Lootboxes, pay-to-win, virtual currencies and other blights unto gaming face heavy regulation as the EU tables new Digital Fairness Act

It's been 10 years since I lasted opened a lootbox, I think. Just thought you should know.

Loot boxes, dark patterns, virtual currencies, subscription services, pay-to-win systems, and many other trappings of diabolical digital serfdom all face extensive regulation under the European Commission's proposed Digital Fairness Act, which has been formally presented to EU member states today. The full draft text of the regulation leaked earlier in the week. If it passes into law - and there's plenty of debate and revision ahead - it'll have big consequences for the developers and publishers of games like Overwatch, Dota 2, and GTA Online.

You can now read the draft text here on the EU Commission's official site. The organisers have also published an introductory explainer that takes us through the timeline of the Act's gestation, dating back to 2020, and summarises its provisions. If passed, the Act will apply to any company doing business in the EU, not just those based in member states, with individual governments able to impose fines and consumers able to seek financial compensation if they think they've been harmed.

Here's a summary from me, based on a quick delve through the text. The Act proposes a number of provisions regarding "unfair" commercial practices, including omission and distortion in advertising and PR communication at large. Amongst other things, it takes aim at "dark patterns" – that is, "visual, auditory and other components" of online interfaces that are designed to manipulate or deceive. The text also forbids personalised advertising and pricing aimed at children, and prohibits influencers from making "direct exhortations to minors to buy products or to persuade their parents or other adults to buy products in commercial communications".

The items that are probably of greatest interest to us smelly gamers are the passages on virtual currencies, "variable reward systems", and addictive design.

The Act would require game publishers who sell virtual currencies to indicate the real-world monetary value of the currency and anything bought with it. It would also require companies to disable paid-for virtual currencies by default for kids, unless a parent or guardian has given approval.

As for paid-for "variable reward systems", aka "loot boxes", "surprise mechanics", "Schrödinger's Giftbombs" or however publishers may prefer to describe them, the Act would require companies to state the "types" of object they might cough up, together with the probability of obtaining them. It would also oblige publishers to disable paid-for "variable reward systems" for minors, and give everybody an "easily accessible" way to switch them off.

The draft Act outright prohibits "pay-to-progress and pay-to-win mechanisms" for kids. More generally, it suggests further constraints for publishers and developers who "design, organise or operate their digital products in a manner that is intended, or can reasonably be foreseen to encourage compulsive or excessive use". Again, it wants companies to give people options to switch these features off.

That includes "features enabling automatic play of content and uninterrupted content consumption without effective and regular interruption moments that enable deliberation by the consumer on their willingness to consume more content". Also, "notifications not triggered by, or not directly related to, the consumer’s interaction or activity on the service", "features incentivising engagement at regular times or with greater frequency, including through penalties or loss of benefits", and "features and system behaviours that encourage continued use by simulating interpersonal relations," such as nagging prompts.

If you'd like a more 'expert' account of the Digital Fairness Act - how dare you! I have read several Wikipedia pages about all this - the bespectacled nabobs of GamesIndustry.biz went and got notes from an actual lawyer. All this follows a change in EU rating law last month aimed at safeguarding the weans from predatory habit-forming devices and instruments of financialisation - games with lootboxes are now PEGI 16 by default, while blockchain games are always rated 18. Across the pond, meanwhile, lawsuits are underway in New York and Washington against Valve's tolerance of lootboxes on Steam, which the lawyers in question define as illegal gambling.