British Columbia Supreme Court Justice Margot Fleming has ruled that a lawsuit against Electronic Arts (EA) can go ahead despite rejecting the suit’s claim that video game loot boxes constitute unlawful gambling. Mark Sutherland, the lead plaintiff, also argued that EA engaged in “deceptive acts or practices.”
Fleming wrote that for the loot boxes to constitute “gambling” under Canadian law, there needs to be a risk of losing or gaining something of actual value. That, she says, is missing from EA’s video games:
Unlike a casino chip, virtual currency and virtual items in loot boxes can never be ‘cashed out’ to gain money.
However, Fleming also ruled the class action could proceed on the merits of the second portion of the complaint, relating to alleged deception on the company’s part.
Judge Finds Loot Boxes Hold No “Intrinsic” Value
Sutherland seeks compensation for how EA has monetized loot boxes in its games since 2008.
For Sutherland personally, the loot boxes were part of Madden NFL, but the class action is open to anyone in BC. The only requirement is proof of paying for a loot box in any of EA’s nearly 70 games, FIFA included.
In the context of video games, a loot box is, in essence, a digital grab bag.
The boxes allow players to earn items or skills that may improve their game experience or performance. Players can earn boxes by meeting game milestones, but spending real money provides a faster way to get ahead.
Because players can sell loot boxes and their content on third-party platforms, Sutherland’s lawsuit argued they have “intrinsic value.”
However, Fleming disagreed, noting in her decision that on EA’s official auction platform, players can only trade items for virtual cash.
Consequently, there is no prospect of gaining, or losing, anything with a real-world value through the defendants’ in-house auctions.
EA followed with an upbeat statement:
We’re pleased that the trial court rejected, as a matter of law, the allegations of unlawful gaming. The court’s decision reaffirms our position that nothing in our games constitutes gambling.
Ruling: EA Not Responsible for Third-Party Marketplaces
In this case, what saved EA was not directly allowing players to sell items for real cash. By Fleming’s interpretation of the law, it didn’t matter that some players have found roundabout ways of doing so.
Take the FIFA series as an example.
The items players can get from loot boxes (in this case, virtual cards) aren’t restricted to that one game. Players can carry over some of what they’ve acquired in one game to the next installment in the series. Furthermore, they have a choice of third-party websites that will pay cash for virtual FUT coins that can be earned in the game.
That combination of factors allows players to get around EA’s policies and convert cards to cash. The process goes like this:
- Players earn or pay cash for a card pack.
- They sell unwanted – or especially valuable – cards for FUT coins through FIFA’s in-game auction house.
- Using a third-party site, they sell FUT coins for real money.
In this roundabout way, according to Sutherland, the virtual card has real-world value.
But according to Fleming, we can’t blame that on EA. Instead, the judge argued any lawsuit trying to prove otherwise is “bound to fail.”
From her decision:
There is no prospect of gaining, or losing, anything with a real-world value through the defendants’ in-house auctions.
Given that wagering or a bet must involve the chance of winning or losing real money or money’s worth, in my view, only the allegation of purchasing and selling virtual items through third-party marketplaces could support this element.
Video Game Loot Boxes Under Scrutiny Globally
Interestingly, recent research confirmed a link between loot boxes and gambling.
Nor is this the first accusation that a video game company exhibited gambling-adjacent behavior. Cases like Sutherland’s have become commonplace around the world, and decisions can go either way.
The United States Federal Trade Commission (FTC) recently fined Epic Games $245 million for allowing children to “rack up unauthorized charges without parental involvement.”
Epic is the developer of Fortnite, which remains one of the world’s most popular games nearly six years after its release.
The order, finalized in mid-March, alleges Epic used “dark patterns” that “tricked players into making unintended game purchases.”
The FTC also accused Epic of using design tricks to make players make in-game real-money purchases unintentionally.
The order specifically called out the game’s “counterintuitive, inconsistent, and confusing button configuration” for leading to unplanned purchases.
It also alleged the game made it easy for children to purchase without parental consent. And it accused Epic of locking accounts in retaliation against customers who disputed charges with their credit provider.
On top of the fine, Epic must stop using dark patterns and ensure purchase consent. Locking accounts in retribution is also off the table.
Despite this newest ruling, we’ll likely hear about video game gambling for a while.
Last November, an Australian MP introduced a bill banning loot boxes for players under 18.
And just last week, BC lawyers filed another potential class action against Epic. That suit alleges the company intentionally makes games “as addictive as possible” for children.”
As yet, these latest claims remain untested in court.