What about the loot box ban – does it apply to Switzerland?

Philipp Rüegg

8.5.2018

Translation: Eva Francis

Belgium and the Netherlands have declared loot boxes are gambling after an investigation into three culprits: «Fifa 18», «Overwatch» and «Counter-Strike: Global Offensive». What impact does this have on the gaming scene and Switzerland in particular?

The issue of loot boxes within video games had been raised before, but it was «Star Wars Battlefront 2» that really set it all off. The loot box system in this popular game caused such a stir that the video game producer Electronic Arts (EA) finally decided to roll back on loot boxes. But it was too late; the damage had already been done. Ironically, «Battlefront 2» isn’t among the games that the Belgian Gaming Commission opened an investigation into – at the time the investigation was conducted, EA had already dropped the micro transactions.

The titles mentioned are «Fifa 18», «Overwatch» and «Counter-Strike: Global Offensive» and instructions have been given to game publishers to remove all loot boxes. Failure to do so may result in an 800,000 euro fine and a five-year prison sentence. Recently, a similar decision was taken in the Netherlands, banning «Fifa 18», «Dota», «PUBG» and «Rocket League». While the Dutch authorities warned video game publishers to modify their loot boxes before mid-June, Belgium has not yet given a deadline.

EA’s answer came promptly: Talking to Eurogamer, the video game producer denies the allegations, stating it does not agree that its games can be considered as any form of gambling. Belgian Minister of Justice Koen Geens states he welcomes the dialogue, but is striving for a Europe-wide ban at the same time. This could cause huge losses for game manufacturers, who are sure to put up resistance. And in the end, the victims of this battle could be us gamers.

What’s it really about?

The current debate isn’t about micro transactions, DLCs and season passes; it’s only about loot boxes. Loot boxes are digital grab bags that players can only get by spending real or in-game currency on. The trick is that you don’t always know what’s inside. It could be a new outfit that just looks good or it could be new equipment or weapons that become a decisive strategic advantage in the game. The Belgian Gaming Commission is criticising the lack of transparency and the emotional element of chance – especially when it comes to children and young people. Not knowing what a loot box contains and paying with in-game currencies is said to obscure the real value. These and other reasons have led to the mentioned games being classified as gambling, forcing game providers to act.

The gaming industry’s options

With the exception of Psyonix («Rocket League»), the game manufacturers affected by this ban are among the largest and most ambitious in the world. They're sure to have enough resources and lawyers at hand to tackle the problem and find loopholes. In my opinion, the following short-term and medium-term solutions exist.

Removing loot boxes

The supposedly simplest solution is to remove the loot boxes from the games in question – only in the two countries for the time being. However, «Battlefront 2» has shown that this isn't as simple as it seems, as loot boxes can be an essential part of the game and so deeply integrated into the logic and the system that they cannot just be removed from one day to the next. Nevertheless, this is probably the most short-term solution.

Modifying the system

EA, Valve, Blizzard and other game producers have the option of modifying their games to make sure no real currency comes into play when dealing with loot boxes, keys and the such. Of course, this includes removing the possibility of buying in-game currency with real currency. Another option would be to increase transparency and only allow spending money on items of value instead of random loot box contents. In any case, major modifications to the games would be necessary to establish a new system. Nevertheless, this is also a possible way to go.

Withdrawing games from sale

Of course, game providers could decide to take their games off the market in the countries that have banned loot boxes. All affected games have long passed their sales peak, so this measure wouldn’t do game manufacturers huge damage. However, withdrawing games from sale isn’t simple. What about the games that have already been sold? Would online services and servers be taken offline to make sure the affected games can no longer be purchased? This is unthinkable for online titles such as «Overwatch» and «Counter-Strike: GO». Game providers wouldn’t do themselves a service by doing this, even if customers got their money back. I doubt that this option will be chosen.

Losses in the millions

Whichever option is chosen; the gaming industry is sure to face million-mark losses. Many of today’s video games are only maintained and updated with new content for such a long time, because – after being purchased – they generate additional steady income through DLCs, micro transactions and loot boxes. With the game mode FIFA Ultimate Team, for example, EA already generates a yearly income of over 800 million dollars. Gamers can purchase FUT Packs including new soccer players and a range of bonuses with in-game currency, which is earned or can be bought with real currency.

Although Belgian Minister of Justice Koen Geens emphasised that the goal was to find a joint solution with the game providers, it remains uncertain whether loot boxes will survive. The German Youth Protection Commission is now also considering a ban on loot boxes. The scope would become even greater if the decision was taken to extend the ban to all EU countries. The EU has proven that it can stand its ground against international companies with the fight over the Data Protection Act, so it's likely that loot boxes won't be able to withstand the pressure of the European Union either.

The situation is a lot different in the US, where consumer protection isn’t as strict. It’s therefore possible that there will be two loot box systems in the future: one for the US and one for Europe.

Consequences for Switzerland

Should the EU declare loot boxes as gambling and force game providers to take action, we can assume that the ban will apply to Switzerland, too. Although Switzerland could, in theory, form an exception as long as enough other countries outside the EU keep the current loot box system, but this is rather unlikely, as we rely on the translated versions released for France, Italy and Germany.

Yet, there’s no need for us to wait for the decisions of our neighbouring countries. What does the Swiss law say about loot boxes? The Federal Act on Games of Chance and Casinos (in German) states the following:

According to Article 3 paragraph 1 of the Federal Act on Games of Chance and Casinos of 18 December 1998 (SR 935.52; FGA), games of chance are games in which, in return for putting in a stake, there is the prospect of a monetary gain or other gain with monetary value, which depends entirely or predominantly on chance. The execution of such games is reserved solely for licensed casinos (Article 4 paragraph 1 DSBG); these are obliged to comply with the provisions of casino legislation and the licence conditions and are supervised by the Swiss Federal Gaming Board (SFGB).

To me, it sounds as if loot boxes – as used in numerous games – are exactly this; you buy a loot box for real currency and make a random gain in return. In the case of the outfits in «PUBG» or the skins in «CS:GO» , these gains can be worth a lot of money. However, the Swiss Federal Gaming Board currently sees no reason to take action.

«The loot boxes you mentioned are, so to speak, a “game within a game” that appears during the course of a computer or video game and usually only makes up a small part of the game in relation to the whole computer or video game.»

According to Maria Chiara Saraceni from the Swiss Federal Gaming Board, computer, console and video games are, as a general rule and following the definition by the Federal Act on Games of Chance and Casinos, not games of chance and therefore not part of SFGB’s field of competence. She adds that this statement is based on current information.

There seem to be primarily two factors that contradict the classification as a game of chance: Being a game in a game and the fact that loot boxes are not the main aspect of the game. So a video game in which you’re visiting a fully functioning casino would probably not pass? «Correct. If we see that it is first and foremost a game of chance, then it also falls under the Federal Act on Games of Chance and Casinos,» Saraceni explains. But she also stresses that each game needs to be evaluated individually to decide whether it’s a game of chance or not.

Let’s get away from video games and take a look at other games; «Magic the Gathering» cards or Panini stickers for instance. Aren’t these also comparable to loot boxes? You buy a set of stickers for a certain price and you get five random stickers, each with a football player on it? Depending on how rare a certain sticker is, it’s worth more or less money. No sticker is worth a fortune, but there’s a value to them. «In this case, the element of gain is missing, which is needed for a game to be classified as a game of chance. Panini stickers can be sold or traded, but they don’t allow you to make a monetary gain directly from the seller,» Saraceni responds.

Game developers therefore have nothing to fear from the Swiss authorities for the time being. However, Saraceni points out that the SFGB will continue to keep a close eye on the developments in the gaming industry. «Should specific reasons appear that constitute any violation of the Federal Act on Games of Chance and Casinos, we will intervene.» It can be assumed that this discussion will be fought out on the political stage.

What’s next after loot boxes?

A ban on all loot boxes is sure to have serious consequences for the gaming industry. Especially for free-to-play games, as loot boxes are often the only source of income. What’s the alternative? Going back to the old system where you’d buy a full-price game and, in exceptional cases, pay for an add-on, is unlikely. Micro transactions and the such are too lucrative to make this possible. The gaming industry is growing every year and generated over 100 million dollars in revenue in 2017.

Although the mobile segment has seen the strongest growth, console and PC games have not been sleeping either. The industry is sure to find a way to keep us to paying well beyond actually purchasing a game. How? All I can do is guess. What do you think? Will loot boxes disappear and if so, what will be next?

Philipp Rüegg

Senior Editor

Philipp.Rueegg@digitecgalaxus.ch

Being the game and gadget geek that I am, working at digitec and Galaxus makes me feel like a kid in a candy shop – but it does take its toll on my wallet. I enjoy tinkering with my PC in Tim Taylor fashion and talking about games on my podcast http://www.onemorelevel.ch. To satisfy my need for speed, I get on my full suspension mountain bike and set out to find some nice trails. My thirst for culture is quenched by deep conversations over a couple of cold ones at the mostly frustrating games of FC Winterthur. more

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