September 22, 2019

September 20, 2019

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Senator Wants to Ban Loot Boxes and Pay-to-Win Aimed at Kids

In the latest salvo in the ongoing debate about whether certain game mechanics are exploiting kids, Senator Josh Hawley (R-MO) announced that he has introduced a bill to ban the alleged exploitation of children through “pay-to-win” and “loot box” monetization. According to Hawley, “The Protecting Children from Abusive Games Act” would apply new consumer “protections” to games played by minors including:

  • Games targeted at those under the age of 18 (this would be determined by subject matter, visual content, and other indicators similar to those used to determine applicability of the Children’s Online Privacy Protection Act (COPPA))
  • Games with wider audiences whose developers knowingly allow minor players to engage in microtransactions

In such games, the bill would prohibit several forms of allegedly manipulative design:

  • Loot Boxes – Microtransactions offering randomized or partially randomized rewards to players
  • Pay-to-Win
    • Manipulation of a game’s progression system, typically by building artificial difficulty or other barriers into game progression to induce players to spend money on microtransactions to advance through content supposedly available to them at no additional cost
    • Manipulation of the competitive balance between players of multiplayer games by allowing players who purchase microtransactions competitive advantages over other players

These rules would be enforced by the Federal Trade Commission, which would treat the distribution of such games by publishers and online distributors as an unfair trade practice.

State attorneys general would also be empowered to file suit to defend the residents of their states. As we previously reported, the FTC itself has announced that it will be holding workshops on loot boxes this fall. The impetus for the bill, according to Hawley, is that “When a game is designed for kids, game developers shouldn’t be allowed to monetize addiction” and “When kids play games designed for adults, they should be walled off from compulsive microtransactions.”

We will provide updates as they develop.

Copyright © 2019, Sheppard Mullin Richter & Hampton LLP.

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

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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...

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