KSA Reissues €5 Million Penalty To Electronic Arts (EA)

In addition to its ‘cease and desist’ warning to Electronic Arts (EA) European subsidiaries, Kansspelautoriteit (KSA), the Netherlands’ regulatory authority for gambling, has re-issued a EUR 5 million penalty.

The charge concerns a 2019 compliance approved by KSA on ‘Electronic Arts Inc’ and ‘EA Swiss Sàrl’ alleging that through its ‘FIFA game packs’ the video games publisher had breached Dutch gambling laws offering’ games of chance.’

The KSA detailed in a statement: “The charges were imposed by the KSA because the popular football game FIFA contains illegal so-called loot boxes . These are a kind of treasure chest. For example, FIFA’s loot boxes contain football players who can improve the team with which the game is played.”

EA challenged the compliance and penalty notice of KSA on the grounds that Dutch gambling laws had no legal transparency on the concept of ‘game packs’ or ‘loot boxes’ with KSA having no justification to link the video game frameworks explicitly as games of opportunity.

The dispute between KSA and EA was monitored by the Hague Court, which released its judgement in favour of KSA this week, claiming that the regulatory body had the right to qualify loot boxes for Dutch customers as a ‘games of chance’ pledge.

The Hague claimed that under its regulatory mandate, KSA had acted to impose the penalty as FIFA games packs held a monetary value and that players had no ‘influence on which prizes they would receive from a loot box’ by mirroring games of chance functions.

“KSA has rightly concluded that the definition of games of chance within the meaning of the Betting and Gaming Act has been met,” it ruled. “In view of this qualification and in view of the prohibition on offering online games of chance without a license, the Ksa is authorized to proceed with enforcement. Correct use has been made of this power – EA appeals are unfounded.”

KSA President René Jansen thanked his team for its contribution to pursuing the EA penalty, for which the regulator had performed casework and analysis worth a year to present to Hague judges.

The KSA ordered EA to withdraw all FIFA game packs from its immersive service in the Netherlands and pay a penalty of EUR 5 million. Since then, however, EA has replied to KSA, claiming that it will follow more legal paths, pointing to a decision of the European Union on the matter.

The Policy Advisory Unit on Competition Standards and Fair Business Practices of the EU’s Internal Market Research Committee ‘(IMCO) released its report this summer on’ loot boxes in online games ‘and’ their effect on young consumers.’

Following member state disputes between regulatory agencies naming loot boxes, the IMCO was sanctioned to carry out research as a concerted effort to turn players into gamblers vs. game developers who maintain that loot boxes are a ‘random incentive tool’ that is crucial to game play and content monetization.

The IMCO report claimed that ‘structural problems’ were raised by all EU Member States and their regulatory agencies (interactive and gambling) in relation to the governance and control of standards attached to loot boxes and if they breached legislation on gambling by Member States.