Child Gambling and the Sordid Story of FIFA Ultimate Team Packs

Loot boxes are random chance purchases inside a game. Gamers pay real money for a box whose contents can range from a pedestrian low-value in-game item to a rare and costly in-game treasure. FIFA, an annually released football simulation video game owned by EA Sports, sells loot boxes in the form of “Ultimate Team Packs” (hereinafter “UTPs”), a mechanic that allows gamers to buy packs of digital football players in the hopes of building the ultimate team. For perspective on the profitability of this microtransaction model, this past year, EA generated $1.49 billion (that’s billion with a “b”) through its Ultimate Team platform.¹ While EA’s interest in maintaining loot boxes is fiscally understandable, they have been facing increasing legal pressure to rid itself of a mechanic that many perceive as a predatory form of gambling aimed at children.

In August and September, EA was hit with two class action lawsuits claiming that FIFA loot boxes violated gambling laws.² Additionally, on October 15, 2020, a Netherlands District Court announced that it would be fining EA for its continued use of loot boxes in FIFA.³ According to the ruling, both the EA in the Netherlands and EA’s Swiss subsidiary will be fined €250,000—up to €5 million each—for every week that they do not remove purchasable UTPs from several generations of FIFA.⁴ EA Benelux released a statement expressing their intention to appeal the decision.⁵

The Loot Box Controversy

The issue behind these legal challenges is whether loot boxes fall under the rubric of monetized games of chance (gambling) or whether they only contain “surprise mechanics” and are more akin to children’s toys like Kinder Surprise Eggs or Hatchimals.⁶ On the surface, the similarity between traditional gambling and loot boxes is hard to deny. As Professors King and Delfabbro point out, “loot boxes resemble gambling slots because they require no player skill and have a randomly determined outcome (i.e. prize).”⁷ Furthermore, the psychological relationship between a gambler and the roulette table and a gamer and a loot box is indistinguishable. As Dr. Zendle explained, “‘both when you are playing on a roulette wheel or while you are opening a loot box, you’re wagering something that you have in our hand of value now on the uncertain hope of getting something of greater value later on.’”⁸ Aside from these formal similarities, FIFA UTPs bear many of the gambling industry’s hallmarks of unsavory practices intended to maximize profits, including:

• A dissociation between actual currency and the item bought: Rather than allow gamers to purchase UTPs for a set dollar amount, EA forces gamers through an arcane and unnecessary process, creating distance between the UTP and actual currency. In FIFA, to buy a UTP, gamers must first buy “points.” These points, in turn, must be used to redeem “coins.”⁹ Only at this stage can gamers buy UTPs for a set amount of coins.¹⁰ Like casinos insisting patrons use chips rather than cash, game developers deliberately create a disconnect between the loot box and the purchasing money for the simple reason that gamblers spend significantly more when betting with a currency analog rather than with real money.¹¹ Creating artificial and confusing degrees of separation between the money and the wager serves to short-circuit the brain’s ability to properly assess the cost or value of a particular bet, leading to overspending.¹²
• FIFA makes it deliberately frustrating for gamers to earn coins through gameplay: While gamers can accrue points by completing in-game challenges, as the game progresses, EA makes it tiresome for gamers to “grind” their way to new points.¹³ This engineered frustration creates “‘demand through inconvenience,’” making it seem reasonable for gamers to spend money to purchase their way to an entertaining experience.¹⁴
• Buying UTPs prompts a similar audio-visual experience to activating slot machines: Once the gamer purchases a UTP, music starts playing, lights start flashing, and a cinematic process unfolds, masking the sense of loss for losers, and heightening anticipation in a process starkly reminiscent of slot machines.¹⁵

EA Responds:

EA counters by noting that, unlike gambling, in-game prizes are valueless, and EA offers no platform for selling in-game items for cash.¹⁶ But this response is insufficient for four reasons:

1. Secondary “gray markets” exist, allowing gamers to swap passwords and accounts for money.¹⁷ Developers counter that they should not be responsible for this form of secondary-market trading given the fact that they expressly forbid gamer participation in these gray markets.¹⁸ This argument however, is difficult to sustain. Value does not disappear simply because a transaction is contractually delegitimized.¹⁹
2. FIFA itself has an in-game auction house to trade players for coins. Gamers can easily sell these coins on third-party websites.²⁰
3. Given the desirability of in-game rewards and coveted players, from an economic perspective, value exists even without a secondary market. Professors Drummond Sauer, Hall, Zendle, and Loudon analyzed the real-world value of randomized loot boxes using a number of different economic models and concluded that “virtual items have monetary value to gamers irrespective of whether they can be cashed out.”²¹
4. FIFA hosts high-stakes tournaments and the only realistic manner of being competitive is to have a highly ranked team of players, necessitating the purchase of UTPs.²²    

To distinguish itself from gambling, developers compare loot boxes to Pokémon cards, which encourage children to buy a randomized set of “in-game” items in exchange for real-world money.²³ But this comparison is strained; unlike loot boxes, a deck of cards is a real-world object of value.²⁴ It can be traded, stored, played with, collected, and represents a permanent physical acquisition. Conversely, the “loot” inside loot boxes are not “collectibles;” they are phantasmic, ephemeral digital creations. If a gamer gets banned, the game servers go down, or the developer abandons the game, all the “loot” disappears.²⁵ In fact, EA issues a new version of FIFA every year, requiring gamers to abandon much of their old lineup of players and old in-game acquisitions and build a brand new team upon each annual release.²⁶

Game developers further contend that loot boxes are like trading cards and not like roulette or slot machines because the gamer never loses; UTPs always produce something of value.²⁷ Like a deck of Pokémon cards and unlike a slot machine, even if a loot box does not contain a rare item, it will at least provide common items. But this comparison does little to whitewash loot boxes. True, gamers always receive something, but the value the gamers receive is typically minuscule compared to the amount paid.²⁸ Additionally, the distinction between “no payout” and “minimal payout” is a mere technicality that yields no substantive difference. Would you label a slot machine “not gambling” if every spin provided a minimum “1 cent win?”²⁹

Conclusion:

Regulators are cracking down on game developers. No matter how developers attempt to brand loot boxes, the reality is that loot boxes possess many of the same mechanics and foster the same addictive behavior—and produce the same devastation—as gambling devices.³⁰ This is especially troubling given that many of these games boast an ESRB rating of “E – for everyone” and are targeted specifically for children.³¹ In the 1920s, cigarette companies ran ads enticing children to buy cigarettes.³² When looking at these vintage ads it is hard not wonder “what were they thinking!?” I am convinced that one day in distant the future, they will look back at these games with equal horror. What were we thinking to allow developers to ensnare vulnerable children with colorful, saccharine games that masked predatory psychologically sophisticated and brutally addictive gambling mechanics?

Nosson Sternbach is a Second Year Law Student at the Benjamin N. Cardozo School of Law and a Staff Editor at the Cardozo Arts & Entertainment Law Journal. Nosson is interested in tax law. Nosson spends most of his free time actively avoiding his three adorable children. Connect with Nosson at https://www.linkedin.com/in/nosson-sternbach-b48641160.  

1. Jack Kenmare, The Mind-Blowing Figures Behind EA Sports’ Net Revenue from Ultimate Team, SPORTbible, (May 26, 2020, 2:24 PM ), https://www.sportbible.com/football/gaming-news-the-figures-behind-ea-sports-net-revenue-from-ultimate-team-20200521.
2. See Complaint, Ramirez v. Elec. Arts, Inc., No. 5:20-cv-05672-SVK (N.D. Cal. Aug. 13, 2020); Notice of Civil Claim, Sutherland v. Electronic Arts Inc., No. S-209803 (S.C.B.C. Sept. 30, 2020) (Can.).
3. Rechtbank den Haag 15 Oktober 2020, NJ 2020, ECLI:NL:RBDHA:2020:10428 (Bd. of Dir. Gaming Auth./Elec. Arts, Inc. (Neth.) (accessible at https://uitspraken.rechtspraak.nl/inziendocument?id=ECLI:NL:RBDHA:2020:10428).
4. Andy Chalk, Electronic Arts Faces €10 Million Fine over FIFA Loot Boxes in the Netherlands, PC Gamer (Oct. 29, 2020), https://www.pcgamer.com/electronic-arts-faces-euro10-million-fine-over-fifa-loot-boxes-in-the-netherlands.
5. Jordan Oloman, EA Appealing Potential €5 Million Fine in the Netherlands for Selling FIFA Loot Boxes, IGN (Oct. 29, 2020, 12:05 PM), https://www.ign.com/articles/ea-appealing-potential-e5-million-fine-in-the-netherlands-for-selling-fifa-loot-boxes.
6. See Asher Madan, EA Says Loot Boxes Are Like ‘Kinder Eggs’ and ‘Quite Ethical,’ Windows Central (June 19, 2019), https://www.windowscentral.com/ea-says-loot-boxes-are-kinder-eggs-and-quite-ethical.
7. Daniel L. King & Paul H. Delfabbro, Predatory Monetization Schemes in Video Games (e.g. ‘Loot Boxes’) and Internet Gaming Disorder, 113 Addiction 1967 (2018), https://onlinelibrary.wiley.com/doi/abs/10.1111/add.14286.
8. Complaint, supra note 2, at 18 (citing workshop transcript from Inside the Game: Unlocking the Consumer Issues Surrounding Loot Boxes. An FTC Workshop (Aug. 7, 2019)).
9. Id.
10. Id.
11. See Joey Richardson, Why Do Casinos Use Chips Instead of Cash? – Reasons Why, GamblingSites.net (May 7, 2014), https://www.gamblingsites.net/casino/articles/casinos-use-chips-instead-cash.
12. Id.; see also The Life and Death of a Casino Chip, PokerStars Casino, (last visited Nov 5, 2020), https://www.pokerstarscasino.uk/buzz/hard-currency-life-of-casino-chip/ (quoting Julius Weintraub as saying “The guy who invented poker was bright, but the guy who invented the chip was a genius.”).
13. EA’s most egregious example of the behavior was when it released Star Wars Battlefront 2 but locked the heroes behind paywalls. Reddit users quickly realized that it would take a whopping 40 hours of grinding to unlock Death Vader. Tone-deaf to the groundswell of fury amongst fans, EA responded on Reddit that “[t]he intent is to provide players with a sense of pride and accomplishment for unlocking different heroes.” @EACommunityTeam, Reddit (Nov. 12, 2017, 2:11 PM), https://www.reddit.com/r/StarWarsBattlefront/comments/7cff0b/seriously_i_paid_80_to_have_vader_locked/dppum98/?context=3. This infamous comment won EA a spot in the Guinness Book of World Records for becoming the most downvoted comment in Reddit history. See Rory Young, Star Wars Battlefront 2 Loot Box Controversy Helps EA Set a World Record, Game Rant (Sept. 6, 2019), https://gamerant.com/star-wars-battlefront-2-loot-box-controversy-world-record.
14. Complaint, supra note 2, at 24.
15. See e.g., Top Clips, FIFA 20 | BEST PACKS!!!😱👏- LUCKIEST FIFA 20 PACK OPENING REACTIONS COMPILATION CLIPS, YouTube (Apr. 22, 2020), https://youtu.be/x8wJvuCUafs.
16. IGEA, Gaming Micro-Transactions for Chance-Based Items, Submission to S. Env’t and Commc’ns References Comm. 3 (July 26, 2018) (available at https://igea.net/wp-content/uploads/2018/07/Interactive-Games-and-Entertainment-Association-IGEA-Gaming-micro-transactions-for-chance-based-items.pdf).
17. Complaint, supra note 2, at 3.
18. Tom McShea, EA Adamant Loot Boxes Aren’t Gambling, GamesIndustry.biz (May 9, 2018), https://www.gamesindustry.biz/articles/2018-05-09-ea-adamant-loot-boxes-arent-gambling.
19. Kyle Langvardt, Regulating Habit-Forming Technology, 88 Fordham L. Rev. 129, 163 (2019) (stating that “[t]he law does not normally hold that goods lose their value if the transaction is illegitimate. Think of bribery, for example. Bribery, too, requires that the briber offer a “‘thing of value’” to the bribee. An offer of unlawful narcotics would presumably qualify despite the goods’ legal illegitimacy. Why, then, should a gambling transaction be considered valueless because it violates another contract’s terms–an adhesion contract, no less?”).
20. Wesley Yin-Poole, When It Comes to FIFA 18, You Can Most Definitely Cash Out, Eurogamer (Oct. 23, 2017), https://www.eurogamer.net/articles/2017-10-23-when-it-comes-to-fifa-18-you-can-most-definitely-cash-out.
21. Complaint, supra note 2, at 31 (citing Aaron Drummond, James D. Sauer, Lauren C. Hall, David Zendle & Malcom R. Loudon, Why Loot Boxes Could Be Regulated as Gambling, 4 Nature Human Behavior 986 (2020)).
22. Complaint, supra note 2, at 3.
23. See Mark D. Griffiths, Is the Buying of Loot Boxes in Video Games a Form of Gambling or Gaming?, 22 Gaming L. Rev. 52 (2018)
24. Jeremy Ray, Loot Boxes Aren’t the Same as Trading Cards, Fandom (Aug. 10, 2018), https://www.fandom.com/articles/loot-boxes-arent-the-same-as-trading-cards.
25. Id.
26. Complaint, supra note 2, at 11; see also FIFA 20 Release Date Details – EA SPORTS Official Site, Electronic Arts Inc., https://www.ea.com/games/fifa/news/fifa-20-release-date (last visited Nov. 5, 2020).
27. Griffiths, supra note 23, at 53.
28. Complaint, supra note 2, at 31 n.38 (quoting Drummond’s assertion that the “overwhelming majority of players incur financial losses when on-selling loot box items, with ~93% of sales recouping less than the purchase price.”).
29. Ray, supra note 24.
30. See generally Alexander Mann, Pseudo-Gambling and Whaling: How Loot Boxes Prey on Vulnerable Populations and How to Curtail Future Predatory Behavior, 15 Wash. J.L. Tech. & Arts 200, 202-03 (2020).
31. See FIFA 20 Rating Summary, ESRB Ratings, https://www.esrb.org/ratings/36486/FIFA+20 (last visited Nov. 5, 2020); See generally Ratings Guides, Categories, Content Descriptors, ESRB Ratings, https://www.esrb.org/ratings-guide/ (stating that “Content [labeled “E”] is generally suitable for all ages. May contain minimal cartoon, fantasy or mild violence and/ or infrequent use of mild language.) (last visited Nov 22, 2020).
32. Outrageous Vintage Cigarette Ads, CBS News, https://www.cbsnews.com/pictures/outrageous-vintage-cigarette-ads (last visited Nov. 5, 2020).