On April 13, 2020, the Entertainment Software Rating Board (ESRB), the self-regulatory industry group that has been rating games1 since 1994, announced that it would create a new “Interactive Element”—the term ESRB uses to describe disclosures for video games that highlight a game’s interactive or online features that may be of interest but do not influence a game’s rating—for games that offer loot boxes and similar random awards to players for purchase. This new Interactive Element, called “In-Game Purchases (Includes Random Items),” will be assigned to any game that contains in-game offers to purchase digital goods or premiums with real-world currency (or with virtual coins or other forms of in-game currency that can be purchased with real-world currency) for which the player does not know prior to purchase which specific digital goods or premiums they will be receiving. The ESRB’s new notice would be applicable to games that offer commonly used in-game tools such as loot boxes, item or card packs, gacha games, mystery awards, prize wheels, or treasure chests. Games that have the In-Game Purchases (Includes Random Items) notice may also include other non-randomized, paid elements.
The ESRB’s decision follows increased public scrutiny over loot boxes in recent years, which has also coincided with regulatory interest. Various federal, state, and foreign actors have proposed regulating loot boxes, including:
- Federal—At the federal level, the most notable effort to restrict loot boxes was S.1629, a 2019 bill introduced by Sen. Josh Hawley (R-MO), that would, among other things, prohibit the publication or distribution of “minor-oriented game[s] that include[] pay-to-win microtransactions or loot boxes,” subjecting the publishers or distributors to penalties in Federal Trade Commission enforcement proceedings or civil suits brought by state attorneys general.
- State—By contrast, in the wake of Kater v. Churchill Downs, Inc., 886 F.3d 784 (9th Cir. 2018), Washington state legislators drafted bills (SB6568 and HB2720) that would immunize makers of games with loot boxes from certain Washington state-law claims. In Kater, the United States Court of Appeals for the Ninth Circuit reversed the dismissal of a class-action complaint against the makers of “Big Fish Casino,” holding that the app falls within Washington’s definition of an “illegal gambling game.” Accordingly, users could potentially recover the value of lost “chips” in the app. Under the proposed state bills, “online games of chance when played solely for entertainment purposes with virtual items if such virtual items may be used only for gameplay and may not be, per the terms of service of the game, transferred, exchanged, or redeemed for money or property” would no longer be considered “illegal gambling games.”
- Foreign—The “Ultimate Teams” mode in Electronic Arts’ popular FIFA soccer franchise has provoked controversy. In “FIFA Ultimate Team,” players create a team of players from virtual cards that are purchased with points acquired in the game or in exchange for money. After discussions with Belgian regulators, Electronic Arts removed the in-game currency that allowed Belgian players to access the mode in 2019, and a complaint was recently filed in France “arguing that [FIFA] has been misclassified as an online video game, when it should in fact be a form of gambling.”2
We will continue to monitor developments regarding loot boxes and similar in-game features and will offer further updates as necessary.
Please do not hesitate to contact Aaron Hendelman, Christopher Paniewski, Brian Levy, Julie Krosnicki, or one of the other attorneys in the firm’s electronic gaming group if you have any questions about loot boxes or random or other rewards in your game or interactive product.
[1] For example, if a game’s “[c]ontent is generally suitable for ages 10 and up,” the ESRB rates the game “Everyone 10+” or “E10+.” See Ratings Guide, ESRB, https://www.esrb.org/ratings-guide/ (last visited Apr. 23, 2020).
[2] Tom Usher, Opinion, Does Fifa Ultimate Team Risk Turning Players into Gambling Addicts?, Guardian (Feb. 4, 2020), https://www.theguardian.com/commentisfree/2020/feb/04/fifa-ultimate-team-gambling-french-lawsuit-ea-video-game-card-packs.
