French regulators have stopped short of labeling video game loot boxes as gambling, but warn of unrestricted access to micro-transactions that could foster problem gambling in children.

France’s online gaming regulatory body — the Autorité de Regulation des Jeux en Ligne (ARJEL) — has somewhat clarified its position on video game loot boxes.

In their 2017-2018 Activity Report, French regulators relayed concerns that some modern-day video game offerings “undermine” gambling policy objectives, but did not specifically define loot boxes as “gambling.” Doing so would have forced the regulatory body to either create rules for and license certain video games, or ban them altogether.

However, numerous questions remain as to whether France will ultimately join the ranks of Belgium, China and the Netherlands to establish rules for the video game industry and micro-transactions.

READ: ARJEL Activity Report 2017-2018 (Official ARJEL Website – Jun 28, 2018)
READ: ARJEL Report Analysis (Sebastian Schwiddessen – Associate for Baker McKenzie – Jun 29, 2018)

French Regulators Seek “Combined and Coordinated” Action

According to Schwiddessen’s summary, French regulators may look to the country’s financial sector for feedback on how to best deal with video game loot boxes and micro-transactions.

ARJEL has the ability to use DNS blocking measures to restrict consumer access to unlicensed gambling products, but are uncertain whether that method would be viable for video games and their corresponding platforms.

As Schwiddessen points out, video game loot boxes could fall under the regulatory “competence” of numerous government agencies, so ARJEL’s current stance on such products could change in the future once those regulatory bodies possess more complete information.

One factor that could play a major role in determining how real money in-game services such as loot boxes are defined could be whether they constitute a “thing of value” and/or can be traded for real money on a third-party marketplace.

Many Gambling Markets Remain Undefined (Analysis)

* All analysis belongs solely to the author.

Regulators around the world have latched-on to gambling products in recent years in an effort to shore up fiscal deficits, combat problem gambling, and exercise regulatory control over business models that have the potential to churn out enormous profits.

Despite this, the balkanization of gambling licensing processes has rapidly turned the industry upside-down in some regions of the world, exposing stakeholders to a wide range of rules and regulations that can vary drastically from one jurisdiction to another.

What’s more, the proliferation of state-sponsored lotteries is sparking a wave of favorable rulings from officials in the country of Italy as well as the U.S. state of Pennsylvania that show preference to government-run gambling products.

Current regulatory trends that place state-sponsored activities in a prime “market capture” position over traditional gambling products (such as enabling young adults age 18-20 to participate in state offerings while restricting competitors to a 21-and-over marketplace) could continue to spell trouble for regulated iGaming services along with any potential “gambling” mechanisms that come along.

Star Wars™ Battlefront II and Video Game Loot Boxes

Although the game was not specifically mentioned in ARJEL’s report, Star Wars™ Battlefront II (published by Electronic Arts) has likely played a critical role in regulators’ appetite for cracking down on video game micro-transactions.

The publisher’s original plans to include loot boxes within the game resulted in a massive wave of negative feedback from consumers that led to the most downvoted comment in Reddit history along with a temporary rollback of those plans.

Those who oppose such practices argue that gambling-like products are being made available to young children and vulnerable people, exposing them to real money wagering without any restrictions.

Yet it is also undeniable that video game media websites are lobbying for these products by openly promoting video game publishers’ point of view to preserve what has become a near monopoly on the underage gambling marketplace.

As stated above, gambling markets will continue to be defined in upcoming years as national, statewide and even some local officials determine what products or services do or don’t involve “gambling.”

We will continue to monitor this topic as more news develops.

Read More Gambling Regulation News from Part Time Poker

Video Game Loot Boxes Attract More Regulatory Scrutiny (Feb 26, 2018)
Loot Boxes Are “Gambling,” Say Belgium Regulators (Apr 26, 2018)
Big Fish Casino Play Money Games Deemed “Illegal Gambling” (Mar 30, 2018)
Will Esports Wagering Mimic the 2002-2006 Poker Boom? (Jun 11, 2018)

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