Washington State Moves To Protect Gambling In Video Games

While the movement in Europe is toward more regulation of video games, the climate in the United States is turning in another direction. In the state of Washington, legislators in both houses introduced bills to protect the video gaming industry by altering the state's Recovery of Money Lost at Gambling Act.

In the House, HB2720, the authors of the bill quite bluntly state they aim to protect the video game industry in their state in the original draft.

The legislature finds that the state has made it a priority to grow clean, high-wage jobs by encouraging firms engaged in video game development to invest and grow in the state. The state has been successful in its efforts and an estimated twenty percent of the global video game development industry is now based in Washington state. However, recent court cases filed in federal district courts in Washington have created economic uncertainty for video game companies located in Washington state, or offering games to players located in the state, by raising the possibility that the legality surrounding these games will be decided differently than similar issues raised and decided in other states, such as Illinois, Maryland, and Ohio.

The legislature further finds that two video game companies based in Washington are subject to recently filed class action lawsuits. These lawsuits, if decided adversely to the game companies, pose a substantial financial risk for video game development in this state. The further possibility exists that companies based in Washington will move their base of operations to other states, which would  remove thousands of jobs from the state and a currently incalculable, but materially significant, amount of tax dollars.

Therefore, it is the intent of the legislature to remove this economic uncertainty by clarifying that a player is not entitled to recovery under RCW 4.24.070 unless the video game played provides a mechanism for the withdrawal of money or property from the game.

Sounds like good news for video game manufacturers.

In the state Senate, SB 6568 was introduced three days later. The original text of the bill spelled out a specific exemption for video games.

(2) For purposes of this section, "illegal gambling games" does not include online games of chance when played solely for entertainment purposes with virtual items if such virtual items may be used only for gameplay and may not be, per the terms of service of the game, transferred, exchanged, or redeemed for money or property.

Quite clearly, these bills were in response to the latest decision in Kater v. Churchill Downs in which a federal judge ruled a video game did not require a real world cash payout for a plantiff to obtain a payout for under Washington state law. The newly formed lobbying group Game On WA certainly wasted little time getting new legislation introduced.

The bills in Washington run counter to the trend in Europe where anti-gambling activists and government officials want to include third party sites engaged in real money trading (RMT) in any definition of gambling. The latest official making such a claim was National Health Service mental health director Claire Murdoch of the UK. In an article from the NHS:

The Gambling Commission does not regulate some loot boxes due to a loophole meaning it is not classed as gambling. Under current gambling legislation, this is because there is no official way to monetise what is inside of loot boxes.

Despite this, third party websites selling gaming accounts and rare items are commonplace and easy to find on places such as eBay across the internet.

Recently, Sen. Josh Hawley (R., MO) recently introduced legislation to outlaw loot boxes in the United States. But as like a lot of other efforts to outlaw loot boxes around the world, the bill is part of an over all larger effort. In Hawley's case, the bill is one of three looking to "disrupt big tech" in the US.

Stand-alone efforts unburdened by other issues seem to pass the legislative process more quickly than those tied to grander objectives. Thus, the change to law concerning gambling in video games most likely to pass is the current effort in Washington state long before the anti-loot box legislation sees the light of day. Then again, the effort in Europe began years ago while the movement in the U.S. is much more recent.

What does that mean for those who play MMORPGs? I expect government regulation in the U.S. will not change very much. But the effects in Europe, and the knock-on effects world-wide are yet to be determined.