Comparative analysis of loot box legislation in different countries

Alla Taburova

Lawyer

Reviewer: Bohdan Popovchenko

Contents overview

To understand loot box legislation trends, along with the gaming license cost and regulations, let’s start with the definition of a loot box. Loot boxes are game boxes containing random in-game items purchased with real money. To rephrase, the player initially does not know exactly what they will receive as part of the purchase. They may receive a random in-game item that is either equal to the purchase amount or less or more than the purchase amount.

Loot boxes are not regulated by any one general law or regulation. For instance, the requirements for the To bique gambling license are certainly not identical to those for the Chinese or Korean authorization. As such, each country or jurisdiction has its own laws regarding loot boxes, allowing it to determine on a case-by-case basis whether this type of in-game monetization falls under local gambling laws or not. Thus, whether you seek to obtain the Anjouan gambling license, the Saint Kitts and Nevis gambling license, or the permit in any other popular destination, it’s critical to stay updated on the latest regulatory standards applicable to your scope of operations.

In general, international lootbox laws have their own specific features and characteristics.

It should be noted, however, that many countries have no regulations at all that regulate loot boxes. This creates a number of problems for developers who, for example, want to release the same game in multiple regions around the world.

China and Japan are called the “cradle of loot boxes”: the first examples of future loot boxes emerged in these eastern countries. The lootbox legal framework in these countries is very strict.

China

China has strict and thorough gambling laws, which include loot boxes. The law prohibits the purchase of loot boxes with real or virtual currencies. Developers must also disclose the odds of winning individual items in loot boxes. In addition, public records of prizes and results of loot boxes for the past 90 days must be provided.

Japan

In Japan, there are a number of requirements for loot boxes, which include, in particular, disclosing the probability of receiving a certain item and taking measures to prevent trading virtual items using real money. At the same time, multi-tiered loot boxes, which must be filled sequentially in order to move to a higher level of the game, are still prohibited.

South Korea

On February 27, 2023, the South Korean government passed a bill amending the Game Industry Promotion Act. The revised lootbox legal guide specifically requires video game developers to disclose the probability of receiving loot box items in games, as well as on official websites and when used in advertising.

Netherlands

Dutch laws prohibit the offering of gambling without the necessary permits, and loot boxes were included in these rules in 2018.

United Kingdom

A House of Lords committee has recommended that loot boxes be included under the UK Gambling Act.
A July 2022 report said that after careful consideration, the government does not intend to amend gambling regulations to cover loot boxes.
This intention was based on the fact that while loot boxes have similarities to traditional gambling, the ability to legally cash out rewards is different. As a general rule, loot box rewards have no real monetary value outside of the game and are primarily used to enhance the gaming experience.

In Europe, gambling is regulated at the national level. As a result of lootbox law disparities, there is no uniform approach to regulating loot boxes in European countries.
In January 2023, the European Parliament adopted a report calling for the harmonisation of EU rules to better protect players in the online video gaming sector, including in relation to loot boxes. The Parliament emphasised that consumers should be fully informed about the existence of in-game purchases, such as loot boxes and other random in-game purchases, and should be aware of their content.

France

France’s national gambling authority has concluded that loot boxes are not subject to gambling regulations unless the items inside the loot boxes have real monetary value.

Belgium

The Belgian Gambling Commission ruled back in 2018 that allowing players to buy loot boxes with real money is legally considered gambling. A company must have a license to be able to legally supply gambling products and services in Belgium.

Despite the above, Belgian gamers are able to access versions of games containing loot boxes in other jurisdictions using a VPN. This maneuver shows that there is no uniform legal regulation of loot boxes for each country.

Spain

Back in 2022, the Spanish Ministry of Consumer Affairs announced a bill to regulate loot boxes in order to protect minors from addictive gambling behavior. However, as of today, the aforementioned bill remains just a bill.

Germany

From January 1, 2023, games with loot boxes must carry the warning label “In-Game-Käufe + zufällige Objekte [in-game purchases + random items]”.

Poland

Loot boxes are not covered by the Gambling Act in Poland. The local Gambling Act does not recognize randomized reward mechanisms used in interactive entertainment. The legislator believes that virtual items are not monetary or material prizes. In addition, such virtual content cannot be considered a material prize within the meaning of Polish law, since it does not have any material form. The Polish Ministry of Finance believes that loot boxes should not fall under the definition of any gambling regulated by the Gambling Act. The mere fact of the presence of an element of chance does not automatically lead to the fact that the game is considered gambling.

Conclusion

Lootbox regulation analysis varies significantly in different jurisdictions. There are countries that have a complex system related to gambling and loot boxes. Therefore, if a developer is going to release a game with a lootbox element of any kind, lootbox policy differences should be taken into account. Specialists of FINTECH HARBOR CONSULTING have a solid knowledge in country-specific lootbox laws and are always ready to help their clients who want to engage in loot boxes.