Expect a Real Life Crackdown on Second Life Gachas, Says Expert Lawyer

Update, August 2: As Vaki predicted, Linden Lab announced the end of gachas in Second Life:

Due to a changing regulatory climate, we’ve had to make the difficult decision to sunset a very popular sales mechanism for content in Second Life.  It’s widely known as "gacha", and is defined by a chance-based outcome as a result of a payment. We know that creators plan their content releases far in advance and will need to re-tool their products, so to mitigate the impact to those affected, we are giving a 30-day grace period, until midnight SLT on August 31.  After that time, selling content via gacha machines will no longer be permitted in Second Life.

Read her analysis here. Original post from June below.

Loot boxes in videogames are considered gambling and therefore illegal in some countries, and regulated in many other jurisdictions. But does that have anything to do with user-created gachas in Second Life? Extremely popular within the SL community, they are a vending machine game of chance to win valuable virtual goods. Should we expect a crackdown on them at some point?

In a word, yes.

"Gacha games/loot boxes/etc. are gambling" says Vaki, a longtime Second Life user who is also a real life attorney specializing in privacy and internet issues; she's even represented SL users in this field. "And they're starting to slowly be regulated as such. Best way to see this is in Chinese games like Genshin Impact, where gacha functionalities are regulated and providers are required to display the actual percentage of likelihood to receive each reward."

While it remains an open question whether SL-based gachas in particular are considered gambling, Second Life creators of gachas, along with Linden Lab itself, should prepare for regulations around them:

"Realistically," as Vaki puts it to me, "the likely scenario — if there is ever a crackdown — is that pressure will be put on Linden Lab to get its platform cleaned up, and Linden Lab will then put pressure on creators, exactly like it did with 'skill-based games' (in-world gambling) five years ago." (As I reported last week, SL users from US states that restrict skill games seem to be banned by their IP location from even accessing a region tagged as having those kind of games.)

In fact, Vaki adds, "I would suspect that there already is pressure, particularly as the US keeps talking about loot box legislation."

A bill that would regulate loot boxes was recently introduced in Congress, and even if it doesn't pass, "this doesn't mean that we won't see guidance from the FTC, or from individual states."

And no, just because many or most SL Gachas are relatively low cost to play (a dollar or two worth of L$ seems typical) doesn't necessarily mean they are safe from legal scrutiny: "Total side note," Vaki adds during our conversation, "in some states in the US, gambling laws are so strict that gumball machines are illegal if they cost more than a few cents." 

And as mentioned, there are several major jurisdictions which already outright ban them:

"Japan already bans gachas and loot boxes," Vaki notes, "and so does Belgium and the Netherlands -— games like Final Fantasy and Fire Emblem Heroes have been completely shut down in Belgium because of their gacha/loot box element."

If anything, Vaki suggests, SL gacha owners probably haven't felt any pressure yet mainly because Second Life has a relatively niche user base.

"Second Life isn't the top of everyone's list in the way that Roblox or Fortnite is," says Vaki, "but if legislation (or legislative guidance) passes that clarifies that loot boxes/gacha are gambling, SL will crack down."

Picture credit: Ryan Schultz.

Comments

[Yoofaloof Pacer]

A shame if Gachas go the same way gambling did. I used to love a little flutter on the inworld lottery and fruit machine games. It's just pennies at the end of the day, right? I doubt hardened gamblers play Second Life.

[Annie Heartsong]

I would think that SL Gachas would be regulated the same as a Gacha Machine in real life. The ones you stick a quarter into and you get a toy/sticker/etc. from. It's not really gambling since there is no real monetary gain from it. All you are getting is whatever comes out of the machine, and I can guarantee, it's not money. Hope this helps.

[Gloom]

Sure you can argue it's just pennies... but people easily drop hundreds of real life money into trying to get gacha sets. Then they turn around and take something that was a 25L pull - to mark it up 100x the original cost on the marketplace (I have seen multiple "rare" items going at 2000L easily from a 25L gacha). Then it becomes a cut-throat market. It is gambling regardless of how you want to word it or look at it.

[Juno]

As a store owner in SL and a participant in many gacha events when it first exploded, I can assure you it IS gambling. Perhaps not outright for money (though as Gloom pointed out one can turn it into one quite easily!), but when you have people putting in 10k Lindens and more for something if sold ordinarily would be a small fraction of that, what else can it be called than something a bit dodgy, at the very least? From the perspective of the people making real money off of it, they definitely want it to be addictive and appeal to their customers to want to juuuuuust try one more time..and then another. And another!

I've enjoyed many gachas as a customer. And the only way you actually can enjoy them is to play once or twice and that's it. Then you WILL be winning and not the other way around, as you will be getting content worth much more than you paid for it in terms of the work that's gone into it. That's the way to play. Anything else and the seller is profiting off that gambling instinct we all have, but some find very hard to curtail. I've been there.

I stopped making them years ago.

[unknown]

You got one detail wrong, Genshin Impact is a Japanese based game not Chinese.

[notme]

Have they done anything about the skills games yet.

[Vex Streeter]

Next up: M-and-M sales are banned because you don't know how many of each color you are getting.

[unknown]

Responding to the commenter that said Genshin Impact is Japanese based - incorrect, it's owned by miHoYo, a chinese company (based in Shanghai, China). So your comment is now unnecessary.

[Suellen Heartson]

Thankfully the resale of gachas seems to be okay for now. I hope to be selling off all those I have collected over the years

[Max]

"Skill Gaming" needs to go next... What a ripoff.