An Austrian court has declared that loot boxes are a form of gambling that requires a licence, in a non-legally binding decision that could cost video game companies millions.
The Hermagor District Court ordered Tokyo-based tech giant Sony, which operates the online PlayStation Network, to refund payments made for FIFA Ultimate Team packs, a type of loot box on the popular FIFA video game series owned by Electronic Arts (EA).
Sony can appeal the decision.
The ruling reflects growing concerns surrounding the link between gambling and gaming loot boxes across European jurisdictions. Belgium has already banned loot boxes and the Netherlands has also proposed to follow suit.
Most recently, Sweden’s Public Health Agency requested that the government’s problem gambling prevention efforts should cover loot boxes, skin gambling, and casino streaming.
An Austrian lawsuit against Sony was launched around two years ago by law firm Salburg Rechtsanwalts, with class action funding provided by financier Padronus, with the pair demanding the reimbursement of €338.26 spent on FIFA packs.
Michael Linhard, the lawyer representing Salburg Rechtsanwalts, called the judgement “trend-setting for dealing with loot boxes and shows that video games are not a legal vacuum”.
“If the case law on the recoverability of payments should also be cemented in this country, the financial consequences for the operators concerned could be devastating,” a press release, which included Linhard's comments, added.
Richard Eibl, the managing director of Padronus, added that the judgement is “a bang for the entire video game industry” in a press release on March 3.
“Neither in Austria nor in Germany has there been any case law regarding the legality of loot boxes and the recoverability of payments made. The final result naturally remains to be seen … but Sony and a number of other gaming companies should dress warmly from now on,” Eibl said.
The court made its decision based on the fact that the random nature of FIFA packs represents a financial benefit to the consumer, as they can be traded on other platforms outside of Sony and EA’s control.
As Sony does not have a gambling licence, any sales it made “are void and the payments made are recoverable”, according to Padronus, much like similar rulings against unlicensed online gambling firms that have seen millions in losses recovered through the courts.
Padronus says it has already financed thousands of court cases against various online casino providers in Austria and Germany, and has already recovered tens of millions of euros for gambling addicts.
"The number of inquiries from Loot box buyers in the last few months is in the four-digit range; the demand is high. The average claims are around €800.00, although we also have an outlier with €85,000,” Eibl said, adding that “the verdict is wind on our sails and spurs us on to further expand our collection process. We invite every loot box buyer to register for the collection process on our website."
In August 2021, the Supreme Court opened the door for claims for millions of euros in reimbursement for online casino losses, after it held that the country’s online casino monopoly, Casinos Austria’s win2day, was not incompatible with EU law.
However, recently, Austria’s Supreme Court affirmed lower court rulings holding that a player from the Austrian state of Styria has no right to reimbursement for sports-betting losses from a European Union-based gambling operator, according to Stadler Voelkel Attorneys.
Separately, a Financial Times article published on March 5 called out operators Flutter Entertainment and 888 for making it difficult for players to recoup Austrian losses on their sites.
A spokesperson for PokerStars, which is owned by Flutter, said it “operates legally out of Malta under a Maltese licence in accordance with the freedom of services across member states under EU law”.
“The court decisions being made under Austrian law are incompatible with these settled EU legal principles. As such, PokerStars will continue to vigorously defend these cases in Austria and when brought before Maltese courts,” the Flutter spokesperson told VIXIO GamblingCompliance.
Flutter said it is “absolutely confident in our legal and regulatory position”.
888 said it only “operates where it has a justifiable legal basis”, similarly citing its Malta licence and the fact its legal advice suggests the “position adopted by the Austrian Courts is contrary to the fundamental EU principle of freedom to provide services”.
“The Malta Gaming Authority concurs with this view and therefore takes the position that gaming service providers licensed by it are able to offer their services in Austria entirely legally on the basis of their freedom to provide services within the internal market, insofar as they remain compliant with the Maltese regulatory and legal framework,” Flutter said.
It is believed there are attempts underway by Austrian lawyers to transfer the legal cases from Austria to Maltese courts.