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loot boxes

Ireland 'far behind the curve' on gambling laws as warning sounded on 'insidious' loot boxes in video games

The long-awaited gambling regulator will review laws around loot boxes in video games – but it isn’t clear when it’ll be set up.

THE REGULATION OF loot boxes in video games and whether or not they constitute gambling is something that will be reviewed by Ireland’s gambling authority – despite there being no definitive timeline for when this regulator will be established.

There are no immediate plans to regulate the in-game purchase of loot boxes here, even as some other countries across Europe step up action on the issue.

Barry Grant, from problem gambling charity Extern, told that these loot boxes in games that are played by millions of children worldwide constitute an “insidious form of gambling” and that Ireland “is far behind the curve” when it comes to the regulation of gambling in all its forms.

In video games, loot boxes contain extra content that a player must pay actual money for.

They’re common in popular games such as FIFA and Fortnite.

In the latest FIFA game, for example, a mode called Ultimate Team allows players to create their own team of footballers and play against other players around the world. 

By playing games against others and the computer, they can earn virtual coins to try buy better players for their team. This is the more difficult and time-consuming method. However, players can also use real money to buy these ‘packs’. 

These packs can cost anything from €1 to €10, and sometimes more for special once-off packs.

The packs may contain a Ronaldo, or a Messi. But it’s extremely unlikely. In fact, the game tells you how likely it is to pull one of the highest rated cards from each pack.

In a pack currently costing roughly €10 in the game, it gives a probability of less than 10% of getting one of the highest-rated players in the game. It follows that, the more you spend, the more likely it is to get these higher-rated players for your team.

Early this year, FIFA-makers EA said that they’d made over €800 million from “live services” in games in just three months, which include the loot boxes found in FIFA. It is estimated that loot boxes are worth billions each year across the video game industry.

Grant said: “E-commerce is one thing where you know the thing you’re buying in advance. Gambling is where you put up a stake and you don’t know the outcome of what the thing will be. 

You’re hoping it’ll be Ronaldo rather than some donkey. 
It’s all about risk and reward, we’ve a reward pathway in our brain. And the likes of this taps into that system the same way social media does and slot machines do.

He said that, while his charity had not yet been contacted by someone specifically over loot boxes, it was clear that embedding such behaviours within children at any early age was asking for trouble.

“I’m sure a lot of parents with the best of intentions link their debit card account to the online store for the Xbox or Playstation or whatever,” Grant said.

“But we’ve heard of cases where the child might go on a spree of buying these loot boxes.

This is a [relatively] brand new thing and they’re already making billions.

Loot boxes

Around Europe, different jurisdictions have taken steps to try to tackle the use of loot boxes – or micro-transactions – in games. 

Last month, a court in the Netherlands upheld a decision from the country’s gambling authority that could mean a fine of up to €10 million for EA. The company has said it will further appeal the decision. 

In Belgium, authorities there have found that some paid-for loot boxes in games amounted to gambling under Belgian law. 

As with other parts of gambling legislation here, the Irish government has been very slow to regulate in this area. The current state of Irish gambling laws have been labelled “obsolete” given how much the industry has changed in recent years with the growth of online gambling. Prior to entering government, Fianna Fáil called for action to tackle loot boxes.

As far back as 2013, the government was seeking to create new laws around gambling in Ireland and a regulator to oversee it. In 2005, the UK Gambling Commission was set up. Such is the development in how people bet in recent years, the British government is looking at updating its gambling laws

Ireland hasn’t even got as far as creating a regulator yet. 

In the recent Budget, it was announced that funding would be set aside next year for the set-up of the long-awaited gambling regulator in Ireland.

A spokesperson for the Department of Justice said: “Initial funding of €100,000 for the gambling regulatory authority was provided in Budget 2020. Additional funding of €100,000, to support the establishment of the Office of the Gambling Regulator, is included in Budget 2021.

It is not possible at this point to estimate the eventual annual costs associated with the establishment and operation of a gambling regulatory authority. These costs will be significantly influenced by the nature and extent of the regulatory tasks required in the context of the gambling activities to be licenced in the State.

In a paper prepared by the Oireachtas Library and Research Service earlier this year, it noted that the legal position in Ireland on whether loot boxes should be considered to be a form of gambling was “unclear”.

It points out that a change in law would be needed if loot boxes were to be categorised as such.

It said: “It is unlikely that the provision of loot boxes within a game would be deemed to be sufficiently similar to making a book on an event as to amount to betting. Difficulties would also arise with trying to fit loot boxes within the concept of a lottery, as it is unclear whether the contents of loot boxes could be seen to amount to ‘money’s worth’.

However, it must be emphasised that, in the absence of any case law or interpretive guidance from a specialist regulator, the legal position of loot boxes in Ireland remains uncertain.

Gambling regulator

Grant said: “We’re so far behind the curve, but it’s not like we’re some technological backwater. Surely someone somewhere can get a grip on this. It’s not beyond the government to come up with a solution.”

He said that while they’re not receiving contacts yet exclusively related to loot boxes, it wasn’t difficult to imagine such a situation further down the line. 

“Fast-forward 10 years and we could see a generation addicted to gambling,” he said.

“And when we go back to the inception of these kinds of behaviours, we could be see seeing these loot boxes.

We’re really aware of this. There was that documentary recently on Netflix – the Social Dilemma – pointing out the effect on social media and games. How they trap up, get us into these feedback loops… the government can’t keep twiddling its thumbs when it comes to regulation on gambling.

The Department of Justice spokesperson was unable to provide timelines for when such a regulator would be set up.

The spokesperson said: “At this point, it is not possible to precisely determine the establishment day for the new Regulator, but Minister of State James Browne who has special responsibility in this area hopes that this process can be carried out as quickly as possible.”

The Business Post, however, recently reported that it may not be until 2023 until such a regulator is set up.

The spokesperson added: “We recognise that there has been some attention on in-game purchases such as ‘Loot Boxes’, skins, etc. which, in particular games, might encourage gambling-like behaviour.

A critical issue is whether Loot-boxes etc constitute gambling, or are a form of e-commerce. These offers do not appear to fall within the current Irish legal definition of gambling, and purchases are essentially an e-commerce activity. As such, they would fall within the recourse of normal consumer law where there is dissatisfaction on the part of the customer with the purchase. This is a position which is shared by other EU Member States, and the Minister for Justice is not responsible for regulation of e commerce activities.

“Different approaches have been adopted to the issue of whether and how Loot Boxes might be defined and regulated in the context of gambling activities in Europe, with no definitive outcomes. This matter is one which the Department, and the new Regulator, will keep under review.”

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