, with the notable exception of EA. EA has received widespread criticism for its reliance on loot boxes to generate income from the various titles it develops and publishes. EA made the decision to challenge the ruling that the KSA made via the courts.
After the challenges to the rules that EA brought to the legal system, the courts have now ruled in favor of the regulator and against the giant developer. The ruling was made in the District Court of the Hague after a lengthy legal battle.
This ruling will now mean that EA itself, as well as its Swiss subsidiary, will be slapped with a hefty €250,000 fine for each week that it fails to remove the loot boxes from the games it offers. This fine will be capped at €5 million, which is no small sum, even for a company with the size and stature of EA.
The developer has been given three weeks to comply with the ruling made in court. This time began on the 15th of October, so it is reasonable to assume the company will be forced to remove all the loot boxes from FIFA games by the 5th of November. This includes all of the FIFA games that currently offer the Ultimate Team game mode, so FIFA 19, 20, and 21 will all be affected.
The game mode in question, Ultimate Team, has been one of the biggest money earners for the franchise as players look to build the strongest teams they can, mainly using players bought from “packs” that offer randomly generated players of different skill levels and value.
These packs are the loot boxes in question. These allow players to buy in-game items blindly, and often for real-life cash. A large part of the problem stems from the fact that the userbase for FIFA games tends to be rather young, and many have argued that these tactics to generate revenue insidiously prey on the naivety of children.
The KSA’s Argument
The randomness of the rewards made up the cornerstone of the argument that the KSA brought to court. The regulator stated that since the rewards offered in packs are completely random and cannot be influenced by the person playing the game, the game mode constitutes a form of gambling. This, alongside the high-value items that are often traded between players, makes it illegal under the current gambling legislation in the country.
The specific legislation that these features were found to breach is the Gambling Act, which stipulates that it is illegal for Dutch citizens to win a prize or a premium from games unless it is from a licensed operator.
The reason that the KSA stated that it was important to make the initial order and then to fight the developer in the courts was its belief that the practice is harming vulnerable individuals. The regulator has made its stance very clear that it believes in shielding these vulnerable individuals, such as underage players, from gambling.
The KSA believes it is essential to introduce a separation between gambling and gaming. This is because a huge number of gamers are young individuals that lack the capacity to differentiate between the two practices. These individuals can be especially susceptible to developing issues with gambling as a result of games that use loot box mechanics, and, as such, these mechanics do not belong in games that are marketed to minors.
This argument was a sentiment that was shared by the District Court of the Hague. It said that the regulator had been right to classify these practices as gambling and was, therefore, right to issue the order to desist from using them in games in the country. It also agreed that the KSA had been right to request reparations in terms of fines from the developer.
At present, in the Netherlands, all forms of online gambling are prohibited by law as the country works to implement the Netherlands Remote Gambling Act from the 1st of March 2021. This will aim to bring in the framework to facilitate online gambling in a safe and responsible manner and will introduce rules that licensed operators in the country will be forced to abide by.
This law was originally intended to be brought in from July of this year, but the hurdles that the COVID-19 pandemic has thrown up during the year have understandably hindered its implementation. This is not to say that the laws would have come into effect before then, however, since the launch of the regulated market had already been delayed as early as November 2019.
Responsible Gambling in the Netherlands
In preparation for the launch of the market, the players in the country’s current gambling market have been making strides to promote healthy and sustainable gambling practices in recent months. Most recently, the Royal Dutch Football Association (KNVB) has signed an agreement with the Nationale Loterij in the Netherlands to better promote responsible gambling on football matches.
This agreement has set out a comprehensive plan to help the two parties work in tandem to push for more clarity and support when it comes to sports betting in the country. This, they hope, will help to improve the public trust in the betting framework that is currently in place before the new licensed online gambling market is launched next year.
Another system that is being implemented in the country that is hoped will help to reduce the impact of problem gambling is the Cruks self-exclusion tool that is currently in development. The mechanisms that will underlie this nationwide scheme have recently been detailed, and Cruks will launch at the same time as the regulated market next year.