Gambling with gameplay

You’ve taken down the level 12 Gundark and that familiar fluorescent green light emits from its corpse indicating the presence of special loot.

What will it be? Another lightly enhanced trinket to be sold for a pittance ASAP or something genuinely special that will accelerate your progress in the game?

In gameplay terms, chance has always been a critical part of many games’ appeal, whether determining loot drops, influencing the spread of your M416 shots or deciding deck placement in solitaire.

However, chance has also become a tempting and particularly lucrative opportunity for microtransaction games; a trend that can move a game uncomfortably close to gambling, attracting the attentions of authorities in Asia and raising the potential of problems in the west too.

THE UNHOLY TRINITY

Gambling is broadly defined as the presence of the ’unholy trinity’ of consideration (i.e. payment to participate), chance (as opposed to skill in determining an outcome) and reward (payments to the winner).

Different countries have different and various definitions of this but in broad terms they are largely similar.

The presence of just one or even two of these usually allows a company to avoid gambling legislation. Thus, Zynga Poker is acceptable in the US and EU as it comprises consideration and chance but not cashing out.

It is also why skill games, in which players wager on their ability, remain broadly legal, as the games’ outcome is demonstrably determined by skill and not chance.

Things become more complex with games that feature tradable virtual goods.

Many MMOGs have authorised secondary markets for their virtual goods – exchanges where players can trade their unwanted virtual items with other players.

Some prevent cashing out, keeping the exchange currencies virtual. Others allow users to sell their items for real money and thus provide them with tangible rewards.

Given that these items may come from random loot drops in games with payment barriers – pay-to-play, microtransaction or subscription – this would appear to make them forms of gambling.

In many parts of Asia, including MMO powerhouses China and South Korea, real-money secondary markets for virtual goods are either heavily restricted or outright illegal as they are deemed to constitute or promote gambling.

This will prove problematic for titles such as the forthcoming Diablo III, which tightly integrates a secondary trading platform into the game, a trend that we believe other titles may well follow.

A more overt form of gambling in games is where players pay – via a premium virtual currency – to directly access random item features such as treasure chests or virtual item slot machines.

This has become one of the most lucrative tricks in the microtransaction commercialisation handbook, and is a common feature of many Asian MMOs in the west (such as MapleStory’s best-selling $30 Gachapon lucky dip machine ticket pack) and numerous social network games (such as FarmVille’s Mystery Boxes).

Even without a cashing out element, it is still a highly compelling mechanism for players seeking rare or high value items for a limited outlay and undoubtedly taps into players’ gambling proclivities.

For this reason, both the Chinese and South Korean authorities, who take a stern view about gambling and games addiction, have indicated their intention to take action against online games companies that employ such systems.

ON THE CARDS

To date there has been limited scrutiny of such practices in the west by governments and the courts. This is true even of the category of gaming that is possibly closest to gambling: trading card games.

Trading card games comprise consideration (paying for a real or virtual pack) and chance (the cards in each pack are allocated randomly). Left at that, the game is unequivocally legal.

However, many games services allow and actively encourage their cards to be traded. While some of this trading is done with virtual currencies only in closed secondary markets, not all of it is, and some allow cashing out, in a process that clearly constitutes reward and thus theoretically completes the unholy trinity.

However, a tiny number of legal attempts to establish trading card games as a form of gambling have failed in the US.

Primarily, it seems, that’s because of the indirect way in which the three conditions are linked, unlike in a poker game, for instance, where all three are part of, and key to, the same process.

So if trading card games are not considered gambling, then surely games with chance-based microtransaction features are safe in the west?

Possibly. The collectible card game market is relatively tiny and would fall below the radar of most investigators’ interest.

The MMO, social network games and broader microtransaction games market is substantially bigger, growing much faster and reaching a significantly broader audience that increasingly includes children.

We believe that at some point these industry practices will be tested more rigorously and we would not want to bet on the outcome.