EA and Swiss subsidiary face Dutch penalties over loot boxes

The KSA first issued the administrative order subject to a penalty in 2019, on the basis that loot boxes constituted a form of unauthorised gambling under the country’s gambling regulations.

This followed an earlier order, in the wake of a 2018 study, for all video games publishers to remove loot boxes from their titles.

That study suggested a correlation between playing games with loot boxes and development of an addiction to gambling later in life, prompting the KSA to take action.

While the majority of companies complied with this order, the KSA noted, EA did not, and instead challenged the ruling.

The District Court of The Hague has now ruled in favour of the KSA, meaning EA, and its Swiss subsidiary, will be fined €250,000 each week it continues to offer loot boxes in Fifa, capped at €5m.

It has three weeks to comply with the court ruling – handed down on 15 October – which would suggest all loot boxes must be removed from titles such as Fifa 19, 20 and 21 by 5 November.

Loot boxes are an in-game mechanic that allow players purchase ‘blind boxed’ items for virtual or real-word currency, with the user then randomly awarded a virtual item that can be used in the game.

EA uses the mechanic in the form of Fifa Ultimate Team (FUT), where users can purchase a pack of randomly assigned players for their team.

The KSA said as the players purchased are determined by chance and the contents cannot be influenced, FUT constitutes form of gambling. It also said that some players have a high value and can be traded by users playing the game.

The regulator said this was in breach of the Gambling Act, which makes it illegal for consumers to win a prize or premium, unless from a licensed operator.

“The KSA believes it is crucial to shield vulnerable groups, such as minors, from exposure to gambling,” KSA chairman René Jansen said. “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.”

Announcing its decision to rule in favour of the KSA, the District Court of The Hague said that the regulator was correct in classifying loot boxes as a game of chance, and as such was right to request the penalties.

“The KSA has rightly concluded that the definition of games of chance within the meaning of the Gambling Act has been met,” the Court explained. “In view of this qualification and in view of the prohibition on offering online games of chance without a licenxe, the KSA is authorised to proceed with enforcement.”

All forms of online gambling are currently prohibited in the country, though this is set to change on 1 March next year with the introduction of the Netherlands’ Remote Gambling Act. This will establish a regulated market and allow operators to apply for igaming licences.

The law had been scheduled to come into effect in July 2020, but was delayed to 1 January in November 2019, but another delay due to the effects of the novel coronavirus (Covid-19) pushed the date back to 1 March, with the market set to launch next September.