The Dutch gaming authority fined Digital Coin Gaming with a wonderful of 600,000 EUR

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The Dutch Gaming Authority (KSA) recently imposed a heavy fine of EUR 500,000 on the Curacao-licensed operator Virtual Coin Gaming and a separate fine of EUR 100,000 on an unnamed employee of the company for creating online games, which the authorities viewed as games of chance.

background

Virtual Coin Gaming (VCG) offered games through the websites www.futgalaxy.nl and nl.futgamer.com, including online betting on football, hockey and US sports, a FUT jackpot and game packages. The online games were based on FIFA Ultimate Team (FUT), a card game that is part of the EA Sports FIFA video game franchise, where players in the FUT video game earned credits by submitting those credits directly to www.futgalaxy.nl bought and nl.futgamer.com or by exchanging the 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 where players had the option to purchase six different packs valued between 5,000 and 100,000 credits. Highly rated soccer players were randomly added to the packs.

KSA guideline

Since the Dutch Betting and Gambling Act does not issue licenses for internet games, online gambling is prohibited in the Netherlands.

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

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

Decision to impose a fine

The KSA pointed out that online gambling violates the Betting and Gambling Act. According to KSA, it was clear that it was an unlicensed operator specifically targeting Dutch consumers by using the Dutch language, extending the .nl domain and using the Dutch payment system iDEAL.

KSA viewed the VCG game packages as games of chance. Research by the KSA in January 2019, backed by announcements on the websites themselves, found that participants generally were not largely able to influence their chances of receiving prices from VCG loot boxes. The KSA also referred to a ruling by The Hague Court on October 15, 2020 in relation to Electronic Arts, which ruled that in-game packs (i.e. loot boxes) in FIFA video games represent gambling (see “The Dutch Court allows the regulator to punish electronic art for FIFA loot boxes’).

The KSA said it imposed an increased fine for a number of reasons, including having minors and young adults participating in these games, as shown by two studies that confirmed minors regularly play futgalaxy.nl.

Conclusion

KSA is stepping up its fight against illegal online gambling before an online gambling market opens in the Netherlands, which is due to take place later this year. When the Remote Gaming Act goes into effect on March 1, 2021 (or April 1, 2021 according to other reports), businesses will be able to apply for online gambling licenses. An online gambling market should exist in the Netherlands by September 1, 2021. However, VCG will not be allowed to participate in this round due to the cooling off criteria that apply to operators illegally targeting the Dutch market after July 1, 2018. These operators must go through a 32 month cooling off period before they can apply for a license.