French gambling regulator criticizes loot boxes, stops short of regulation

Now that Belgian and Dutch gambling regulators have spoken up on loot boxes, it's France's turn. In its 2017-2018 activity report, the Autorité de regulation des jeux en ligne (ARJEL) discussed at length its findings on loot boxes and how the regulatory authority for online games planned to respond to them.

In short, for now, it doesn't. At least not legally. An analysis of the French report courtesy of media law associate Sebastian Schwiddessen helps set the stage, describe, and analyze the report in English. It starts by acknowledging that loot boxes and video game microtransactions in general aren't a new thing, but that the 2017 debate (unnamed in the report, but likely referring to Star Wars: Battlefront II's controversial use) brought them to public attention and emphasized the need for the ARJEL to take a closer look.

Currently, the only types of online gaming permitted are sports betting (including horse races) and poker. If the ARJEL were to determine loot boxes were gambling, the body would either have to approve them in France or the practice would be illegal.

In order for the ARJEL to classify an activity as gambling, that activity must be offered to the public, a financial sacrifice must be made in anticipation of some gain, and (implied, but not stated directly) there must be an element of chance. Schwiddessen notes that this is a fairly consistent definition across multiple other regulatory bodies.

With all that defined, what about loot boxes themselves? The ARJEL notes that loot boxes are worth particular consideration because there is no strict age gate to playing the games they're contained in. Whether or not loot boxes are gambling, the regulator says they are close enough that they normalize gambling behaviors and could instigate an early gambling addition in young people. Finally, the odds for loot box rewards are not currently required to be disclosed in France (as they are in China, for instance) and there is a concern that personal data could be exploited to change odds around and hook players for longer based on interests or past purchases.

The ARJEL's response is to vote for coordinated action on loot boxes, but it stops short of instigating that action itself. It calls for better analysis of loot boxes by financial regulators and a combined consensus across Europe, noting that the Gaming Regulators European Forum (GREF) has a publication on the way that will clarify rules to publishers, raise consumer awareness, and warn parents of the dangers to minors.

What the ARJEL does not do is define loot boxes as gambling. Where its hesitation lies is in the fact that the items players receive from them do not necessarily have real-world monetary value, and even where they do (such as through skin gambling sites), the ARJEL notes that the publisher or developer would need to participate in or approve of the trading; passive approval by ignoring the process doesn't count.

For now, the verdict seems to be that in France, loot boxes aren't gambling and won't be regulated as such. But with continued investigation planned and the upcoming GREF paper, the ARJEL seems intent on verbal warnings at least for consumers to stay on their toes.