The FIFA game has always been one of the most popular and profitable video games on all platforms. Anyway, in 2009, Electronic Arts (EA) – the developer - started a process to raise the productivity and profitability generated by the series to a new level, with the creation of the Ultimate Team mode, in which the competitive scene of the game is based, in general, on a challenge for the player to assemble his own team, from "packages" that contain random letters of football players.
These packages are acquired by virtual currencies earned from the performance of gamers in matches or by microtransactions, consisting of the acquisition of this virtual credit for real money, which often means a shortcut to building a team with the main players of the world.
Thus, within a paid game, EA found, in the sale of packages, a relevant source of revenue, so much so that it replicated the popular mode for other franchises (such as, for example, Madden NFL, UFC and NBA). The result was so effective that, in 2020, the developer profited US$ 1.49 billion from the Ultimate Team mode, considering all of its sports games.
This mechanic, known as loot boxes, is not only used by EA. Also present in games like Overwatch and Free Fire, the loot boxes represent the possibility, for gamers, of acquiring a package of random items with virtual coins earned in the game itself or by paying in real money, being included, among such items, those capable of improving the player's performance. Thus, especially in free-to-play games, the practice of loot boxes constitutes the main source of revenue for developers.
However, loot boxes are also the subject of controversy and reflect the need for clear regulation of games and betting, even for those indirectly involved with this market, as is the case with the electronic games industry.
Last Thursday (25/02), the press reported the presentation of several public civil actions by Brazil’s Association of the Centers for the Defense of Children and Adolescents (ANCED) against major developers of electronic games, such as EA, Riot Games, Konami, and Ubisoft, claiming that these companies use gambling techniques in front of children and teenagers, in order to retain this clientele, due to the sale of loot boxes in games.
Due to the equalization of the exploitation of loot boxes with the exploitation of games of chance, ANCED pleads, then, the immediate cessation of this practice in the games developed by the defendants and an indemnity for moral damages of individual and collective nature, the sum of which amounts to approximately R$20 billion (US$ 3.53b).
Distributed with the Courts of Childhood and Youth of Brasília, the actions proposed by ANCED are pioneering with regard to the appreciation, by the Brazilian Judiciary, of the relationship between loot boxes and games of chance. The arguments are constructed based on the criticisms that this mechanic receives from the gamer community, in the sense that loot boxes create an unfair advantage for those who spend more money on the game, fomenting the so-called pay-to-win.
Thus, the purchase of loot boxes is considered as a kind of virtual game of chance. For this definition, they use a lesson presented by the English psychologist Mark Griffiths, who considers this characterization as fully possible, insofar as (i) the exchange is determined by a future event, the outcome of which, at the time of the bet, is unknown ; (ii) the result is determined by chance; (iii) there is an exchange of money without the introduction of productive work on either side; and (iv) losses can be avoided by not participating in the activity.
ANCED also claims that games, with this mechanics, expose their players to a real casino, which requires them to spend substantial amounts, in a routine way, so that they remain competitive. In this sense, it emphasizes that the practice contradicts the basic dictates of the Brazilian legal system, which, both in the Constitution and in the Statute of Children and Adolescents, establishes the principle of full protection of children and teenagers, from which legal duties are sought to restrain the exposure of this public to abusive practices, such as that the developers accuse.
It is the first time that a Brazilian court finds itself in the process of assessing the situation related to loot boxes, having to weigh the perspective presented by ANCED against the claims of the developers, who say that there is no relationship between this mechanics and gambling, so that loot boxes are optional in the game, endowed with a playful character.
On foreign soil, the discussion is more recurrent and introduces relevant debates about the regulation of loot boxes and the possible need for a ban.
The most emblematic cases in this regard occurred in the Netherlands and Belgium. In both countries, the regulatory bodies responsible for the control and supervision of gambling and betting fined EA millions of dollars, since the sale of player packs in Ultimate Team mode is considered a violation of established regulations, also prohibiting that mechanics continued to be used in the game.
The impact of the decision taken on Belgian and Dutch soil was such that EA has studied blocking the Ultimate Team in countries that have less permissive legislation in relation to games and betting, especially in view of the proposition of actions like the one proposed by ANCED in Brazil in other countries, such as France, Canada and the United States.
EA is not the only developer that suffers from legal problems related to the exploitation of loot boxes and the gray area in which they operate, when compared to other types of games and betting.
Also in Belgium, the Commission dedicated to the regulation and supervision of gambling and betting in the country pointed out that the loot boxes present in Overwatch (developed by Blizzard) and Counter-Strike: Global Offensive (developed by Valve) could be compared to games of chance, but the developers took steps to adapt the games and disable packages with random items and real money transactions within the games, a measure that was followed by other developers, such as 2K and Konami, who preventively removed the mechanics from their respective games. With that, they all avoided penalties with fines, which happened to EA for maintaining the mechanics in Ultimate Team mode.
The Belgian example mentioned above demonstrates an interesting effort for a composition of interests between authorities and developers, in favor of a regulation that does not cause losses and wear for any of the parties.
In Asian countries, discussions are proving even more mature, mainly because China and Japan were the first to be forced to deal with the popularization of loot boxes. The authorities of both countries have issued quite incisive rules, with an express prohibition on the exploitation of this mechanics by the developers, who, on the other hand, endeavored to look for loopholes in the prohibitive rules to maintain their source of revenue, such as Blizzard which, in Overwatch, stopped selling packages of random items directly and started giving gifts to gamers who bought virtual coins using real money.
Thus, in these countries, there is currently a movement in favor of self-regulation and the development of standards uniting authorities and developers. As a result, the ban and the application of millionaire fines was not the best nor the only alternative found by the authorities and, in reality, there was a movement in favor of implementing good practices for the exploitation of loot boxes.
The regulatory framework of these countries was redesigned so that a predatory exploitation of loot boxes was prohibited, starting to allow its existence since, among other obligations, the developers were obliged to provide information on the exact probability of winning the items; limitation on the number of packages to be purchased in a given time interval; increase in the probability of obtaining items that really ensure an improvement in performance; and strict restrictions on the acquisition of loot boxes by children and adolescents.
Currently, in Brazil, we live an intense expectation for the regulation of the gambling and betting market, especially with the advent of Law No. 13,756 / 18 - responsible for the creation of the lottery modality for betting fixed odds related to sporting events and the setting of a 2-year deadline for the Ministry of Economy to regulate it; and the decision of the Supreme Federal Court (STF) of September last year, which authorized the states to explore and regulate lotteries.
Despite the positive signs, the truth is that situations such as the loot boxes point out that the games market is still going through a cloudy environment within the Brazilian legal system, which warns of the need for clear regulation, to reduce legal insecurity and delimit the performance of the economic agents involved in this market.
When we talk about gaming, we are talking about one of the main entertainment industries in the world, which includes both electronic games and the gaming and betting market. Providing predictability, defining administrative and regulatory structures with well-defined competences, and seeking to include all agents in the design of this regulation is essential to reinforce best practices.
What is certain, however, is that such a complex phenomenon, of which the loot boxes are an example, cannot be restricted solely to analysis in a judicial process. The proposition of the actions presented here warns of a necessary advance in our legal system, in order to precisely regulate this reality, in favor of both the industry and the consuming public.
Henrique Chamas – Partner at Andrade Chamas Advogados. Bachelor and Master in Tax Law from USP. Specialist in Tax Law from IBET.
Raphael Andrade – Partner at Andrade Chamas Advogados. Bachelor, Master and PhD student in Commercial Law from USP.
Felipe Ferreira – Associate lawyer at Andrade Chamas Advogados. Bachelor of Laws from FDRP / USP.
