As described by our Austrian colleagues from the law firm RAPANI, the District Court of Hermagor/Austria has classified Lootboxes in the form of so-called "FIFA Packs" from the FIFA video games as games of chance, which violate the Austrian gambling monopoly (judgment of February 26, 2023). Therefore, Sony (Interactive) was ordered to repay the purchase prices that a customer had paid for such packs. The court reasoned as follows: The specific content of the FIFA pack purchased depended on chance and could constitute a prize in the sense of a "pecuniary benefit" as defined by the Austrian Gaming Act. Impact on Germany from the perspective of the claimant side
Austrian litigation funding institution “Padronus” has not only financed numerous lawsuits from the online casino sector, but has now also dedicated itself to player lawsuits in the area of lootboxes and was involved in the above-mentioned case. Padronus CEO Eibl recently also commented on the legal situation in Germany to the “Behoerden Spiegel”, a monthly national newspaper for the public sector in Germany (see here):
“On the question of the legality of Lootboxes, the legal situation in Germany is very similar, if not identical, to the legal situation in Austria. (...) In Germany, (...) the same subsumption rules exist, namely the randomness of the outcome and the "acquisition of a chance to win", whereby a "win" is only possible if the consideration received has an economic value that can be assessed as either a profit or a loss. Therefore, the Austrian court ruling can also be seen as a milestone and precedent for German case law.”
But is the legal situation really as clear as the Austrian litigation funder sees it?
Situation in Germany
From a German perspective, too, the random nature with regard to the content of Lootboxes is indeed undisputed. But: What is exciting, is the question of whether there really is "a game" in which "a fee is demanded for the acquisition of a chance to win", as the German State Treaty on Gambling stipulates.
The FIFA packs are "virtual items" that are basically intended to be used for the game. They can also increase the chances of winning "in the game", but no prizes such as prize money are offered for the "winners" of the FIFA video games. In this respect, at most the "buying of the Lootboxes" as such can be a game of chance (“within the FIFA game”).
However, then the content of the FIFA packs would have to represent an economic value "outside" the FIFA game. Here, the Austrian court argued as follows: Since the digital soccer stars from the FIFA packs would be traded on a secondary market on the internet, it would be possible to make a profit outside the game, because significantly higher "profits" could be made for individual packs than the original purchase price.
In this case, though, the trade would also have to be attributable to Sony, they would have to be somehow legally co-responsible for the trade. Against this, one can object that the game providers prohibit this trade in their general terms and conditions. However, on the other hand, the game providers also "profit" from this trade, as it can strengthen the economic value of the Lootboxes and thus also promotes the sale of Lootboxes by the game providers.
Ultimately, the existence of a chance to win and thus a game of chance in connection with the acquisition of a Lootbox such as FIFA packs is to be negated the more the game providers are economically and organisationally distant from possibly emerging secondary markets or the more the game providers seek to prevent secondary markets.
This is because, according to German law and case law (instructive: BVerwG 8 C 21.12 - judgment of October 16, 2013, "Super-Manager"), a "direct connection" between the payment of a fee and the acquisition of a chance of winning is required in order to affirm a game of chance. This immediate connection is questionable, since the economic "profit" from the Lootbox purchase - if any - can only be realised later on the secondary market (“no temporal directness”) and the profit claim cannot be asserted against the game provider either (“no economic directness”).
What happens next? In order to prevent a wave of lawsuits in the matter of Lootboxes in Germany, a new co-regulatory framework for online games and lootboxes in particular and to be developed.
Since the EU Commission was recently called upon to develop new rules for Lootboxes at the EU level, this initiative will also soon have an impact on Germany, among other things via changes to the Interstate Treaty on Media and the respective docked youth protection laws. Since, according to MEP Adriana Maldonado López, the main aim here is to protect children and young people from potentially addictive content, uniform verifiable rules will be established for (online) sales (see also TLN 1/2022 article “Netherlands court sets new standards for gambling law assessment of lootboxes”)
Here, a generally recognised test seal, such as a specially tailored TÜV seal, could provide additional security for end consumers, the control authorities and the providers. Since clear age labels should also indicate which game content may be provided for which age group, the Voluntary Self-Regulation of the Entertainment Industry (Entertainment Software Self-Regulation/USK) will continue to play a central role in ensuring a high level of protection for the respective online player groups in Germany.
During a regulatory webinar, organised by Behörden Spiegel/Glücksspielwesen (https://www.gluecksspielwesen.de/termine/), focusing on lootboxes in Germany, Fabian Gramling (Member of the Federal Parliament of Germany and deputy member of Consumer Protection) highlighted on 24 April 2023 the need for a co-regulatory solution involving the USK and the online games industry. He said that “the young games industry should not be crushed by new regulatory pressure and bans but need to provide the game industry with a clear perspective, how youth protection and self-regulation can best be achieved – based on studies also involving law experts from the industry and the political level”.
Finally: The political discussion on lootboxes is now really kicking off in Germany. However, to copy a court decision from Austria or from Belgium to path the way for a lootboxes ban is too short thinking and is also not shared by a wider political consent. Finally new stricter rules in a trustable legal co-regulatory framework seems to be the silver bullet to success for the future regulation of Online Games and Lootboxes in Germany.
Quelle: TIME Law News (01/2023)