Lootboxes at Court: Why EA and Sony have to pay in Vienna

In August, Sony and EA were ordered to pay back more than 10,000 euros spent on loot boxes. The text of the judgement is now public and makes it clear why the Vienna Regional Court ruled against the companies on appeal - even though both companies had won at first instance.

At the end of June 2023, Electronic Arts (EA) and Sony Interactive Entertainment Deutschland won a lootbox case at the Vienna Regional Court for Civil Matters in which a plaintiff wanted to recover a total of over 10,000 euros for lootboxes purchased from the PlayStation Store in the "EA Sports FIFA" games. The plaintiff and his litigation funder Padronus appealed. And indeed, the state court overturned its previous judgement after reconsideration at the end of June. EA and Sony did not appeal - Richard Eibl, CEO of Padronus, suspected "tactical reasons" to avoid provoking a precedent against loot boxes in the highest court. Nevertheless, EA at least spoke out against the judgement in a press release, while Sony made no comment (read the article on GamesMarkt). Sony and EA each had to pay back half of the amount of 6,507.31 euros. In addition, the "first defendant", recognisable as EA from its designation as publisher of "FIFA", had to repay a further 4,291.97 euros, both plus interest.

These facts were already known in August. However, the decision text of the Vienna Regional Court (text in German) has recently become publicly accessible. Although the document is anonymised, the parties to the lawsuit are known thanks to the statements made by EA and Padronus. It is now public how much exactly which company has to pay and why the Vienna Regional Court ruled in favour of the action at first and second instance. "The first and second defendants do not hold a licence to offer games of chance in Austria," the court stated. There is now no doubt in the court's mind that loot boxes such as FUT (FIFA Ultimate Team) packs are categorised as "illegal and therefore void gambling". In the first instance, the court had taken a different view. The first judgement was based on the fact that the plaintiff had accepted the terms of use of both his Sony and EA accounts when he created them and decided to play FIFA Ultimate Team (FUT). In addition, there was no payout of winnings in FUT - and under Austrian gambling law, only a game cthat has both monetary stakes and winnings an be gambling .

As in the first German-language ruling against loot boxes, which was handed down against Sony in Hermagor, Carinthia, the defence of EA and Sony had argued that FUT was a game intended for entertainment and that the contents of the FUT packs purchased were not winnings worth money as they could not be resold. Vienna had agreed with this view at first instance, but corrected its assessment on appeal. Based on EA's own estimate of a black market for FUT content, it was already established in Hermagor that these are indeed considered to be monetary profits, even if the market on which the profits from the content are made is not on official markets. Vienna now follows this reasoning in its appeal with reference to the same figures that EA had presented in Hermagor: around three percent of the user base, i.e. around 600,000 players, participated in the black market, meaning that gambling was taking place, even if it was not official. This also invalidates the reference to the terms of use. As the gambling was illegal, the contracts concluded would not be valid either. Or in legal Austrian terms: "To deny the claim for repayment would contradict the purpose of the gambling bans. The claim for repayment exists even if the invalidity of the obligation or service was known."

"Exorbitant effort" without real money plays a role

In addition to the judgement itself, the letter also provides interesting perspectives on current practices in the games industry. For example, the court in Vienna denies that FUT is a game of skill. The defence had argued that this was the case because you could also buy FUT Packs using the in-game currency of FUT Counds, and this currency can in turn be obtained by playing the game. In addition to the player characters, the player's own skill was also relevant, so the argument. However, the court sees an "exorbitant effort" here and the purchase with real money as "the only realistic way to obtain this content". The basis for the assessment is a counter calculation of coins and playing hours, which according to the court leaves no doubt and is explained in the back half of the judgement text: "For the sake of completeness, it should also be noted that in the present case it is not even a realistic alternative option, especially since according to the findings made by the court of first instance, even in the ideal case of winning all football matches, earning an amount of 500 FUT Coins takes 12-15 minutes, while up to 10,000,000 FUT Coins are required to obtain some winnings (virtual football players), the acquisition of which would take at least 4,000 hours to obtain. Even if, in deviation from the case law cited, the FUT packs themselves rather than the winnings obtainable from the FUT packs were to be taken into account, the acquisition of some packs would require 100,000 FUT coins and thus, even in the ideal case of winning all football matches, would still require an effort of at least 40 hours. It is therefore not possible to speak of an even remotely equivalent alternative way of obtaining the prize or participating in the competition."

Hermagor had argued similarly, with the additional point that the aesthetic design of the loot boxes, which is intended to entice players to constantly open further packs, goes beyond entertainment - instead, according to Hermagor, the focus is on the companies need to earn money by players constantly buying and opening the packs. This is also mentioned as a reason in the Vienna appeal judgement. Moreover, the player's own skill in the game is not sufficient to be successful in FUT if they do not have the correspondingly good player figures, for which they in turn have to open FUT packs. In the wording: "Neither a game of skill upstream of the game of chance removes the gambling characteristic, nor does a game of skill downstream of the game of chance, even if this could still change the final outcome of the game."

Overall, the reasoning of the Vienna Regional Court is very similar to that of Hermagor, probably also because the defence strategy of the companies was very similar to that case. In both cases, the defence argued that loot boxes were not purchased directly with money, but that players would purchase so-called FUT points and then decide to exchange them for loot boxes. Both courts also found that this step does not decouple the FIFA packs from the use of real money, as the FUT points are there for precisely this purpose.

Both law firms, representing EA and Sony respectively, had also contested the lawsuit by pointing out that the other company, not their own, was responsible. The court rejected this with reference to the shared commercial responsibility and distributed the payment obligations accordingly. Both companies had also filed a counterclaim for the amount that the plaintiff wanted back. EA's and Sony's defence had claimed that the plaintiff would refuse to return the content extracted from the loot boxes. According to the court, this was untrue, "after all, the plaintiff also expressly offered to transfer all digital content of the game (...) to the defendants". The court therefore dismissed all counterclaims.