Back in April, the Netherlands sent out fair warning to certain game models. They stated clearly, if you sell loot boxes to video game players, then allow an aftermarket for players to trade and sell the contents of those loot boxes for real-world money, then you are in violation of our gambling laws. Gambling is legal in the Netherlands with a permit, but video games do not have a permit type they can obtain. The Netherlands have made this clear also, and that until they create a permit for gambling in video games, they will be fined and prosecuted.
Since then they reached out to developers they identified as violating their gambling laws. They set a firm date of June 20th for the game developers to comply. On June 19th they announced the following, as further warning they were serious:
The Gaming Authority will check from tomorrow (June 20, 2018) whether game companies have made adjustments to their illegal loot boxes, treasure boxes in games. If they have done so, it will be checked whether the adjustments are sufficient to be no longer able to be characterized as a game of chance as described in the Betting and Gaming Act.
Valve took this serious enough to greet its Netherlands players with the following:
Needless to say, some players in the Netherlands that use the trading system are upset. But it is also fair to point out, many knew what was coming and supported it.
Why is it Valve has backed down and complied? And why does it have other companies taking notice? It is the very real threat of fines and imprisonment. The fines can be as much as 10% of a companies annual revenue.
If you consider Tencent which have been gobbling up tech startups that includes several MMO game developers, 10% of 237 billion dollars is nothing to sneeze at. Here is the enforcement announcement from the Netherlands:
If it turns out that the game companies have not made sufficient adjustments, the phase of enforcement will start. To this end, the Gaming Authority has various options. For example, administrative fines can be imposed of up to 830,000 euros (or, if that is more, 10 percent of the company’s worldwide turnover that violates the law). If administrative enforcement does not prove effective, the Gaming Authority can appeal to the Public Prosecution Service to prosecute criminal proceedings.
So if you haven’t noticed it, many games have cracked down on account trading, another means of an aftermarket of selling goods. You will probably see more of it in the future. Be fairly warned that activities like this, developers once turned a blind eye to, will end up with banned accounts. If it’s your neck or theirs, they will choose yours.
And as far as Valve’s need or desire for further clarification:
The Gaming Authority can not say at the moment when more clarity can be given; enforcement procedures generally take a long time. If the Gaming Authority imposes a fine or measure, it becomes public.
So the bottom line, comply or don’t trade in the Netherlands. Let’s not forget Belgium is doing the same. We also can not forget other gambling commissions will be taking note.
The loot box monetization model is only in phase 1 of its regulatory response. Expect more to come.