loot box gambling – a lottery?
A recent report by the Swedish Consumer Agency (Konsumentverket) suggests that the business model underlying so-called loot boxes is problematic in regard to children and vulnerable consumers. Subsequently, the Swedish Ministry of Finance has issued a referral of the Consumer Agency’s report to a legislative committee (the Gambling Market Inquiry). The Committee claims that if loot-box winnings are able to be converted into cash or other legal tender, they constitute a lottery and thus fall under the scope of the Gambling Act.

The Ministry of Finance commented that the government’s Gambling Market Inquiry will "consider the recommendations" of the Consumer Agency, although there is a growing belief among relevant actors in Sweden that the government will initiate some form of action against loot boxes.

"We must to ensure that consumers have adequate protection. The fact that computer and video games are of great interest to children and young people makes the issue particularly important," said social security minister Ardalan Shekarabi, the minister responsible for gambling in Sweden.

However, when it comes to the legal reality of the law, a Stockholm-based international lawyer pointed to several tricky technicalities that may stall any attempt to classify loot boxes as a kind of lottery.

"The relevant issue here is how the state will define the [Consumer Agency’s] statement that 'if the winnings in a loot box can be converted into money, it is a lottery that falls under the Gambling Act'," explained Ola Wiklund, founder of Wiklund Law. "There are also strong arguments to support the view that the existing law doesn’t apply to loot boxes" Wiklund comments.

"First, the games are not provided for a geographically determined group of consumers. Second, the definition of a lottery does not lend itself to application to loot boxes without some amendment, since the conversion into money is of a different nature when compared to a traditional lottery."

"In short, to regard loot boxes as falling under the Gambling Act would amount to regulatory overreach that is unlikely to withstand scrutiny in a court of law," he said. However, Wiklund noted that, ultimately, political reality may be determinative of future developments.

Read the article Loot Boxes and Domestic Gaming Laws – Regulatory Overreach, published on GamblingComplience, 29 October 2019