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Compliance Updates

Belgium Threatens Criminal Prosecution Over Loot Boxes

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Belgian gambling commission-loot boxes
Reading Time: 4 minutes

Belgian Gaming Commission lays groundwork for prosecution as Belgian justice minister meets with stakeholders to find an alternative

 

The Belgian Gaming Commission (BGC) has suggested that criminal prosecution should be undertaken against Electronic Arts, Valve, and Activision Blizzard over loot boxes in their respective games.

With the release of its research report on loot boxes,the BGC has clearly defined the parameters of what does and does not constitute gambling, and the ways in which FIFA 18, Counter-Strike: Global Offensive, and Overwatch each contravene the legislation.

The report lays out recommendations of what steps should be taken next to handle the issue.

Although the BGC has suggested criminal prosecution first and foremost, it will not proceed until Belgian minister of justice Koen Geens has met with industry stakeholders to begin a dialogue on the issue.

Speaking with GamesIndustry.biz, BGC director Peter Naessens said: “We are going to take all preparatory measures for the drafting of police reports, but it’s not going to be tomorrow. There is a certain amount of time for the minister of justice, but it’s not unlimited.”  – Peter Naessens, Belgian Gaming Commission director

Other recommendations from the BGC include developing specific permits for video games that feature loot boxes, and marking them accordingly. This is coupled with the suggestion of age verification in stores when purchasing codes or gift cards, and a principal ban on minors being able to purchase games featuring the mechanic.

Regarding distributors and operators, the BGC recommended that a clear indication of winning odds be provided and that its technical assessment team be granted complete control over the random number generators used for loot boxes.

Additional provisions over player data and payments were recommended, along with the introduction of a user spending limit.

License holders such as FIFA and Disney were also pulled up by the BGC, which suggested such companies pay closer attention to the sort of mechanics appearing in their games.

Unlike the Netherlands’ recent decision regarding loot boxes, the Belgian ruling does not consider the option to sell or trade the contents of loot boxes as an important factor when determining whether or not the mechanic might constitute gambling.

The BGC defines gambling as any game whereby a wager can lead to loss or win for at least one of the players, and where chance may even have a secondary role in the course of the game, the winner, or size of the winnings.

While its definition may appear less applicable to loot boxes than the Netherlands Gaming Authority, the BGC clearly defined the many ways in which the offending games are in breach of the legislation.

Taking Overwatch as an example: using real money, players can purchase loot boxes containing random collectable items, which constitutes a wager. The chance of a win or a loss concerns the wager itself versus the value of the items in the box. Despite being entirely aesthetic and not tradeable outside of the game, the items have player-ascribed value that is altered by artificial scarcity, limited edition items, and the four categories of rarity.

As Blizzard does not allow players to purchase credits directly, they are encouraged to purchase loot boxes containing in-game currency in order to obtain items faster than they would by just playing the game.

“The chance of losing your wager (the cost of the loot box) is, of course, ever-present now that testimonies and research have shown that players have a substantial chance of obtaining an object or item that they already own,” the report reads.

“Both in the purchase of loot boxes and in the entire operation of the game, all of this can lead to pure manipulation of individuals or groups of players” – Research Report on Loot Boxes, Belgian Gaming Commission

The BGC calculated that, should a player wish to collect every item, they would have to open somewhere between 1,300 and 1,600 loot boxes.

Considering the aspect of chance, things become a little murkier, though the BGC is operating on the understanding that players believe the content is determined by chance, even if there were no odds communicated directly.

“Both in the purchase of loot boxes and in the entire operation of the game, all of this can lead to pure manipulation of individuals or groups of players,” the report reads. “The line between encouragement and manipulation is sometimes difficult to differentiate in an online environment where one party (game manufacturer/game platform) records almost everything and the consumer who plays the game rather passively from this perspective.”

Blizzard did not respond to the commission’s requests for more information.

Many within the games industry have criticised the assumption that loot boxes which do not contain items of monetary value outside of the game constitute gambling, drawing comparisons to collectible card games such as Pokémon or Magic the Gathering.

“It might be considered as gambling, but in our legislation there is an exception for it,” Naessens told GamesIndustry.biz. “So Pokémon cards, if they are going to introduce a wheel of fortune, roulette, or a blackjack game in order to determine the contents, it will also be problematic and we will examine it as well.

“But in our legislation, card or party games are exempt from gambling [legislation]. If Pokémon cards were to introduce the gambling element to their game, it would be very problematic as well.”

Essentially, the BGC argues that players are “lured into betting money through loot boxes with a range of techniques”.

When making the decision, the BGC considered aspects such as social behaviour monitoring, as demonstrated with the “exploratory” patent filed recently by Activision which is designed to encourage microtransaction spending through player monitoring.

“If [Pokémon card] are going to introduce a wheel of fortune, roulette, or a blackjack game in order to determine the contents, it will also be problematic and we will examine it as well.” – Peter Naessens, Belgian Gaming Commission director

Other considerations include the “fusion of fiction and reality”, highlighting the use of the footballer Cristiano Ronaldo to advertise the most expensive loot boxes in EA Sports’ FIFA and “whitewashing the behaviour of the super-rich in the football world or the possibility of match-fixing”.

Tying into this point is the use of limited edition items to drive loot box sales, and the use of game-specific currencies that are “psychologically very sophisticated” and fully disconnect the value of real money from the value of in-game currency.

Game operators failing to enforce a spending limit, combined with readily giving away free loot boxes in order to attract players was also considered a dangerous aspect of the mechanic.

Despite a recent assertion from Electronic Arts CEO Andrew Wilson that FIFA 18 loot boxes do not constitute gambling, the clock is ticking and the publishing giant, along with Valve and Activision Blizzard, will invariably have to make changes or forgo the Belgian market entirely.

Although progress will be slow, momentum is gathering as gambling legislators from around the world turn their gaze towards the issue of loot boxes. According to Naessens, BGC has been in contact with officals in Spain, Germany, Finland, America, and Asia.

 

Source: gamesindustry.biz

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Compliance Updates

Gammix Limited slams “outrageous and unsubstantiated” €19.7m KSA penalty

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The operator vows to fight on all fronts against the Dutch regulator’s ‘unjust’ ruling.

Gammix Limited has announced its intention to contest the “outrageous and unsubstantiated” penalty handed to them by the Netherlands Gaming Authority (KSA).

In response, Gammix stated that the record €19.7m penalty imposed is based on “falsified data, extreme inaccuracy and highly suspect mathematics”.

In the ruling the regulator said that Gammix was adjudged to have allowed online gambling access for Dutch consumers, as well as not requiring age verification upon sign-up – something the company wholeheartedly disputes.

Gammix reports that accounts used to access its sites during the investigation were created in Luxembourg, with deposits made via credit card. Gammix added that such action violates the sites’ terms and conditions, specifically the provision of false information upon sign-up.

The operator asserts that the penalty, totalling €19,679,000, has been calculated using figures from a proprietary web-traffic aggregation service and a multiplier of 240 Euros per click. Gammix believes this would show turnover that doesn’t exist.

Furthermore, Gammix strongly condemns the KSA’s “mystery shopper” style of investigation, which, the operator states, is an unjust basis for this record-breaking penalty.

Phil Pearson, Director of Gammix Limited, has vowed to “fight on all fronts until it receives an apology and retraction!.

He said: “The KSA has imposed upon our company a penalty that is both outrageous and unsubstantiated. Now that we are able to talk openly about the case, we can confirm that we are fighting on all fronts as, to us, this is an extraordinary and unnecessarily heavy-handed action from a regulator that many already regarded as unapproachable.

“When we received the first notice of a possible penalty, we reached out to them to say we have blocks in place. We also asked for any information they had that was material to the investigation, to ensure we remained in compliance with all guidelines  – a request they appeared to ignore. Our lawyers also approached the regulator, in writing, to gain more information, but again no response was forthcoming.

“We had enabled a block on Cloudflare for any Dutch IP, we have no Dutch language or direct Dutch payment methods, and categorically do not target Dutch traffic. If affiliates list any of our brands on Dutch-facing sites, we cannot be held responsible for those promotions. However, once players reached the end site, they would not be able to register an account.”

Pearson concluded: “This fine is an absolute joke, and we will contest this in every possible way, at every possible turn. We will only rest once this outrageous penalty has been rescinded and we have received the apology we deserve.”

 

 

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Compliance Updates

BHA Chief Executive Julie Harrington Statement Following Parliamentary Debate on Affordability Checks

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BHA Chief Executive Julie Harrington has issued the following statement after MPs debated the impact of affordability checks.

“Yesterday’s debate on the impact of affordability checks on British racing has shone a light on a hugely important issue for our sport.

“It was vital that MPs were given proper parliamentary time to thoroughly interrogate the Government’s proposals and we were encouraged by the high turnout for a Westminster Hall debate.

“Many MPs made valuable contributions to the debate, and we are sure that Sports Minister Stuart Andrew will have listened with interest to the views expressed.

“From MPs of all parties and all sides of the debate, there was a clear recognition of the need for the Government to protect and support British racing when reviewing gambling legislation.

“If our sport is to remain a healthy industry, supporting jobs in the rural economy and remaining competitive with our international rivals, we hope that Government will heed this advice.

“We were encouraged by Minister Andrew ruling out the use of job titles and postcodes in the implementation of enhanced spending checks and confirming that these changes will at least be subject to a genuine pilot.

“We will continue to make the case into the heart of Government that the impact of these checks both on our industry and racing bettors needs to be carefully considered and look forward to further discussions on this important issue for British racing with the Gambling Commission and DCMS.”

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Compliance Updates

Ensuring Integrity: The Role of Assurance in the Gambling Industry

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Ensuring Integrity: The Role of Assurance in the Gambling Industry
Reading Time: 2 minutes

 

By Salvador Garcia-Noblejas, Senior Regulatory Assurance Services at ComplianceOne Group

The gambling industry has its origins in the ancient period, and different types of games are found in almost every culture and civilization.

Over the last few years, we have witnessed an immense transformation, clearly boosted by technological developments. Among these changes, online gambling has grown rapidly, and with this new non-face-to-face reality, regulation and regulators have also embraced new ways to protect players, businesses, and the overall economy. Regulators have the responsibility to set the framework of common rules that define what is right and wrong, the means to protect all parties, and the tools that must be used when anyone does not behave as expected.

Assurance in a world of global risks

It would be inaccurate to assume that regulatory assurance’s only goal is to ensure that operators operate in a fair and transparent manner and meet their legal obligations. On the contrary, assurance also includes helping businesses understand the risks involved in the industry where they operate, analysing their strengths and weaknesses, and setting measures to mitigate those risks.

Assurance’s starting point consists of an interview phase where tailor-made questionnaires serve better understanding the reality to each operator and its actual circumstances. Once the assurance assessment is complete, a detailed action plan assists the operator in fixing any identified gaps, improving policies and procedures, and obtaining the maximum financial gain from refining their processes, products, and operations.

As part of the fast transformation of the gambling industry, with competitive new products, platforms, advertisements, and market expansion, we must not forget that bad actors and illegal practices also develop. This is the moment to ask ourselves if we are ready to face whatever can harm our operations. The most efficient way to know is carrying out a thorough audit of policies, procedures, and processes. This approach will certainly save operators from potential harm to their clients, products, brands, and finances.

Audit readiness

Regulators focus on legislation, supervision, and enforcement. All stakeholders must comply with gambling regulations if they want to offer products and services or provide a safe environment to their clients. An important part of the gambling legal system is the fact that the industry is continuously overseen to ensure that all actors adhere to the established rules. At this point, operators need to ask themselves how ready they are to show sufficient evidence that their operations adhere to the law.

Smart operators will choose to comply with as many rules and regulations as their business is capable of, and they will ensure that records are properly kept. Company leadership is essential in ensuring compliance as it contributes to collaboration between departments and having policies and procedures that make the business run within the parameters of the legislation.

Lessons learned

In recent years, some highly publicized enforcement actions, including fines and penalties, license suspension, and revocation, have alerted the whole gambling industry. From such cases, there have been increasing efforts in reviewing processes, improving systems, and growing compliance departments.

Experience in the gambling industry has taught us that it is crucial to have a detailed understanding of the regulations that govern the relationship between operators and players. Where knowledge has been insufficient, inaccurate, or out of date, some business decisions have led to unwanted consequences, sometimes catastrophic ones.

Knowledge, a solid compliance culture, strong procedures, and willingness are the formula to be ready for a regulatory audit.

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