Tuesday, July 19, 2016

EULAs, Terms of Service, Can Matter In Court

Digging into the Counter Strike: Global Operations gambling scandals unearthed a lot of information. One little item I discovered in the Steam Subscriber Agreement is from Section 2G:
"You are entitled to use the Content and Services for your own personal use, but you are not entitled to: (i) sell, grant a security interest in or transfer reproductions of the Content and Services to other parties in any way, nor to rent, lease or license the Content and Services to others without the prior written consent of Valve, except to the extent expressly permitted elsewhere in this Agreement (including any Subscription Terms or Rules of Use);"

With "Content and Services" defined as:
"...including but not limited to Valve or third-party video games and in-game content, and any virtual items you trade, sell or purchase in a Steam Subscription Marketplace."
So technically, sites like OPSkins that convert skins to real world currency with funds deposited to a PayPal account violate the SSA. I use the term "technically" because Valve appears to allow the sites to operate with a wink and a nod. At the very least, Valva does not enforce its rules very vigorously. A cynic may even claim the rules are only enforced when lawsuits are filed, but I don't know that for a fact.

I decided to reread the Steam Subscriber Agreement after rereading the top question in the Ask Us Anything conducted by eSports/gaming lawyers Bryce Blum, Ryan Morrison, and Jeff Ifrah.

Q. Lawyers, I personally have gambled skins before, I'm over age and can so it's not something illegal for me to do. My question is, is this technically gambling? The reason I ask is because there is no technical way to 'cash-out' the skins without using a 3rd party site that goes Valves ToS/SSA.

The reason I ask this is because in Florida we have had this lawsuit between the government and 'arcade owners'. The Arcades are basically slot machines but you get gift cards and not cash if you win. The courts found the Arcades ok since gift cards are not considered monetary value.

Doesn't that seem very similar to Skin betting and all?

Blum: This is a great question, and should probably be higher up. When it comes to skin betting, there is a threshold question of whether or not skins constitute consideration and therefore fall under the wide array of gambling laws we're discussing throughout this thread.

For my money, I think this is a no brainer because the secondary market is prominent, permitted to exist, and skins have widely known value. That being said, there isn't a case directly on point here so it's impossible to say for certain. I've discussed this issue at length with /u/ifrahlaw [Jeff Ifrah] so hopefully he can chime in as well.

Edit: I'd also add that it's not necessarily a safe assumption that simply because you are overage you are acting within the bounds of the law. Regulations vary significantly depending on jurisdiction and the type of wagering activity involved. In the US for example, internet based gambling is largely prohibited, even if you are over 18.

Ifrah: Agreed - great question. To start, the distinction Florida makes on the 'arcades' is not one that every single state shares. That is part of what makes the gaming industry so tricky in the US. Not only are there federal laws to comply with, but every state has its own definition of gambling that must be taken into consideration.

But, I agree with your premise about the cashing-out distinction. In our work, the question is whether the skins are a 'thing of value.' Generally, in traditional gambling cases, this means cash or chips. There is a recent court decision from Maryland – Mason v. Machine Zone - that stressed the distinction between virtual things of value and things of value with 'real world' value. I think this case will be instructive in the future. Skins, even with secondary markets, hold their value because of the gaming, which puts it squarely in the virtual world. If the skins are virtual things of value, using them for gambling would be OK under most laws.
The significance of the responses from the two lawyers is that they do not believe that gambling for virtual goods violates most gambling laws, even with the presence of unsanctioned secondary markets. Valve may face legal problems with their possible connections and implicit approval of secondary RMT sites like OPSkins.

Looking into the opinion in Mason v. Machine Zone, I found something on page 3 that made me smile:
Crucially, there is no real-dollar value attached to “gold,” chips, or any Casino prizes. On the contrary, Defendant’s Terms of Service (“ToS”)—appended to Plaintiff’s Complaint—provide that “Virtual Currency and Virtual Goods may never be redeemed for ‘real world’ money, goods or other items of monetary value from [Defendant] or any other person”; that players receive a nontransferable “revocable license to use the Virtual Goods and Virtual Currency” solely for personal entertainment purposes; and that, aside from the foregoing license, players have “no right, title, or interest in or to any such Virtual Goods or Virtual Currency.” (ECF No. 1–2 at 9.)

Although the ToS expressly bar players from “buy[ing] or sell[ing] any Virtual Currency or Virtual Goods outside the Services or in exchange for ‘real world’ money or items of value” (id. at 10), Plaintiff alleges that “players have created secondary markets to buy and sell Game of War accounts” (ECF No 1 ¶ 37). Plaintiff does not allege that Defendant hosts or sanctions these secondary markets, nor does she allege that she has ever sold or attempted to sell an account—nor even that she intends to do so in the future. 
First, if the game company in question does not provide a method of cashing virtual goods or currency into real world currency, the company is not held liable for any gambling charges. The second is that the judge treated the terms of service for Game of War as a legal document, or at least relevant in this case.

I find the whole situation with CSGO fascinating. Whatever the legal result is in the two class-action suits will probably impact gambling in all other games, including EVE Online, at least in the U.S. Perhaps the biggest long-ranging impacts coming out of the whole mess is that EULAs and ToS do legally matter.

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