Video game regulation bills advance

State lawmakers on Tuesday unanimously advanced two Senate bills and a House bill that would regulate video games featuring potentially exploitative transaction systems.

Senate Bills 3024 and 3025 passed a third reading by the Senate and now move to the House. Both bills seek to regulate monetization schemes in video games that many think are exploitative and promote addictive gambling behaviors.

SB 3024 would prohibit the sale of video games that feature systems wherein players can spend real-world currency to purchase a randomized reward — or purchase a virtual item that can itself be redeemed for a randomized reward — to anyone younger than 21. SB 3025 would require game publishers to post warning labels on games featuring such systems, as well as disclose the probability rates for each randomized reward that can be purchased. These disclosures would apply to physical and digital copies of games.

House Bill 2727 is functionally identical to SB 3025 and passed a third reading by the House. It now will go before the Senate.

A fourth bill, House Bill 2686, was functionally identical to SB 3024, but Democratic Oahu Rep. Chris Lee, who spearheaded the House bills, said it was abandoned in January because of its companion bill’s successful progress.

The bills highlight a contentious issue in the video game industry, with many accusing such randomized reward systems — often taking the form of virtual “loot boxes” — as promoting gambling behaviors among children.

However, the Entertainment Software Association contested this description during hearings for each bill. Specifically, the ESA contended because the rewards received through loot boxes are inherently valueless — being, in reality, incorporeal lines of code — purchasing the chance to receive such items does not constitute gambling.

“Loot boxes do not constitute gambling under U.S. law,” the ESA said in a statement. “In general, for an activity to constitute gambling, it must meet three elements: staking something of value (consideration) for a chance to win something of value (a prize). If one of the elements is lacking, it is not gambling. Loot boxes do not satisfy those elements. For instance, there is no “prize” because you cannot win something of value in the real world. Whatever worth those virtual items have, it is limited to within a virtual universe.”

While some third-party websites exist to sell in-game items from games such as “Counter-Strike: Global Offensive” or “PlayerUnknown’s Battlegrounds” for real-world currency, the ESA pointed out that doing so contradicts the terms of service of such games.

Technology lobbying organization TechNet also opposed the bills, comparing the transaction practices to older, socially acceptable practices such as buying baseball cards.

Meanwhile, the Hawaii Youth Services Network supported the bills, testifying, “Children and youth who play these games are introduced to the thrills of gambling at an age when their brains are not fully developed. They are vulnerable to developing behavioral addiction to gambling, and do not have the maturity and knowledge to recognize the risks they encounter.”

The bills passed with minimal alterations. While each of the three bills is currently slated to go into effect in 2050, if passed, Lee said such a practice is customary so as to promote additional dialogue on a bill. If passed, the bills’ effective dates will be amended to take effect much sooner.

Email Michael Brestovansky at mbrestovansky@hawaiitribune-herald.com.