Dutch appeal court upholds loot box penalty against EA

Video game giant Electronic Arts (EA) and its European subsidiaries have lost an appeal against the Dutch gambling regulator’s decision to issue a €5m (£4.8m/$5.8m) fine for unlawfully offering games of chance.

In a judgement published today, it was concluded: “The court is of the opinion that the compulsory payment decision is neither unlawful nor disproportionate. The appeal is unsuccessful.”

The long-running dispute between the regulator, Kansspelautoriteit (KSA), and EA relates to so called loot boxes (in this case, they are game packs) within EA’s popular FIFA football game, which offer players the chance to win superior players to improve their team in the game.

Because the game pack is paid for with real money, but the contents of the pack is left to chance, the KSA argues its purchase amounts to a game of chance.

However, EA maintains that the Dutch legislation does not define what a loot box or game pack is and therefore cannot assert that they are illegal, while also arguing that because the contents of the game packs cannot be cashed out, they do not equate to a game of chance.

In the court’s view though: “The Gaming Authority (KSA) has rightly concluded that the definition of games of chance within the meaning of the Betting and Gaming Act has been met. In view of this qualification and in view of the prohibition on offering online games of chance without a license, the KSA is authorised to proceed with enforcement.”

The Netherlands has been concerned about the impact of loot boxes on players for some time, carrying out research in 2018 that revealed a potential connection between loot boxes and the development of a gambling addiction.

The regulator is therefore concerned that the presence of loot boxes in video games increases the public health risk, particularly as video games are accessible to minors.

Prior to issuing the penalty and cease and desist notice to EA, the KSA did reach out to games publishers outlining their position. The regulator reports that some took action to comply, while EA did not.

The question going forward is whether the decision by the Dutch court will set a precedent for other jurisdictions. The jury is still out in the UK and the US, for example, as to whether loot boxes equate to gambling.

Meanwhile, EA has indicated an intention to appeal the Dutch court’s decision, making a European Union judgment on the matter increasingly likely.