Wednesday, 30 January 2019
Ceisteanna Eile - Other Questions
38. To ask the Tánaiste and Minister for Justice and Equality if his Department considers loot boxes and mystery boxes in video games a form of gambling or an e-commerce activity; and if he will make a statement on the matter. [4383/19]
The gaming industry is growing exponentially and there is much concern about the harm, in particular to young adults, from loot boxes and mystery boxes. Some $30 billion was reportedly spent on loot boxes in 2018 alone, and the gaming industry is predicted to have a value of $160 billion by 2022, 47% of which will be generated from micro-transactions such as loot boxes. It is clear that improved regulation is needed.
In the light of the Department's ongoing work on the Gambling Control Bill 2018, will the Minister of State outline the Department's view on loot boxes? Are they considered a form of gambling or an e-commerce activity?
The Deputy will be aware that I have previously addressed the issue of loot boxes and whether they constitute a gambling or e-commerce offering. A licence is required under the Betting Acts 1931 to 2015 or the Gaming and Lotteries Act 1956 to sell gambling products, and gaming, as defined under the latter Act, is covered in that regard. While the Minister for Justice and Equality has certain responsibilities under both Acts, the Revenue Commissioners are the responsible licensing authority. In the context of video games, if a game sought to offer an activity or items for purchase that fall under the current Irish legal definition of gambling, the manufacturer of the game would require a relevant licence. To the best of our knowledge, no manufacturer has sought such licensing by gambling regulators in Ireland or other EU member states to date.
If a game offers in-game purchases, however, that are advertised to increase the chances of success in the game but do not fall within the current Irish legal definition of gambling, such purchases are an e-commerce activity. This would fall within recourse to normal consumer law where there is dissatisfaction on the part of the customer with the purchase. However one might regard in-game purchases and how they may be marketed, it must be clear that they fall within the legal definition of a gambling activity to engage the regulatory attention of my or other Departments responsible for that regulation. This position is shared by other EU member states.
I have been made aware of so-called mystery boxes, which are items offered for purchase through Internet platforms such as YouTube. I am advised they appear to be in the nature of lucky dip-type purchases and, as such, do not come under the definition of gambling. My earlier comments, therefore, regarding the requirement for a gambling licence also apply in this instance.
Through the Department of Justice and Equality, Ireland was happy to lend its support to the recent declaration issued by the Gaming Regulators European Forum, concerning the blurring of lines between gambling and gaming. The declaration reflects concern among national authorities as to whether gaming products such as video games should be appropriately licensed if they offer gambling possibilities. The declaration was intended to indicate to the gaming industry concerns expressed by several states that certain player-to-player gaming products may, in the context of in-game purchases, fall within the category of gambling as defined under their national laws. Although the declaration does not have any legal effect, Ireland will continue to co-operate with other member states in the matter.
I thank the Minister of State for his response and acknowledge our role in the joint declaration of European regulators. In popular games such as Overwatch where if one purchases a loot box, the box starts shaking on the screen and there are flying discs and a final reveal, and it is all designed to heighten the appeal. It is very much like watching an episode of "Winning Streak". Similarly, in the Fortnite game, which is also popular, the "Save the World" game features blind loot boxes. While Epic Games has said the system will be replaced by an X-ray system, there are currently brightly coloured piñatas that are cracked open with the potential to win in-game goodies. There will soon be X-ray llamas in order that the player will know before purchasing what they contain, which I welcome.
York St. John University and the University of York came together to conduct an extensive study of 8,500 gamers, and they found a direct link between adults who have problems with gambling and the time they spent on loot boxes, which is something we should be conscious of. They recommended a loot box restriction and that, at the least, there should be an age restriction on loot boxes in line with other types of gambling in order that they are treated as another form of gambling, which should be borne in mind.
That was one of the reasons we supported the declaration I mentioned. Parents have primary responsibility to protect their children in the purchase and use of video games, particularly those played online. The declaration to which I referred will serve to alert parents of potential issues and costs involved and encourage them to exercise greater control over purchase decisions. That the Deputy raised the matter will, I hope, highlight to parents that they need to be vigilant about these matters.
Video products are currently regulated under the Video Recordings Act 1989. Video games are exempted works for classification purposes unless they fall within the terms provided for in section 3(1)(a)or (b), which cover the grounds for the prohibition of works. Ireland is part of a pan-European game information, PEGI, system, which is a European-wide rating system for video games, and the director of the Irish Film Classification Office, IFCO, is a member of the council of the PEGI system. It is now normal practice for IFCO to view video games which are rated as 18+ to allow the director of IFCO to form an opinion of whether such games fall within the terms provided in the Video Recordings Act 1989.
I raised the issue for two reasons, namely, to try to influence our view of regulation as we amend the upcoming gambling Bills and to raise awareness among parents of their responsibility. Children aged ten, 11 and 12 play the games, often in their bedrooms without parental control and without parents being fully informed of the important elements of the game.
Countries such as Belgium, the Netherlands, the Isle of Man, China, Japan and Australia have treated loot boxes and mystery boxes as a form of gambling. Regulators are investigating the matter in 15 other areas, one of which is the US Federal Trade Commission, which is investigating pay-to-win and gameplay systems. While parental control is important, and I accept that gambling problems are covered by the Department of Health, it is incumbent on the Department of Justice and Equality, as regulator, to make a start. If somebody is susceptible to problem gambling, this type of gaming is a bad way to start as a young adult. If there are ways we can restrict that and make young adults safer in their gaming, we must take every step.
I thank the Deputy for raising the matter, which is important because children are possibly being groomed by using the games before progressing to gambling. He is correct that people with gambling problems or addictions are the responsibility of the health authorities because it is a health matter.
The Deputy made reference to the group that we established to review the main provisions of the Gambling Control Bill. The group gave attention to considering the structure of the proposed regulatory authority, having regard to the decision taken by the Government on 10 January 2018. It considered governance and logistical practicalities in the establishment of the regulator, as well as the future of licensing of gambling activities, including gaming arcades, machines, lotteries and casinos; combatting money laundering through gambling; improved protection of consumers and vulnerable persons; and the approach to be taken to advertising, sponsorship and the proportion of gambling activities, and match-fixing of sporting events.
The Deputy is correct that the matter is changing by the week. Every time we examine it, there is a new game, approach or way of making money and enticing people to get involved, which is why I am anxious that the gambling control authority be established as soon as possible with the flexibility to keep up with the industry.