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Spain Sets its Sights on Regulating Video Game Loot Boxes
By Jeff Osienya Jun 05, 2022 LegalityLoot boxes continue to be a hot button issue in the EU. Spain is gearing up for official regulation of the items that come as in-game boosters and has launched a public consultation on the matter.Spain may soon be the first EU country to develop legislation to regulate video game loot boxes. Alberto Garzón, the Spanish Consumer Affairs minister, has proposed drafting customized laws for loot boxes and other video game incentives, along with NFTs and cryptocurrencies.
During a video games seminar, the minister stated that while they may look innocent at the outset, there is always a youngsters’ game that’s indistinguishable from gambling games. As such, the loot boxes carry a potential health risk for unsuspecting players. He has also claimed that loot boxes may lead to problem gambling which may, in turn, lead to addiction, stress, and bankruptcy.
Video game loot boxes have been a topic of contention, with multiple sources linking them to problem gambling and putting them at high risk of negatively affecting children and young adults. This is the reason why more and more countries are considering regulating the industry.
Potential Harm to Vulnerable Users
The main reason for the controversy around loot boxes is that they are ‘predatory’ monetary schemes, according to different groups advocating for their tighter regulation. The biggest concern here is that they manipulate users into purchasing them without full knowledge of the implications, including the long-term cost of the microtransactions.
The scrutiny into loot boxes was amplified by EA’s Star Wars Battlefront 2 loot crates which changed the public’s perspective of the game. The company has previously stated that loot boxes are not gambling and are, in fact, just like a Kinder egg or a Hatchimal kids’ toy. However, EA later received a lot of heat from the media and gaming commissions for possible gambling practices through loot boxes.
Either way, it’s worth pointing out that there’s a stark difference between loot boxes and casino games like slot machines. For instance, unlike the latter, which is not guaranteed to yield a prize when played, all loot boxes carry a price, no matter how small. In addition, the player may also retrieve loot box prizes that were not used up immediately after they were awarded, which is not the case with more explicit forms of gambling. Despite these differences, loot box critics have been fighting them, insisting that they are still addictive and pose an enormous risk to video game players, including minors.
NCC Report Terms Loot Boxes ‘Exploitative’
On June 1, the Norwegian Consumer Council (NCC) released a report accusing video Game developers of exploiting consumers. Based on the NCC publication, loot boxes are marred with deceptive designs that encourage impulsive purchases. Additionally, the report alleged the unethical use of machine learning to target users and maximize spending, aggressive marketing, and hidden pricing, among other practices.
The European Consumer Organization is among 20 consumer groups in 18 EU countries that have backed the report. Insert Coin, as the report has been titled, also pointed out the fact that most video games that feature in-game purchases are free-to-play – something that reels the player in during the first few hours or days of playing.
However, the catch comes later when a player has invested time and effort and is looking for virtual items, powerups, and in-game currencies to increase the chances of landing bigger prizes or leveling up faster. As a result, the developer temporarily removed loot box microtransactions, requiring users to earn any progression through gameplay. The two popular games mentioned in the report include FIFA 22 and Raid: Shadow Legends.
Public Participation in the Spain Loot Boxes Regulation
With other members of the EU deliberating on what to do next regarding loot boxes, Spain has already begun public consultations to find out what the people think of the matter. In addition, the MCA has put out a notice on its website, inviting public feedback on the regulation of random reward mechanisms. The consultations were opened on May 28 and concluded on June 13.
Those welcomed to give their opinion include citizens, associations, and organizations. In addition, an email was provided for all concerned parties to channel their points of interest. Some of the topics to be discussed by those interested in contributing include the problems the regulations would attempt to resolve, their objectives, why such rules would be necessary, and alternative solutions, if any. The council intends to publish an initial draft of the regulations in the coming weeks.
Will Spain Become the First EU State to Regulated Loot Boxes?
Discussions about regulating loot boxes in Spain have been ongoing since 2020 when Minister Garzón took to Twitter to announce the first attempt to introduce measures to regulate online gambling advertising due to its public health implications. He later added that one of the main areas of focus for regulators would be loot boxes since, according to him, they were perverse systems that indiscriminately encourage impulsive consumption of games of chance.
If Garzón’s proposal is taken up, Spain will become the first country in the EU to regulate loot boxes, perhaps creating precedence for other members to follow suit. Other countries that have already passed laws to regulate or outright ban loot boxes include Belgium and the Netherlands.
Attempts to impose steep fines on big gaming companies like EA and Epic Games have been made since 2018, forcing the developers to make the contents of the loot boxes more transparent. However, it’s unclear what lies ahead for the Spanish video gaming industry as this is a conversation that has been going on even with its gambling regulator since last year. Mind you, a court in the Netherlands recently declared that loot boxes do not defy any anti-gambling laws and overturned a decision by a smaller court to claim a €10 million fine from EA.
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