VIDEO GAMBLING
and cited to the Kater principle regarding sales in violation of the terms of use. Thus, because the loot boxes themselves were not illegal, nor was selling and profiting from virtual currency, Plaintiff’s characterization of the Google Play Store as a virtual casino was unpersuasive to the court, and the case was dismissed. 12 With such sundry judicial analyses, state legislatures are beginning to define virtual currencies within their borders and clarify the roles of regulators over the transfer of virtual currencies between issuers and purchasers. The authors’ home state, Florida, recently enacted legislation defining “virtual currency” from a financial regulation perspective. The Florida Legislature excluded mediums of exchange that are issued by or on behalf of a publisher and used solely within an online game, game platform, or family of games sold by the same publisher or offered on the same platform. 13 Other states have attempted to make similar distinctions about whether these in-game virtual currencies fall within the jurisdiction of state financial regulators, or if their use and conduct could be within the scope of gaming regulators. Nevada adopted a similar approach to Florida, defining virtual currency as digital representation of value used as a medium of exchange, unit of account or store of value, that does not have legal tender status recognized by the United States, but excluding “game-related digital content” and “a loyalty card or gift certificate” 14 . New York defines
virtual currency as digital units of exchange but excludes “digital units solely related to gaming platforms” and “digital units that cannot be converted into, or redeemed for, fiat currency or [virtual currency]. 15 ” Louisiana, Arkansas, and Texas also exclude both rewards points that are unable to be exchanged for legal tender and “digital representations of value” issued by publishers in gaming environments from their state’s virtual currency definition. 16 Tennessee, when defining property, excludes and separately defines “game-related digital content” such as a virtual wallet or gems, gold, or tokens, but excludes from that term any such item that can be redeemed outside the game for money, goods, or services, or that can be otherwise monetized. 17 Therefore, it appears that the current trend is to keep closed-loop virtual currency in games away from the financial regulators, thereby shifting the burden on its lawful use to gaming commissions across the country. As noted by Dunbar in 2016, the lines between gaming and gambling continue to blur, and they become less clear by the day. As these recent cases and legislative changes reflect, subtle differences in definition of money, determinations of value, transferability of currency or items, specificity, clarity, and acknowledgement of terms of use, the role of the defendant in the related transactions, and the forum of the legal challenge can all have a drastic impact on whether the use of virtual currency and casino gaming are permissible.
DANIEL MCGINN Associate
MARC DUNBAR Partner, Dean, Mead & Dunbar For information contact mdunbar@deanmead.com +1 850 933 8500
12 A similar case against the maker of the games Clash Royale and Brawl Stars, challenging the legality of loot boxes purchasable for both real and virtual currency, is currently on appeal in the 9th Circuit, styled as Peter Mai, et al v. Supercell Oy, Feb 02, 2023 (No. 23-15144). The trial court held that virtual currency was not a “good or service” and that loot boxes were not gambling under California law. 13 Ch. 2022-113, Laws of Florida. The law also removed consumer affinity or rewards program “points” that can be applied solely as payment for purchases with the issuer and their designated merchants but are unable to be converted or redeemed for currency or another medium of exchange from the definition of virtual currency in a money transmit- ting context. Maine did the same, see ME ST T. 32 § 6102. 14 120A.122, NV. Rev. Stat. Ann. 15 23 NYCRR 200.2(p). 16 LA R.S. 6:1382; AR ST § 4-11-102; TX Bus. & Com. § 12.001. See also CO ST. § 38-13-102(10) and (32), defining the terms in the context of unclaimed property, and DE ST. TI 12 § 1130, defining the terms in context of estates; RI ST. § 19-14-1, excluding most rewards programs, in-game currency, native digital tokens used in blockchain service platforms, and items defined in 12 C.F.R. 1005.20(a) with exceptions. 17 TN ST § 66-29-102.
PAGE 18
IMGL MAGAZINE | JULY 2023
Made with FlippingBook flipbook maker