Gaming and esports download: Issue 4

Gaming and esports download bulletin: Issue 4

A download of some of the most interesting issues we have seen recently in the world of gaming and esports from both the legal sector and beyond. Read previous issues here.

In this latest issue of the Download, we look at the latest from the Esports Integrity Commission and the ongoing Epic litigation against Apple and Google, as well as updates on loot boxes from around the globe and EA's new FIFA Spend-Tracking tool.

ESIC sanctions CS:GO betting offences

On 23 October 2020 the Esports Integrity Commission (ESIC) and the E-Sports Entertainment Association (ESEA) announced the first findings in their joint investigation into various breaches of ESIC's Anti-Corruption Code within the Mountain Dew League (MDL). Their joint statement declared that seven professional Counter-Strike: Global Offensive (CS:GO) players in MDL Australia had breached ESEA's tournament rules and Article 2.2 of ESIC's Anti-Corruption Code which prohibits participants (including players, managers, coaches, agents and so on) from betting on any element of a match or event in the esport in which they participate professionally. The offending players placed bets on MDL and other CS:GO matches. Sanctions have been imposed in the form of a 12 month ban from all competitive CS:GO events organised or promoted by ESIC members.

These sanctions come with a warning to professional players of the gravity of inappropriate betting behaviour, not just for the integrity of the esports industry but also for the reputations of the individuals themselves. ESIC has referred the betting offences to law enforcement, and they have not ruled out the possibility that their investigations may result in further consequences for the seven sanctioned players and their teams.

This is only the beginning for ESIC's investigations into potential breaches of the Anti-Corruption Code within the MDL. As the esports gambling market grows, so too does the risk that players will both fall fo ul of the temptation to place bets or be approached to fix matches. As ESIC continues to investigate numerous instances of match manipulation behaviour, watch this space for further updates.

Epic Games v Apple continued...

In the couple of months since our last issue, there has been plenty of movement in Epic Games' ongoing disputes with Apple and Google.

We previously reported that Epic Games have sued both Apple and Google in the US after the two tech giants removed Epic's best-selling Fortnite from their app stores following a dispute over commission. Apple counter-sued, seeking damages for both breach of contract and "intentional interference with prospective economic advantage and conversion" (that is, that Epic intentionally interfered with Apple's legitimate business interests). A Californian Federal Judge has now dismissed these counterclaims in part in response to an application by Epic. The Judge ruled that Apple had no basis for its interference and conversion claims, observing the matter is "a high-stakes breach of contract case and an antitrust case and that's all". Apple's counterclaim is now therefore limited to breach of contract. The case is now set to be heard in July 2021, but we expect there to be more action between now and then.

Epic has also gone on to sue Apple in Australia on similar misuse of market power grounds. In this claim, Epic is not seeking damages but rather a ruling that will open up mobile platforms to third-party stores and allow direct payments to app developers. This is the first claim to test these rules as they relate to the Apple app store in Australia and will therefore be of great interest to stakeholders worldwide.

Recent statements from Epic suggest that they have not yet started proceedings against Google outside of the USA, but the case in that jurisdiction against them continues.

Loot-Boxes Around the Globe

As the debate over whether loot boxes should be classed as gambling continues to rage worldwide, here are some of the latest updates on this hot topic from around the globe.

The Netherlands

EA has been fined up to a potential €5 million in the Netherlands for its in-game sale of FIFA Ultimate Team Packs, loot-box style items that have been found to violate local gambling laws. EA and its Swiss subsidiary will be fined €250,000 each a week up to the €5 million total unless they change the way the items work. EA have announced that they plan to appeal the decision on the grounds that, since the in-game packs have no real-world monetary value, they should not be considered gambling.

It is not necessarily surprising that such action has been taken in the Netherlands, given that the Dutch Gaming Authority first banned loot boxes as violating gambling laws in 2018. We also note with interest the closeness in time between this decision and the launch of FIFA Playtime (discussed below).

Canada

On 30 September 2020, a loot box related class action was filed against EA in Canada by two named plaintiffs -- Mark Sutherland and Shawn Moore -- on their own behalf and on behalf of any Canadian who purchased, directly or indirectly, loot boxes in 60 named EA games as well as "such other games...that may become known to the [plaintiffs]" since 2008. Sutherland and Moore claim that, by making loot boxes available in the jurisdiction, EA operated an "unlicensed, illegal gaming system" in breach of the Criminal Code of Canada which prohibits unlawful gaming, lotteries and games of chance.

The outcome of this action will be interesting because, on the assumption that EA does not have a Canadian gambling license, it will likely turn upon the Court's analysis of whether loot boxes should be classed as gambling. Although any judgment will, of course, focus on the position under Canadian law, it will no doubt be more widely instructive.

USA

Less than 2 months later, EA found itself facing another loot box related class action, this time in the US. The scope is somewhat more focused than the Canadian claim -- it relates to EA's use of Dynamic Difficulty Adjustment (DDA) technology in its Madden NFL, FIFA and NHL franchises since 2017. In summary, the plaintiffs claim that EA uses DDA (which uses AI to adjust game difficulty to keep players engaged) to push players to purchase Player Packs, which they argue are a form of loot box, in violation of various statutes including False Advertising Law and Unfair Competition Law. 

Whilst this claim looks at potential problems with loot boxes through a slightly different lens, we note that a separate class litigation was issued against EA in California in August 2020 in which it is alleged that Ultimate Team packs (the same loot boxes items for which EA is facing fines in the Netherlands) break Californian gambling laws.

We will be monitoring all of this ongoing loot box litigation and providing updates in future Downloads.

UK

In our last issue we featured the House of Lords Select Committee's recommendation, in its Summer 2020 report on Gambling Harm, that loot boxes should be brought within the remit of the UK's Gambling Act. On 8 December 2020, the UK Government published its response. It issued a call for evidence on loot boxes from players and adults responsible for children who game, as well as developers and other organisations with an interest in the gaming sector. This closed on 22 November 2020 and the results are currently being analysed, with next steps expected to be announced in early 2021. This is unsurprising given that the government specifically committed in its 2019 manifesto to focus on tackling issues around loot boxes in a bid to make the UK one of the safest places in the world to be online.

At the same time, the UK Committee of Advertising Practice (CAP), which offers guidance on UK advertising codes, has published draft guidance on the way in-game purchases should be advertised to prevent customer harm. This covers issues including how in-game purchases are priced and how purchase opportunities are presented, which is of particular concern in relation to immersive gameplay scenarios and random-item purchasing. You can read the draft guidance here. A consultation on the draft guidance is underway and runs until 28 January 2021.

EA launches FIFA spend-tracking tool

Described as the first major practical step in their 'Positive Play Charter', EA recently announced 'FIFA Playtime', giving players the ability to review how much time and money they have spent in the game as well as the ability to limit some elements of their play. Providing further functionality targeted specifically at parents, EA claims that the concept behind FIFA Playtime is "grounded in research that shows that having access to more information helps players feel comfortable with how they play".

While this is certainly a positive and proactive step for EA to take, it feels very much influenced by the broader debate around the responsibilities of gaming companies, in which loot-boxes have been a lightning rod for increased regulatory scrutiny across the UK and EU. Would EA have launched their Positive Play Charter without increasing pressure? Impossible to tell, but the fact they hadn't done so before June this year appears reactionary.

What is interesting around self-management tools like FIFA Playtime is the interplay between the level of responsibility on individual games to introduce such features and then, of course, on individuals themselves to use them. The FIFA Playtime service is opt-in and at the time of publishing, it is too early to understand how many players have actually turned it on and used it to limit their spending or playing time. Time will tell whether it makes an impact on spending in-game, and on FIFA's overall earnings (reported £2.8m per day during the first UK lockdown) and, more importantly, on player wellbeing -- although that may be harder to measure.