Technology, Media & Telecommunications

Last week, a district court in the Northern District of California ended a suit alleging unlawful and unfair conduct by videogame developer Supercell Oy. Plaintiffs alleged that Supercell’s use of loot boxes in its popular games Clash Royale and Brawl Stars constituted violations of California’s Unfair Competition Law (Business & Professions Code § 17200) and Consumers Legal Remedies Act (Civil Code § 1750). At the crux of Plaintiffs’ complaint were claims that loot boxes are illegal gambling games under California law and that loot boxes are inherently unfair because they exploit the same cognitive traps as gambling.

It is no secret that gaming companies have been increasingly keen to integrate or express enthusiasm for blockchain technology.

Game developers have been increasingly integrating cryptocurrency and Non-Fungible Tokens (NFTs) within their games hoping these digital assets will increase their games’ longevity with an expanded content offering. But, early feedback suggests these features risk fan-blowback so developers are advised to proceed deliberately.

Although the Genting resort is among the most ambitious projects, the intersection of AI and casinos has become increasingly popular among the gaming industry. Potential applications include combatting fraud, optimizing casino floor ROI, and tracking player performance. These considerations make the intersection of AI and gambling a valuable, lucrative, and beneficial one. However, utilizing AI in casinos raises a myriad of legal questions. The second of our two-part series considers the legal implication of these questions for gaming industry parties.

AI technology implementation in casinos is a relatively new phenomenon that has prioritized efficient data collection, curbing gambling addiction, and importantly combating fraud and cheating. This implementation promises more secure gameplay and better monitoring of players. AI recordkeeping and data analysis can detect players’ specific patterns and habits, while also providing accurate predictions about behavior and preferences. In the security context however, AI is still largely a promising, but developing process.

Questions remain as to what the financial impacts of the Metaverse will be, and what will drive the potential trillion-dollar online economy. The answer can be found in blockchain technology, with cryptocurrencies like Bitcoin and Ethereum acting as the money used to purchase the stuff that makes up the Metaverse—digital assets in the form of NFTs.

The Marshall Islands passed an amended Non-Profit Entities Act 2021, allowing any DAO to register and begin operations in the country.

It’s no secret that scarcity (real or perceived) can drive demand, remember beanie babies? In the last year, there has been a surge of Non-Fungible Token (NFT) trading volume, much attributable to popular projects with limited numbers such as CryptoPunks, Bored Ape Yacht Club, and Meebits, which are essentially collections of unique images whose ownership is proven by an NFT. While this all may seem silly, NFTs are not a fad or transient internet phenomenon. They may enable fads that lead to asset bubbles, but NFTs are simply certificates that prove ownership of an asset—which can be anything from clipart of a rock to a patent—and are here to stay.

In August 2020, a group of game firms and online companies came together to form Oasis Consortium (the “Consortium”)—a non-profit dedicated to advancing common ethical standards and technologies for the rising Metaverse. In less than two years, the Consortium has become a standard-setter for what might be the most exciting new industry in the world.

Earlier this month, a district court in the Northern District of California ended a suit against Apple concerning loot boxes. That suit alleged that Apple facilitated in-app purchases of “gems,” a virtual currency used in Supercell’s game Brawl Stars. A decision issued in a similar suit brought against Google ended last week on similar grounds. The case, brought by the same attorneys on the same day as the Apple case, sought to hold Google responsible for games (in this case, Bandai’s Dragon Ball Z Dokkan Battle and Square Enix’s Final Fantasy Brave Exvius) in its Play Store that use loot boxes.

In another blow to plaintiffs suing game developers and publishers over loot boxes, a district court in the Western District of Washington granted summary judgment in favor of Valve Corporation. The case concerns the use of loot boxes in Valve’s Counter-Strike: Global Offensive, Defense of the Ancients 2, and Team Fortress 2 games.

The potential applications of non-fungible tokens (NFTs), like blockchain technology in general, are attracting attention across the economy. Some early projects by mainstream videogame publishers have been met with mixed reviews, but adoption shows no sign of slowing down. But like blockchain technology in general, NFTs, including in videogames, cause environmental concerns because of the energy required to create, transfer, and track them.

Polymarket will wind down existing contracts and pay $1.4 million to settle U.S. regulators’ allegations it offered illegal trading.

A California federal district judge put an end to a suit brought against Apple under California’s Unfair Competition Law (Business & Professions Code § 17200). The suit alleges that loot boxes in games are akin to illegal slot machines, which are prohibited by California law. Rather than suing the game publishers themselves, plaintiffs sued Apple for hosting games with loot boxes in the Apple App Store.

Videogame industry leaders have been optimistic about the endless possibilities of the metaverse, Non-Fungible Tokens (NFTs), and blockchain technology despite relatively recent developments.

As we discussed in our prior post, Blockchain and Cryptocurrency: The Future of Online Gambling?, the blockchain technology offers the online gambling industry security, privacy, efficiency, and cost-effectiveness. While some online casinos have authorized cryptocurrency payments, others have gone further by building platforms entirely on the blockchain.

The metaverse has taken the digital and physical world by storm. Many companies, including Facebook, have developed augmented reality products within the metaverse and many of these products utilize Non-Fungible Tokens (NFTs) to integrate the digital and physical consumer experience.

On October 11, 2021, the Entertainment Software Association (ESA or Association) informed the Office of the United States Trade Representative (USTR) of certain foreign websites and marketplaces that should be labeled “Notorious Markets.”

Concerns regarding the application of securities laws, such as those banning “wash trading,” are increasing given the popularity of Non-Fungible Tokens (NFTs) and cryptocurrency transactions, and Chairman Gensler’s recent remarks on the regulation of these assets.

Decentralized Autonomous Organizations (DAOs) are one of many white-hot blockchain topics promising to bring a blockchain-based method for managing any organization in a decentralized automated way. Adding to the intrigue, DAOs are often associated with the creation of a proprietary blockchain token. This is a first in a series of articles exploring the business and legal ramifications of these intriguing new organizations.