The Dutch gambling authority (KSA) fines Virtual Coin Gaming EUR 600,000

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The Dutch gambling authority (KSA) recently issued a major fine of EUR 500,000 against the Curacao-licensed operator Virtual Coin Gaming and a separate EUR 100,000 fine against an unnamed employee of the company for creating online games that the authority deemed to be games of chance.

Background

Virtual Coin Gaming (VCG) offered games via the websites www.futgalaxy.nl and nl.futgamer.com, which included online betting for football, hockey, and US sports, a FUT jackpot and game packs.  Its online games were based on FIFA Ultimate Team (FUT), a card game that is part of the EA Sports FIFA video game franchise, in which players earned credits in the FUT video game either by purchasing these credits directly on www.futgalaxy.nl and nl.futgamer.com or by exchanging virtual currency earned in the EA Sports video game FIFA.

These game packs were a simulation of loot boxes found in the FUT-based FIFA video games in which players had the option to purchase six different packs with values ranging from 5,000 to 100,000 credits. Highly rated soccer players were randomly added to the packs.

KSA policy

Because the Dutch Betting and Gaming Act does not issue licenses for internet gaming, online games of chance are forbidden in the Netherlands.

To combat online gaming, the KSA applies 'prioritisation' criteria, which generally focus on gaming websites that use a .nl domain, feature the Dutch language, advertise through Dutch media, offer payment methods popular among Dutch consumers (e.g. iDeal), and fail to employ technology that blocks Dutch IP addresses (i.e. geoblocking).

Since 2018, in response to research that revealed a link between loot box games and gambling addiction, the KSA has focused on loot boxes, particularly in game packs in FIFA video games.

Decision to impose a fine

The KSA pointed out that online games of chance violate the Betting and Gaming Act.  According to the KSA, it was clear that this was a case of an unlicensed operator that specifically target Dutch consumers through the use of the Dutch language, the .nl domain extension and the use of the Dutch payment system iDEAL.

The KSA deemed the VCG game packs to be games of chance. Research carried out by the KSA in January 2019, bolstered by announcements on the websites themselves, revealed that participants generally are not able to predominantly influence their chances of receiving prizes from VCG loot boxes. The KSA also referred to a decision of the court The Hague of 15 October 2020 regarding Electronic Arts, which ruled that in-game packs (i.e. loot boxes) inside FIFA video games constituted games of chance (see 'Dutch Court allows regulator to fine Electronic Arts for FIFA Loot Boxes'). 

The KSA stated that it issued an increased fine for a variety of reasons, including because minors and young adults have taken part in these games as indicated by two studies that confirmed minors were regularly playing futgalaxy.nl.

Conclusion

The KSA is stepping up its fight against illegal online gambling ahead of the opening of an online gambling market in the Netherlands, which should take place later this year. When the Remote Gambling Act enters into force on 1 March 2021 (or 1 April 2021, according to other reports), companies will be able to apply for online gaming licences. By 1 September 2021, an online gambling market should be in existence in the Netherlands. However, VCG will not be permitted to participate in this round due to the cooling-off criteria, which applies to operators who illegally target the Dutch market after 1 July 2018. Such operators must undergo a 32-month cooling off period before they can apply for a licence.

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https://www.cms-lawnow.com/ealerts/2021/01/dutch-gambling-regulator-fines-virtual-coin-gaming-eur?cc_lang=en