EU Proposes Digital Fairness Act: New Rules for Loot Boxes and Casino Influencers

Brussels is taking a decisive stand against manipulative digital practices. On Wednesday, November 11, the European Commission published the draft of the Digital Fairness Act. This wide-ranging consumer protection package is designed to tackle unfair practices in the digital economy, with a specific focus on online gambling, lotteries, and gaming products that feature gambling-like mechanics. The proposal highlights the growing concern over the blurring lines between gaming and gambling, which often puts younger audiences at risk.

The new legislation is set to replace the outdated 2005 Unfair Commercial Practices Directive. Its primary focus is on transparency and the protection of vulnerable groups. Under the new rules, influencers who promote betting or casino products must formally disclose their content as an advertisement or commercial collaboration. Furthermore, personalized advertising based on sensitive personal data or the profiling of minors will be strictly prohibited. This applies not only to traditional ads but also to personalized recommendations and content rankings.

Numbers and facts

The economic implications of this proposal are significant. The Commission estimates that these reforms could save EU consumers as much as €13.7 billion each year by reducing unwanted spending. Conversely, businesses are expected to face approximately €1.2 billion in recurring annual compliance costs. Video game developers using variable reward systems will be hit particularly hard, as Article 15 of the draft defines loot boxes as products sharing the speculative features of gambling.

“Variable reward systems that offer random rewards or variable odds, such as loot boxes, wheels of fortune, or collectible card packs, are prone not only to cause unwanted spending by consumers but can also be harmful due to the fact that they share the speculative features of gambling.” - Recital 63, Draft Digital Fairness Act

Companies will be required to clearly disclose the types of rewards available and the probability of obtaining them. Consumers must also be provided with accessible tools to disable these systems. For minors, the rules are even stricter: paid loot boxes will be banned in products directed at children or where operators know with reasonable certainty that minors are the primary users.

Background

The debate over loot boxes has been ongoing for years. While the video games industry often argues that these features do not constitute gambling because players always receive an item and cannot cash out for real money, the EU is now intervening. Felix Hilgert, a partner at Osborne Clarke, noted that the industry generally does not consider loot boxes similar to regulated gambling due to the lack of a cash-out option. Nevertheless, the EU is adopting core gambling regulation elements for this sector, including a requirement to display the real-world value of virtual currencies at the point of purchase.

Additionally, the act targets manipulative design features known as dark patterns. These include autoplay functions that encourage prolonged play and notifications that are not triggered by user activity. Engagement-based reward systems designed to simulate personal relationships or keep users active through psychological triggers are also on the list of prohibited practices.

Why it matters for German players

For players in Germany, the Digital Fairness Act adds an extra layer of protection to the already stringent Interstate Treaty on Gambling 2021 (GlüStV). Germany has already established the GGL (Joint Gambling Authority of the States), which enforces a €1 spin limit and a €1,000 monthly deposit limit via the LUGAS system. The EU proposal could close the loophole in the gaming sector where children were previously exposed to gambling-like mechanics without sufficient safeguards. The mandatory labeling of influencer marketing will also help in identifying and shutting down illegal advertisements for offshore casinos lacking a German license.

What it means for GGL-licensed casinos

Licensed German operators on the GGL whitelist are already subject to strict advertising guidelines. However, the Digital Fairness Act will further tighten the requirements for affiliate marketing and influencer partnerships. Casinos must ensure that their partners adhere to EU-wide transparency standards. Influencer contracts will need to include specific compliance clauses. Since German licensed casinos are already prohibited from targeting minors, the most significant technical adjustment will be providing tools to deactivate engagement features if they are classified as manipulative.