The gambling regulator in the Netherlands re-issued a €5 million financial sanction to Electronic Arts (EA), alongside a “cease and desist” order for the company and its European subsidiaries.
The Kansspelautoriteit (KSA) dished the penalty as part of its enforcement action against EA in 2019, arguing the video games developer had violated Dutch gambling laws, as certain elements of the popular football game FIFA, the so-called game packs, were classified as loot boxes by the regulator.
Loot Boxes Represent Games of Chance
KSA stated that this kind of treasure chests represent games of chance as players inside them can improve the overall performance of the team, but the outcome of the game pack and its content cannot be influenced. Further, the regulator noted that the mere fact that certain players can have a high value and be traded constitutes a violation of the Gambling Act, and under Dutch law, to offer such a game of chance requires licensing.
The enforcement action by the KSA was prompted by a 2018 study which found possible correlation between playing games with incorporated loot boxes and developing a gambling addiction. After the publication of the study results, the regulator contacted companies from the gaming industry to adapt their games accordingly, and many did, but not EA and its subsidiary Electronic Arts Swiss Sàrl.
Legal Appeal against the Penalty
Electronic Arts contested the enforcement action and the penalty, arguing that under Dutch gambling laws there is no clear definition on what “game packs” or “loot boxes” mean, hence KSA had no legal grounds to directly link both in the video game, claiming they represent games of chance.
This week, the District Court in Hague issued a ruling in favor of the gambling regulator, stating KSA had rightfully qualified loot boxes as games of chance, and acted within its regulatory remit to enforce the penalty, since the game packs represent a monetary value and mirror games of chance functions as players had no control over what prize they would receive from a loot box.
EA Will Seek Further Legal Routes
KSA ordered EA to remove the game packs from its FIFA video game and pay the penalty, but EA’s response was that the company intended to seek further legal routes and would request a European Union judgement on the matter.
EA is seeking the last resort to avoid paying the €5 million fine due to a recent report from the EU’s Internal Market Research Committee (IMCO) regarding loot boxes in online games and their effect on young consumers.
The policy advisory unit for competitions standards and fair business practices was sanctioned to carry out a research on loot boxes after regulatory agencies in some member states clashed with game developers: regulators claim loot boxes are systematic attempts to turn gamers into gamblers, while the companies designing the games insisted that loot boxes are mechanisms for random reward and are vital for the monetization of content.