Raad Van State – The Netherlands’ State Council – has overruled Dutch gambling regulator Kansspelautoriteit’s (KSA) penalty of EA Games, which judged that ‘loot boxes’ offered by its FIFA football game could be classified as games of chance reward.
FIFA Games had appealed a previous judgement sanctioned by a Hague Commercial Court that had sided with KSA’s original judgement that FIFA loot boxes could be interpreted as games of chance, breaching the Netherlands gambling laws.
In 2018, KSA notified EA Games that it would undertake an investigation of ‘loot boxes’ – virtual gifts/reward items offered by the games publisher’s most popular sports titles.
Following its investigation, in 2019 KSA fined EA €5 million and ordered the publisher to withdraw or modify all loot boxes from its Dutch market offering – an order EA would immediately appeal.
The long-standing dispute saw KSA stand by its original judgement that – “coincidence determined the content of the packs and the prizes have an economic value, making the pack a game of chance”.
EA had contested that KSA held no grounds to make such a judgement, as Dutch gambling laws had no clear definition for interpreting ‘game packs’ (loot boxes) mechanics and engagements with customers.
Presiding over the dispute, in 2020 the Hague Court ruled in favour of KSA, underlining that although distinct, loot boxes carried a ‘monetary value’ as prizes were exchangeable and that certain game pack incentives/engagements mirrored that of a gambling reward.
The Hague Court’s judgement saw KSA double its fine to €10 million, with EA ordered to immediately comply with the regulator’s demand or face further penalties.
Once again, EA would challenge the loot box judgement, issuing an appeal to the Netherlands State Council – the Dutch government’s legal advisor and highest judiciary court.
“According to EA, the court also applied an incorrect standard of assessment by reluctantly assessing whether the KSA could rule that the components ‘chance’ and ‘price or premium’ have been met.” – EA had pleaded.
“Moreover, the court did not consider its argument that the KSA went beyond its statutory duty by taking action against FIFA’s packs, even though there is no question of gambling addiction.”
A review of EA’s appeal saw the State Council notify that the games publisher had outlined a clear distinction of how loot boxes are awarded to players – who must compete in ‘FIFA Ultimate Team Mode’ (FUT Mode) to collect ‘FUT coins’ to activate prizes.
Of significance, the State Council noted that EA had established competitive criteria for how it rewarded its Game Packs that had not been considered by the Hague Court of KSA.
“KSA should not have imposed a penalty payment on the publisher of the FIFA22 computer game in 2019. The so-called packs or ‘loot boxes’ with which virtual football players can be traded on a virtual transfer market in FIFA22 are not games of chance that required a licence. The publisher has not broken the law.” – the State Council verdict read
“With this, the highest administrative court has reached a different decision than the District Court of The Hague, which ruled in October 2020 that the publisher did offer a game of chance while he did not have a licence to do so.”
In the summer of 2021, EA Games issued a FIFA update that would allow customers to preview game pack rewards – a measure that applied across all sports titles.
EU courts will likely examine the Netherlands State Council’s judgement, as the trade block’s Internal Market Research Committee (IMCO) has previously underlined that member states have incoherent policies in how to govern loot box disputes.