Imposition of an order subject to a penalty on Electronic Arts for FIFA video game
In 2019, the Netherlands Gambling Authority (Kansspelautoriteit, Ksa) imposed an administrative order subject to a penalty of up to 5 million euros on Electronic Arts Inc. and Electronic Arts Swiss Sàrl each for violating the Gambling Act through its ‘Packs’ in the FIFA video game. The District Court of The Hague recently ruled in favour of the Ksa in this matter. The judgment was published today.
The Ksa imposed the orders subject to a penalty because the popular FIFA football game contained illegal loot boxes. These loot boxes are like treasure chests. The FIFA loot boxes, for example, would contain football players that could improve the performance of the team that the player was using to play the game. The players contained by the loot box are determined by chance, and the contents cannot be influenced. The fact that football players sometimes have a high value and that they can occasionally be traded constitutes a violation of the Gambling Act. Under Dutch law, a game of chance that allows a prize or premium to be won can only be provided if a relevant licence has been granted.
A study carried out by the Ksa in 2018 found that there may be a correlation between playing games that incorporate loot boxes and development of an addiction to gambling. Chairmen René Jansen: ‘The Ksa believes it is crucial to shield vulnerable groups, such as minors, from exposure to gambling. For that reason, the Ksa supports a strict separation between gaming and gambling. Gamers are often young and therefore particularly susceptible to developing an addiction. As such, gambling elements have no place in games.’
Following the publication of the study, the Ksa called on companies in the gaming industry to adapt their games so they were no longer infringing the Gambling Act. A number of companies heeded the Ksa’s call. However, Electronic Arts Inc. and Electronic Arts Swiss Sàrl did not.
Further information is provided in the five questions and answers below.
Why did the Ksa impose an order subject to a penalty?
Electronic Arts Inc. and Electronic Arts Swiss Sàrl are violating the Gambling Act through its Packs in the FIFA video game. The law stipulates that games of chance may not be offered without a licence. This is not without cause; games of chance are high-risk products that can only be offered under strict conditions. Electronic Arts Inc. and Electronic Arts Swiss Sàrl are not licensed to offer games of chance. The orders subject to a penalty were imposed in order to compel the companies to put an end to the violation. The Ksa considers the violation of the law to be particularly serious given that a large number of children and young adults have access to Packs in the FIFA game and are particularly vulnerable to developing gambling addictions.
What is the background to this case?
In 2018, the Ksa conducted an investigation into loot boxes, after concerns were raised by gamers, parents and care institutions, among others. This issue is by no means unique to the Netherlands; regulatory bodies around the world are addressing the blurring boundaries between gambling and gaming. The fact that each country has its own gambling laws, all of which are structured slightly differently, complicates the matter. The Ksa’s investigation revealed that several loot boxes were not in compliance with Dutch law. Non-compliance was found in cases where the content of the loot boxes could not be influenced, the content had a high value and the content could be traded. The investigation also found a potential correlation between loot boxes and the likelihood of players developing a gambling addiction. As a result of the investigation, the Ksa called on game developers and game companies to comply with the standard set by the law, which is that games of chance offered without a licence are prohibited. A number of providers subsequently adapted their games accordingly. Electronic Arts Inc. and Electronic Arts Swiss Sàrl did not, despite having already been notified by the Ksa in April 2018 that its Packs in FIFA 2018 were in violation of the Gambling Act. In early 2019, the Ksa informed Electronic Arts Inc. that the same violation occurs in the FIFA 2019 game. According to the law, the Packs constitute a game of chance.
Why did it take so long?
Legal proceedings entail a very lengthy process and must be conducted with a lot of care and diligence. The same applies to any investigations that may be required. The stakes are high. Since the investigation in 2018, the Ksa and Electronic Arts Inc. have communicated on this matter on several occasions and various procedures have been followed. In some cases, the Ksa is prohibited either by the court or by law to publicise a measure during legal proceedings. This was the case in this matter as well.
What is the Ksa’s overall impression of loot boxes?
The Ksa’s study into loot boxes in 2018 showed that a number of loot boxes were not in compliance with Dutch law. In addition, the Ksa concluded that there was evidence to suggest a possible association between loot boxes and the development of addiction in players. This was not only the case for illegal loot boxes. The Ksa is alarmed that more and more games are appearing with elements of gambling, not least because gamers tend to be young and particularly susceptible to developing a gambling addiction. Loot boxes (called ‘packs’ in FIFA) are the exponent of this trend. The Ksa believes it is crucial to shield vulnerable groups, such as minors, from exposure to gambling. Adults likewise stand to benefit in this regard, as they should be aware of what kind of game they are playing. This is, in part, why the Ksa feels that a strict distinction must be made between games and games of chance. Games of chance are high-risk products, and offering them without a licence is prohibited.
If a FIFA player feels they have been wronged, where can they report it?
Players who wish to file a complaint about the operation or modification of the game can contact the game's providers. The game's providers are the parties that decided to include a gambling game within the game, thereby breaking the law. The Ksa has pointed this out to Electronic Arts Inc. and Electronic Arts Swiss Sàrl repeatedly. Electronic Arts Inc. and Electronic Arts Swiss Sàrl are therefore itself responsible for changing the game such that it is no longer in contravention of the law. How exactly it accomplishes this is at their discretion.