Thursday, October 13, 2016

EVE Online Bans Gambling Sites

With the introduction of Alpha clones and a switch to a freemium business model, changes to the EVE Online End Users License Agreement to take effect in November were predictable. I don't think anyone really expected a change to Section 6B of the EULA.

B. Selling Items and Objects

You may not transfer, sell or auction, or buy or accept any offer to transfer, sell or auction (or offer to do any of the foregoing), any content appearing within the Game environment, including without limitation characters, character attributes, items, currency, and objects, other than via a permitted Character Transfer as described in section 3 above. You may not encourage or induce any other person to participate in such a prohibited transaction. You may not use, transfer or assign any game assets for games of chance operated by third parties. The buying, selling or auctioning (or any attempt at doing so) of characters, character attributes, items, currency, or objects, whether through online auctions, newsgroups, postings on message boards or any other means is prohibited by the EULA and a violation of CCP's proprietary rights in the Game.
Normally I add emphasis to important parts of a quote. CCP added the emphasis in the above passage. For those who don't understand the importance of the added sentence, the dev blog spelled out the meaning:
In short, this addition to the EVE Online EULA means that as of the launch of EVE Online: Ascension, players will be prohibited from using in game assets and currency, as well as the EVE IP, to take part in or promote gambling services or other games of chance that are operated by third parties.
I believe that "games of chance" is a weak phrase many space lawyers will misinterpret. A EULA should contain clear enough language to let players know what is and is not allowed in order to cut down on the number of issues support staff has to handle. "Games of chance", while perhaps a legal term, fails the clarity test. Hopefully, the vagueness does not result in GM time devoted to dealing with illicit gambling instead of working on other types of support tickets.

The dev blog then took a short detour, outlining enforcement actions for violations of the current rules:
With this in mind, as of this announcement we have taken action against two organizations that are currently offering third party services based around gambling and games of chance:
  • The third party service IWANTISK has been shut down in game, and all ISK and assets have been confiscated after extensive and exhaustive investigation has brought forward compelling evidence of large-scale Real Money Trading. Permanent account suspensions have been issued against those involved.
  • The third party service EVE Casino has been shut down in game, and all ISK and assets have been confiscated after multiple and sustained breaches of our Developer License Agreement. Permanent account suspensions have been issued against those involved.
Please note: CCP will not be issuing reimbursements based on outstanding ISK or asset balances with either of the above mentioned organizations that have been subject to account action and/or ISK and asset confiscation.
The first organization, IWANTISK, had a checkered past where illicit real money trading was concerned. In May 2015, CCP investigated IWI for RMT activity, blacklisting the website from the in-game browser for three weeks and permanently banning three bankers. In January 2016, Team Security temporarily banned 12 IWI bankers for an unusually long time. As 1ronBank confirmed yesterday on Twitter, the bankers were warned against any further RMT activity.


On a special edition of TMC's Talking In Stations, IWANTISK founder Eep Eep disclosed that three individuals received permanent bans: Eep Eep, 1ronBank, and Lenny Kravitz2. 1ronBank confirmed his ban on Twitter yesterday while Lenny did the same on Reddit. Given that both 1ronBank and Lenny Kravitz2 left IWI over the past month, the investigation went back at least 2-3 months, probably longer. Apparently, CCP decided three incidents were too much and pulled out the banhammer. CCP also either zeroed out, or nearly zeroed out, the wallets of all the IWI bankers.

The second organization, EVE Casino, is a gambling site associated with EOC.TV. The dev blog stated that members of the organization received permanent bans, but according to Adarics on Talking In Stations, he was the only player receiving the punishment. From what I can tell, the most obvious part of the Developer License Agreement Adarics could have violated are provisions against developing software in connection with gambling. The following seem the most pertinent sections of the agreement.

BACKGROUND STATEMENT

CCP is the owner of the massively multiplayer online game EVE Online® ("EVE"). As a "Developer", you desire to make one or more software applications to be used in connection with EVE. To use and support your application(s), you desire the right to access, read, and modify certain Game Data from EVE using approved CCP Tools. In exchange for these rights, you agree that you will use the Game Data and CCP Tools solely for the Purpose (as defined in Section 1.13 below). Subject to these conditions, and all other terms and conditions provided in this Agreement, CCP will grant you the right to access the CCP Tools and Game Data as a Developer. Therefore, for good and valuable consideration, the receipt and adequacy of which are acknowledged, the Parties intending to be legally bound agree as follows:
Section 1.13 reads:
"Purpose" means Developer's creation, distribution, and hosting of an Application that uses the CCP Tools to access and modify the Game Data but only where the Application is used solely to enhance Player's enjoyment of EVE and only where the Application is offered for non-commercial and non-profit use, as provided in Section 4 below. To fulfill the Purpose, a Player does not have to use the Application and EVE at the same time; rather, the functionality of the Application need only support a Player's use of EVE. The Purpose explicitly excludes (a) any use of the Licensed Materials or CCP Marks for any Application that is not used to support a Player's use of EVE or any related CCP product, and (b) any Application that promotes or provides online gambling, betting, raffles, lotteries, sweepstakes, or similar activities (as determined by CCP, in its sole discretion). [emphasis mine]
Since Adarics was developing a gambling site, the odds he violated Section 1.13 seem rather high.

Both IWANTISK and EVE Casino posted responses on their respective websites. First up is the IWI response.

IWI Statement Captured On 12 October 2016
Hello everyone! We are working hard to recover our accounts as well as your ISK. You might also want to try asking CCP for your ISK back to see how quickly they deny you because CCP Peligro does not care. CCP Peligro has proven yet again that this is a personal vendetta for him as he even tweeted vindictive posts about this (now deleted by him from his twitter). He has blamed you for RMT and has taken your ISK. We are also being falsely accused of RMT and if we cannot recover your ISK for you, we will pursue this legally as we have already found grounds. (Keep in mind somer blink was allowed to pay their clients out) On another note: Gambling sites are not banned until November. This means you can set up a gambling site until then! Contact me at side8designs@gmail.com if you would like me to set up a copy of IWI for you to run for your corp or alliance in this final month we will call, EVE GAMBLES MONTH . Setting up a new site for yourself does NOT violate the EULA and does not mean RMT as you will not be paying for any ISK or assets. Simply a copy paste of my code that I will set up on a server for you. Cheers! In the end of it all, if CCP decides to keep my account banned even though I know I did nothing wrong, I will develop IWI 1.0 into a P2P website with no central bank or central hub which means CCP will not be able to ban our system and you, the players, will receive YOUR ISK from other players using a mass pay and honor system.(P2P). We will get you your ISK. If they unban my account I can develop IWI into something that is in-game competitions and tournaments of sorts. Races even. But to flat out ban with no proof (as always) is very spiteful to the EVE community.
Eep left a lot to work with, but in the interests of brevity, I will only address two points. The first is the comparison of the shutdown of IWANTISK and SomerBlink. The circumstances are vastly different. CCP is shutting down IWI due to illicit real money trading activity. Team Security standardly seizes all tainted ISK in such actions. SomerBlink shut down due to the activities of Somerset Mahm which did not involve RMT. From the forum thread:
Our investigation uncovered a number of concerns. For privacy and other reasons, we will not discuss them all. However, we want to comment on three key issues.

First, the promotion could be applied to facilitate the exchange of real-world money for ISK (it’s indirect, but such transactions usually are). If the promotion were used in this manner, it would be a violation of EVE Online’s EULA and Terms of Service. We will not comment on whether any such violation actually occurred. However, this potential did raise a red flag.

Second, SOMER Blink advertised the promotion as being “approved by CCP.” But SOMER Blink never had permission from CCP to make such a statement, which misled our players, and is no different than someone pretending to be an authorized representative of CCP (look at paragraph 8 of our Terms of Service). This is a serious violation because it undermines the safety and security of EVE.

CCP was involved in discussions with SOMER Blink to address our concerns about their products, which included several different ideas for promotions, but none of them had been fully authorized by a CCP representative (notably the legal department). The promotion in question was similar to one SOMER Blink had suggested (the “PLEX Buyer’s Club”), but the promotion had been altered before enacted. SOMER Blink certainly had no basis to assert the live promotion was “approved by CCP.”

Finally, following our investigation, CCP tried to resolve our concerns directly with SOMER Blink’s founder. In response, the founder published private communications from CCP without authorization. This violates our EULA and Terms of Service (see paragraph 18 of our Terms of Service). 
Since CCP did not ban Somerset Mahm for RMT, SomerBlink's assets were not seized and the remaining staff could distribute the contents of accounts to their customers.

The second item is the threat to enable players to break the anti-gambling provisions of the EULA once they go into effect on 8 November. The threat probably will result in Eep Eep never having his ban overturned. In that way, Eep is truly acting like Somerset at the end.

UPDATE: According to Reddit, the offer to create duplicate sites is real.



The EVE Casino statement seems more conciliatory:
Hello All,

Even though we did NOT even get to open our doors to a single customer we want to thank everyone for supporting us in the amazing ways that were done.

And though we have NOT even opened EVE Casino for anyone to use. I know a lot of people have been asking in which way we have violated the Developer License Agreement since the EVE Casino project does NOT utilize CREST or the EVE SSO mentioned in the DLA.

We are still inquiring on this manner.

To ensure we do not violate the Upcoming EULA/TOS we will be shutting down our Chance based Game Engines.

Our other fan based sites like EOC.TV, MiLA, and AoEVE have been affected by this recent development and we hope to resolve any issues which may arise.

We entrust CCP will be thorough in their investigation as they have in the past and we hope to have this resolved as soon as possible.

Again much love,

Adarics
Evil At Work
I don't know as much about the Adarics situation, but one thought struck me. Yes, EVE Casino never opened to the public. But did he follow the rules during the development process? If not, perhaps that is the reason for the ban.

In the interest of completeness, I will post the next three paragraphs of the dev blog that deal directly with the subject of gambling.
As of the launch of EVE Online: Ascension, the hosting of, and participation in any form of third party gambling service that utilizes in game assets, currency, or the EVE IP will be strictly prohibited.

In the run-up to November 8th, all services that offer any form of third party gambling of this nature are required to wind down their operations. During the time from this announcement until the release of EVE Online: Ascension, our security team will be closely monitoring all these in game entities to ensure that no illicit behavior occurs, and that any movement of in game assets and currency remains in line with our current EULA and Terms of Service.

Please note: Given that the Alliance Tournament is currently ongoing, we are aware that some players may have outstanding wagers on alliances who are competing with other third party services who have not been subject to account action and/or ISK and asset confiscation. These third party services are free to finalize these wagers over the course of the weekend given that they have not broken our rules, but must wind down operations in an orderly fashion before 11:00 UTC on Tuesday November 8th, 2016.
The obvious question is: why ban gambling? First, if circumstances require changes to the EULA, best to do them all at once, as each change gives users the ability to opt-out and potentially get money back for unused subscription time. But that just explains the timing.

Many will point to the bans issued under the current EULA and claim the outlawing of gambling is an overreaction to illicit real money trading. With the influx of new freemium players, CCP just doesn't have the staff to both monitor the RMT activities usually found at a F2P-type launch and monitor the massive activity that surrounds gambling operations. Despite the staffing argument, I don't believe RMT by itself is enough to cause a change in policy.

In my opinion, the biggest driver for the gambling ban is the current legal climate surrounding video game gambling. In the United States, Valve is engaged in two class-action lawsuits over skins gambling in CS:GO while also dealing with demands from the Washington State Gambling Commission to shut down the ability of third-party gambling sites to operate. The demands of the WSGC are more effective than normal since Valve is headquartered in Bellevue, Washington and thus the WSGC has more leverage.

The Valve situation must make CCP nervous. The Icelandic game company wants to move its headquarters to London at the same time the attention of the U.K. Gaming Commission turns toward skins gambling. The UKGC charged two men in September with operating an illegal gambling site based on FIFA 16. The charges were part of a wider crackdown in which the UKGC sent out over 100 cease-and-desist orders to unlicensed gambling site operators. Three weeks ago, I reviewed a UKGC white paper and came to the conclusion EVE gambling sites most likely require a license to operate within the U.K.

I'm pretty sure that CCP's legal team would like to avoid what happened to Valve. The Washington-based company failed to enforce its terms of service about botting and RMT and is paying the price now. All EVE gambling sites arguably currently violate point 7 of the EVE Online Terms of Service:
7. You may not violate any local, state, national or international laws or regulations.
The cases involving Valve in addition to the case in the United Kingdom demonstrate that, at least in some jurisdictions around the world, the type of activity conducted on EVE gambling sites is illegal. Does CCP really want to hire additional staff to ensure EVE gambling websites obey the law? Or is banning gambling in EVE more cost effective? I believe CCP views the latter as a better option for their business, and I don't blame them.

A lot of people let me know about the dev blog and the changes in the EULA banning gambling sites. The word count reached 2700 words, so hopefully I satisfied those who wanted to know what I think about the change.

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