Is that a state-by-state regulation? A federal regulation? And does the regulating code specifically mention physical machines?
Thanks in advance for satisfying my curiosity.
Slot machines are regulated because they fall under the category of gambling and video games don't meet the legal definition of gambling. (Although, I'd agree that it's starting to seem more and more as if they should.)
There's a pretty good explanation of the criteria at https://digitalscholarship.unlv.edu/cgi/viewcontent.cgi?arti... but the brief summary (from the article) is "Gambling consists of three elements: consideration, prize and chance. If any one of those three elements is missing, the game is simply not gambling (Rose, 1986))."
By looking at those criteria, there's a lot of ways video game companies can defend themselves. The strongest one IMO being that, from a legal standpoint, there is no prize. You "win" things or get drops but the TOS of all games say that the player does not own them (or anything else in the game) in any legal sense. The analogy would be more like a carnival ride where you are paying for the experience rather than the expectation of getting anything material in return.
Yet loads of people sell their in-game items (that they got through chance) for real money. So in a sense, they do own them.
More problematicly, im not sure how youd stop it from extending to say WoW gold-selling, or even cartridges with 100% saves on them.
People will attribute value to anything for any number of reasons, but I’m not sure you can make regulation on anything beyond “encouraging” such behavior. (And I would assume these companies already actively discourage it; you’re not supposed to be able to get money back out of the system!)
On one hand, this may be enough to consider it gambling for money.
On the other hand, many games may expressly forbid selling in-game stuff. This is not easy to enforce, though, unless you forbid to drop and pick up items, or make in-game exchanges. A number of games uses exchange as a important "social" / "multiplayer" feature, but likely those are not slot-machine-like anyway.
I believe if I had a slot machine that paid out in free vacations instead of cash, there would be no doubt playing it is a form of gambling.
I think it’s that the micropayments don’t get a random return. When someone buys to complete a level it is a predictable outcome, not a gamble.
People get variable return on item drops, but you don’t generally pay with money for item drops, just time.
There is a one-step-removed way in which I think video games could be regarded as a kind of indirect or obscured gambling.
1-I pay to receive an in game item like a weapon
2-I use that investment to go out and kill monsters for treasure drops
3-I end up with some randomly variable items of value that are by definition valuable, because people will pay me for them, TOS doesn’t establish a thing’s market value.
But I think this would really require us rethinking or redefining a number of concepts.
I did in the 1970's, and it's perfectly legal (roulette, not slots):
https://www.ebay.com/p/Las-Vegas-Roulette-Intellivision-1980...
That you are never forced to pay is a defining aspect of “freemium”. You are always given the choice to wait out the timer/watch an ad for your next upgrade/level/continue/bonus/lootbox, rather than pay.
In the US you can't build a slot machine that accepts money and dispenses tokens that have value. That's often how things operate in Japan, but the same model is generally illegal in the US.
It's questionable if spending real money on virtual currency to buy "loot boxes" that randomly give things of value is legal. And if that's legal, it's not obvious if changing the rate of rewards is legal.
If the state wins, it could result in an expansion of regulation of this type of mobile game.
Here's an article with some more detail.
https://www.geekwire.com/2018/game-show-network-hit-online-g...
The regulations were designed for casinos before video games became so popular and way before mobile games and micro-transactions even existed.
Example of gambling regulation for New Jersey: https://www.nj.gov/oag/ge/docs/Regulations/MergedRegulations...
> Is that a state-by-state regulation?
Yes. Delaware, Nevada, New Jersey and Pennsylvania allow gambling. But I guess that at any moment local or federal regulations could be created.
> And does the regulating code specifically mention physical machines?
There is specific regulations for casinos, for on-line gambling, for jackpots, sports betting, etc. e.g. CHAPTER 69O INTERNET AND MOBILE GAMING from the linked PDF
Example of definitions:
* "Authorized Internet or mobile game" means any game authorized by the Division for use with an Internet or mobile gaming system.
* "Client terminal" means any device that is used to interact with a gaming system for the purpose of conducting server-based gaming activity.
* "Data warehouse" means a system of one or more servers located in New Jersey for the purpose of storing transactions received from the primary gaming equipment.
* "Dormant account" means an Internet gaming account, which has had no patron initiated activity for a period of one year.
https://www.eurogamer.net/articles/2018-04-25-now-belgium-de...
Probably because the problem is not perceived as bad enough to get regulated yet. The industry was getting dangerously close to this when there were all those cases of kids racking up huge bills through in-app purchases on iPhones, but that has died down enough that it's not on the radar anymore. I think if the games industry gets too aggressive again, regulation will sweep in.
If a game has micro transactions, then treat it as gambling.
Problem solved.
