Gambling in video games - what does the law say? (2024)

• by Zachary Strebeck

Today’s video games are complex, immersive experiences that can be enjoyed by millions of players around the world. Many genres of games have increasingly added virtual currencies, loot boxes, and other chance-based elements to the gameplay – these have become extremely popular in recent years.

However, this popularity has led to a growing concern about gambling in video games. In this article, we’ll explore what the law says and what it means for game developers and players alike.

What is gambling in video games?

Gambling in video games refers to an activity in a game that involves risking something of value in the hope of winning something of greater value.

“Something of value” is a legal term with varied meanings, depending on the jurisdiction.

For example, most states do not consider in-game currency to be something of value. A minority of others disagree.

Similarly, “risk” is meant to ensure that games of skill remain legal. Only games of chance are impeded by gambling laws. Since most games contain elements of both skill and chance, courts often have difficulty drawing clear lines to follow.

Gambling, as it relates to video games, can include anything from loot boxes and gacha games, to full-on virtual casinos and slot machine games. These mechanics are often used in free-to-play games to generate revenue, but they are the subjects of a lot of recent controversy and legal scrutiny.

What does the law say about gambling in video games?

The Unlawful Internet Gambling Enforcement Act (UIGEA):

The UIGEA is a federal law that was passed in 2006 to prohibit unlawful online gambling (gambling which is otherwise unlawful under other state and federal statutes). The law defines gambling as “placing, receiving, or . . . transmitting a bet or wager” using the internet.

However, the law includes several exemptions, including for fantasy sports, skill games, and educational games. This means that some forms of gambling in video games may be exempt from the UIGEA.

State gambling laws:

Each state has its own laws regarding gambling, and these laws vary widely. Some states have strict laws that prohibit all forms of gambling, while others allow certain forms of gambling, such as lottery games or charitable gaming.

Many states do not consider it gambling when a player cannot “cash out.” Thus, loot boxes and gacha games are not considered gambling in the eyes of many states’ laws.

Game developers need to be aware of state laws and ensure that their games comply with them.

Consumer protection laws:

Several consumer protection laws, such as the Federal Trade Commission Act and state consumer protection laws, may apply to gambling in video games. These laws prohibit unfair and deceptive practices, and they may be used to regulate gambling mechanics that are seen as misleading or manipulative.

What are the risks of including gambling mechanics in video games?

• Addiction: Gambling mechanics in video games can be addictive, particularly for vulnerable players such as children or people with gambling disorders. A gambling addiction can lead to financial and other issues.
• Legal issues: Game developers may face fines, legal fees, and damage to their reputation if their game is found to violate gambling statutes.
• Consumer backlash: Players may react negatively to games including gambling mechanics, particularly if they feel that these mechanics are unfair or exploitative. This can lead to player loss and revenue decline.

How can game developers mitigate the risks of gambling mechanics in video games?

• Be transparent: Show the odds of winning against the costs of participation to help players make informed decisions and reduce the risk of addiction.
• Limit spending: Limiting the amount of money players can spend on gambling mechanics reduces their financial risks.
• Avoid targeting vulnerable players: Children and people with gambling disorders are uniquely vulnerable. Targeting vulnerable groups heightens legal and regulatory risks.
• Consult with legal experts: An attorney can ensure that games comply with all relevant laws and regulations.

Conclusion

Inclusion of gambling mechanics in video games is a complex issue requiring the weighing of risks to game developers and players. While there is no one-size-fits-all solution, game developers can take steps to mitigate the risks associated with gambling mechanics in their games.

Business and legal risks can be mitigated through transparency, limitations on player spending, avoidance of targeting vulnerable players, and consultations with legal experts.