February 17, 2019

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The Legality of Loot Boxes – Update

We recently blogged on legal issues with loot boxes as a game mechanic, and some of the scrutiny to which they are being subjected. The debate continues on whether loot boxes are an illegal gambling mechanic, but at least for now, they likely remain legal in many jurisdictions. The following is an update on recent statements from various gambling regulatory authorities around the world.

  • United Kingdom – The Executive Director of the UK Gambling Commission issued recent guidance on loot boxes, stating: A key factor is whether in-game items acquired ‘via a game of chance’ can be considered money or money’s worth. In practical terms this means that where in-game items obtained via loot boxes are confined for use within the game and cannot be cashed out it is unlikely to be caught as a licensable gambling activity. In those cases our legal powers would not allow us to step in.

  • Belgium – Belgium’s Gaming Commission clarified that it has NOT actually finalized its decision on whether loot boxes are gambling, despite erroneous reports to the contrary. It says the statement that appeared in the original report, stating that the “mixture of money and addiction is a game of chance,” is descriptive of the investigation’s intent rather than its conclusion.

  • Hawaii – is allegedly considering legislation relating to loot boxes.

  • Australia – The Victorian Commission for Gambling and Liquor Regulation has not yet ruled on whether loot boxes constitute “unauthorized gambling” as defined by Victorian law, but it confirmed that it is “aware of the issue of ‘loot boxes'” and in the process of assessing their legal status.

  • Netherlands – The Gaming Authority has not concluded that games with loot boxes are seen as gambling games, but are investigating the issue.

Stay tuned as this issue continues to evolve.

Copyright © 2019, Sheppard Mullin Richter & Hampton LLP.


About this Author

James Mattinson Blockchain Technology and Digital Currency Lawyer Sheppard Mullin Washington DC

Jim Gatto is a partner in the Intellectual Property Practice Group in the firm's Washington, D.C. office. He is also Co-Team Leader of the firm's Digital Media Industry and Social Media and Games Industry Teams, Blockchain Technology and Digital Currency team, and Team Leader of the firm's Open Source Team. 

Areas of Practice

Mr. Gatto leverages his unique combination of nearly 30 years of IP experience, business insights and attention to technology trends to help companies develop IP and other legal...