Austrian court ruling against “Counter-Strike” lootboxes: a precedent for Germany?

Austrian court ruling against “Counter-Strike” lootboxes: a precedent for Germany?

A recent court ruling in Austria has caused a stir in the video games industry and could be seen as groundbreaking for similar cases in other countries. A court in Styria has ruled that the loot boxes in the video game “Counter-Strike” are to be classified as illegal gambling. The operator of the game, known for its worldwide popularity, was ordered to refund an amount that a customer had spent on these loot boxes. The court’s decision was based on the argument that the contents of the loot boxes are random and that the items they contain, so-called “skins”, can be traded on a secondary market. This tradability enables potential profits to be made, which is a characteristic feature of games of chance.

The ruling is remarkable in that it sheds light on the often-discussed gray area between digital in-game purchases and traditional gambling. The question arises as to what extent virtual items acquired in games via random mechanisms fall under existing gambling laws. This ruling is not yet legally binding, but could have far-reaching consequences for the video game industry, particularly with regard to the design and sale of in-game elements. It marks an important step towards consumer protection as it draws attention to the potential risks associated with such game mechanics, particularly with regard to minors and vulnerable players.

The decision could also serve as a precedent for other jurisdictions where similar legal issues regarding loot boxes and gambling regulation are being discussed. It highlights the need for clearer legislation and regulation in this area in order to balance the interests of both consumers and game developers and operators.

Across the border to us?

In Germany, this Austrian ruling raises the question of whether loot boxes could also fall under the State Treaty on Gambling (GlüStV) in this country. The GlüStV, which was last updated in 2021, regulates online gambling and sets certain requirements for legal gambling offers, including a necessary license. Classifying loot boxes as games of chance in Germany would mean that game producers who offer such elements in their games without having the appropriate license could face legal problems.

The legal classification of loot boxes in Germany has not yet been conclusively clarified. While other countries, such as Austria and Belgium, have already passed rulings classifying loot boxes as gambling, such a decision has yet to be made in Germany. The discussion about loot boxes and their possible classification under the GlüStV therefore remains a current and much-discussed topic. However, developments in other countries could have an influence on German jurisdiction and legislation, particularly with regard to consumer protection and the regulation of gambling-like elements in video games.

Interestingly, this development is reflected in the recent wave of successful lawsuits against online casinos in Germany. These cases show that German case law is increasingly prepared to deal with the complex issues of online gambling regulation. In view of this trend, it could be worthwhile for those affected and consumer advocates to take a closer look at the legal situation regarding loot boxes. Lawsuits in this area could not only lead to increased consumer protection, but also underline the need for clearer legal regulation of such digital offerings. In view of current legal developments and the growing awareness of the problem of loot boxes, a legal dispute in Germany could prove to be increasingly relevant.

The legal situation in detail: Loot boxes under the Interstate Gambling Treaty

The legal classification of loot boxes in Germany is on the borderline between illegal gambling in accordance with Section 284 of the German Criminal Code (StGB) and permitted purchase transactions within a game. Illegal gambling refers to any public gambling event that has not been approved by the competent authorities. According to the case law of the Federal Court of Justice (BGH), the term “gambling” is uniformly applied to Section 3 para. 1 of the Interstate Treaty on Gambling (GlüStV). Accordingly, a game of chance exists if a chance of winning, which depends on a random event, is offered for a fee. Loot boxes offer the chance to obtain in-game items that are determined at random. Since the offering of the boxes in the games is public, the question of whether it is illegal gambling under Section 284 StGB depends on whether the items in the games constitute a “prize” in the legal sense.

A “win” within the meaning of gambling law would be given if the items represent a not insignificant asset value. This can be assumed in two cases: Firstly, if the items can also be purchased individually within the game for a fee, and secondly, if the items can be traded between players on platforms with the consent of the manufacturer. Such “marketplaces” are operated by large gaming platforms such as Steam or Origin, whereby the game producers themselves can decide whether to activate their items for trading. If these two possibilities are not given, it will not be an asset, but merely an object with a subjective-ideal value. Any sale of the items on other platforms for which the manufacturer is not responsible cannot be attributed to the manufacturer.

The game manufacturer therefore has the opportunity to prevent both alternatives that could potentially lead to illegal gambling. Whether this is in his economic interests, however, is another question. This legal gray area shows that the classification of loot boxes as gambling or a permitted purchase transaction in Germany depends on several factors and requires clear legal regulation in order to protect both consumer protection and the interests of the games industry.