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Compliance Updates

Pearson, Simon & Warshaw, LLP and Kaliel PLLC: New Class Action Lawsuit Challenges Fortnite’s Sale of Loot Boxes

George Miller

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Pearson, Simon & Warshaw, LLP and Kaliel PLLC: New Class Action Lawsuit Challenges Fortnite’s Sale of Loot Boxes
Image Source: theverge.com
Reading Time: 2 minutes

 

Pearson, Simon & Warshaw, LLP and Kaliel PLLC filed suit, Altes v. Epic Games, Inc. Case No. 2:19-cv-01488 in the U.S. District Court for the Central District of California on February 28, 2019, alleging that Defendant Epic Games, Inc., the developer of the wildly popular video game Fortnite, uses predatory tactics to lure players into making in-game purchases. Specifically, the Complaint challenges Fortnite’s unfair and deceptive marketing of its “loot boxes,” known as “Llamas,” in Fortnite Save the World.

The Complaint, which is filed as a class action on behalf of California consumers, is brought by Mr. Altes on behalf of his child, a minor. Melissa Weiner, an attorney representing Mr. Altes and his son, commented, “Fortnite’s conduct with respect to loot boxes is especially egregious because so many of its players are kids.”

A “loot box” is a virtual pack of goods which contains a randomized selection of virtual items to be used in a game. Loot boxes can contain everything from purely cosmetic items—known as “skins,” which offer no competitive advantages—to a variety of items such as “power ups” that can dramatically alter a player’s chance of progressing in the game. The loot boxes in Fortnite Save the World, known as Llamas, are of the latter variety, offering players a chance to advance in the game.

Recently, loot boxes have generated significant controversy, with some countries, such as Belgium, Netherlands, and Australia finding that they constitute illegal gambling, based on the fact that consumers pay real currency for potential “loot” that is not guaranteed.

Other countries, including China and Korea, have recently issued regulations requiring games with loot boxes to disclose the odds of winning loot box contents.  In the U.S., the Federal Trade Commission has vowed to investigate the use of loot boxes in video games, but so far, has taken no action.

Mr. Altes’ Complaint, which was filed in federal court in California, alleges that through both misrepresentations and omissions, Epic markets loot box Llamas in Fortnite Save the World as highly likely to contain valuable loot, but in reality, the Llamas do not contain the loot expected by the reasonable consumer, and especially by the reasonable minor. The Complaint alleges that Epic fails to disclose that the odds of receiving valuable loot are next to nothing, and, if players knew the actual odds of receiving the items they desired, they would not purchase the Llamas.

Sophia Gold, another attorney representing Mr. Altes, commented, “In nearly every other game of chance, the odds of winning are disclosed.”

Mr. Altes, who brings his claims under California consumer protection law, seeks both an injunction and a class-wide refund.

George Miller started his career in content marketing and has started working as an Editor/Content Manager for our company in 2016. George has acquired many experiences when it comes to interviews and newsworthy content becoming Head of Content in 2017. He is responsible for the news being shared on multiple websites that are part of the European Gaming Media Network.

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Compliance Updates

MGA Cancels the Gaming Licence of Wish Me Luck Ltd

Niji Narayan

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MGA Cancels the Gaming Licence of Wish Me Luck Ltd
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The Malta Gaming Authority has cancelled the gaming licence of Wish Me Luck Ltd.

Wish Me Luck Ltd has thus been directed to proceed with the cancellation process of the authorisation and to suspend all gaming operations with immediate effect.

The Malta Gaming Authority notifies that any websites operated by Wish Me Luck Ltd or associated with Wish Me Luck Ltd and which make reference to the Authority or the above-quoted licence is not approved to be operational by the Authority.

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Compliance Updates

EGBA Brings Case Against Online Payment Blockings In Norway

George Miller

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EGBA Brings Case Against Online Payment Blockings In Norway
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This week the European Gaming and Betting Association (EGBA), along with Entercash payments processor, brought a case against the Norwegian Ministry of Culture in Oslo District Court over the Norwegian government’s policy of seeking to block online gambling payments.

EGBA believes payment blocking infringes on European Union law and the freedom of payment processors to do business across the European Economic Area (EEA).

Instead of enforcing restrictive payment blocking measures to protect the revenues of the state monopoly and fend off outside competition from EU-licensed operators, EGBA urges the Norwegian government to undertake a more fundamental review of how the country regulates online gambling.

The adoption of a multi-licensing regime – like in the vast majority of EEA countries, including those with existing state-owned monopolies – would improve the functioning of Norway’s online gambling market and bring with it several other benefits.

Online gambling is a consumer-driven market – but monopolies naturally restrict consumer choice. This lack of choice available locally might lead some Norwegian players to search elsewhere and play on gambling websites based outside of Norway – which neither apply Norwegian laws nor pay taxes in Norway.

The introduction of a multi-licensing regime would enable a greater variety of products, brands and competition on the Norwegian market to meet existing consumer demand. This would make the local market more attractive to Norwegian players and encourage more of them to play on websites which are licensed and regulated in Norway – and not on websites based outside it.

This is important because it would ensure more Norwegian players are protected by Norwegian laws when they play online and generate greater tax revenues for the state from local gambling activity.

“In today’s digital age it is virtually impossible to enforce national borders on the internet but that’s what the Norwegian authorities are trying to do by introducing payment blockings for online betting.

Rather than being a tool to benefit consumers, such restrictive measures are aimed at protecting the revenues of the state-owned monopoly by cutting off outside competition from reputable EU-licensed operators.

This is not only in breach of the EU’s internal market principles but out of step with the reality of a consumer-driven betting market, where players will inevitably search around the internet for value and choice in the games they play.

This reality is why we’re seeing national gambling monopolies across Europe slowly being replaced by multi-licensing regimes which facilitate better consumer choice and enable better functioning national markets. Norway is one of only two EEA countries which do not have a licensing regime yet – but it is inevitable they will have to confront this decision sooner or later.

The introduction of a multi-licensing regime would be a win-win: it would encourage more effective channelling which would benefit player protection, more effective local control of gambling activity and increased tax revenue for the Norwegian state.” – Maarten Haijer, Secretary General, EGBA.

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Compliance Updates

UKGC fines Platinum Gaming Ltd £1.6m for social responsibility and money laundering failures

George Miller

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UKGC fines Platinum Gaming Ltd £1.6m for social responsibility and money laundering failures
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AN online gambling operator will pay £1.6m for failing to identify gambling harm and prevent money laundering.

The Gambling Commission launched an investigation following reports that a convicted fraudster had spent £629,420 of stolen money with Platinum Gaming.

During Commission enquiries it was revealed the customer’s deposits were so high and losses so significant Platinum Gaming should have considered refusing or barring service to the customer. Instead the operator continued to allow the customer to gamble.

Investigations also revealed the operator breached anti-money laundering regulations, including a failure to make adequate enquiries about the source of the funds the customer used to gamble.

As part of a settlement with the Commission, Platinum Gaming returned £629,420 to the fraudster’s victims and will pay £990,200 in lieu of a financial penalty. This money will be spent accelerating delivery of the National Strategy to Reduce Gambling Harms.

Richard Watson, Gambling Commission Executive Director, said: “There were weaknesses in Platinum Gaming’s systems and as a consequence, more than half a million pounds of stolen money flowed through the business. This is not acceptable and I would urge all operators to carefully read this case and learn lessons so they don’t make the same mistakes.”

“This is yet another example of us taking firm action against online operators who fail to protect consumers or implement effective safeguards against money laundering. We must see the industry stepping up and providing consumers in Great Britain with the safest and fairest gambling market in the world.  Where we continue to see failings, we will continue to take action.’

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