Kansspelautoriteit (KSA), the Netherlands’ regulatory authority for gambling, has re-issued a €5 million penalty alongside its ‘cease and desist’ order to Electronic Arts (EA) European subsidiaries.
The charge relates to a 2019 enforcement sanctioned by KSA on ‘Electronic Arts Inc’ and ‘EA Swiss Sàrl’ stating that the video games publisher had violated Dutch gambling laws offering ‘games of chance’ through its ‘FIFA game packs’.
“The charges were imposed by the KSA because the popular football game FIFA contains illegal so-called loot boxes . These are a kind of treasure chest. For example, FIFA’s loot boxes contain football players who can improve the team with which the game is played,” the KSA detailed in its statement.
EA had contested KSA’s enforcement and penalty notice on the grounds that Dutch gambling laws held no legal transparency on defining ‘game packs’ or ‘loot boxes’, with KSA holding no grounds in which to directly link the video game mechanisms as being games of chance.
KSA and EA’s dispute has been overseen by a Hague Court which this week published its judgement ruling in favour of KSA – stating that the regulatory body held the right to qualify loot boxes as a ‘games of chance’ engagement for Dutch consumers.
The Hague stated that KSA had acted within its regulatory remit to enforce the penalty as FIFA games packs carried a monetary value and that by mirroring games of chance functions, players had no ‘influence on which prizes they will receive from a loot box’.
“KSA has rightly concluded that the definition of games of chance within the meaning of the Betting and Gaming Act has been met,” it ruled. “In view of this qualification and in view of the prohibition on offering online games of chance without a license, the Ksa is authorized to proceed with enforcement. Correct use has been made of this power – EA appeals are unfounded.”
KSA Chairman René Jansen praised his team for its dedication in pursuing the EA penalty, for which the regulator had conducted a year’s worth of casework and research to present to Hague judges.
The KSA has ordered EA to remove all FIFA game packs from its Netherlands interactive offering and pay the €5 million penalty. However, EA has since responded to KSA stating that it will pursue further legal routes, pointing to a European Union judgment on the matter.
This summer, the EU’s ‘Internal Market Research Committee’ (IMCO) policy advisory unit for competitions standards and fair business practices published its report on ‘loot boxes in online games’ and ‘their effect on young consumers’.
The IMCO was sanctioned to carry-out research following member state conflicts between regulatory agencies branding loot boxes as a systematic attempt to turn gamers into gamblers vs game developers who maintain that loot boxes are a ‘random reward mechanism’ which is vital to game-play and the monetisation of content.
The IMCO report stated that all EU member states and their regulatory agencies (interactive and gambling) carried ‘structural problems’ in relation to the governance and monitoring of standards attached to loot boxes and whether they breach member state gambling legislations.