On July 15 of 2022, the Consumer ProtectionCommittee of the Executive Yuan passed the draft amendment to the “MandatoryProvisions and Prohibitory Provisions of Standard Form Contract for OnlineGame Services.” Among the provisions, item 6, which catches more attention fromthe public, stipulates that lottery products or activities of online gamesshould disclose the chance of winning. This is the so-called “gacha law”revision. The full text of the amendment will come into effect on January 1,2023.

The so-called gacha (or “loot box”) mechanismrefers to the mechanism in which consumers directly or indirectly receive arandom item after paying money. In a game, it may appear in the form of drawingcards or opening loot boxes.

With the advancement of Internet technologies,the business model of gaming companies has evolved from the traditional buyout model,monthly fee model, and online shopping mall model to the gacha mechanism. Andthe gacha mechanism can be considered the most profitable model currently.

The gacha mechanism of online games hasalways been controversial. Because of this, many countries have proposedcorresponding regulations or initiatives. For example, followed by a misleadingevent in 2015 , the Japanese gaming company of the mobile game “GranblueFantasy” promoted an amendment which provides that gacha products in games mustdisclose their odds. And starting in 2017, the Belgian government has one byone identified many games with gacha mechanisms as gambling. In 2019, JoshHawley, a U.S. Republican Senator, proposed the “Protecting Children fromAbusive Games Act,” banning the “pay-to-win” and “loot box” monetizationpractices by the video game industry. However, this act was not passed. In2020, the Gambling Industry Committee of the House of Lords of the UnitedKingdom reported that the loot box mechanism in games should be regarded as “gambling”and regulated. In July of 2022, six political parties in the Netherlandsproposed to regard the gacha mechanism as gambling, and therefore, games shallnot include this mechanism. This bill is expected to have a good chance ofpassing.

Overall, with the concerns raised by the aforementionedcountries regarding the gacha mechanism in games, it is not difficult to seethat the gacha mechanism often involves issues such as non-transparent odds,pay-to-win, and whether it pertains to gambling. From the perspective ofconsumers, the amendment of Taiwan’s gacha law should allow consumers to determinetheir consumption activities through the disclosed odds of winning, therebyimproving the non-transparency of the gacha mechanism. If the game company doesnot disclose such information as required by the law, the competent authoritymay order it to do so in accordance with the Consumer Protection Act; if it failsto make the correction, it may be fined up to NTD500,000.

However, the amendment of Taiwan’s gacha lawdid not address the issue of whether the gacha mechanism constitutes gambling.If the gacha mechanism constitutes gambling, not only the game players may be jeopardizedas involved in the offense of gambling, but game manufacturers may also be atrisk of committing the offense of providing venues for gambling.

Gambling as defined in Article 266 of theCriminal Code refers to the act of gambling in a public place or a place opento the public. After the amendment of January 12 2022, “gambling viatelecommunication equipment, electronic communication, internet, or othersimilar means” are also included in the scope of the offense of gambling. Therefore,compared to the holding of some courts in the past that the Internet does not pertainto “a public place or a place open to the public,” the amendment to the offenseof gambling in the Criminal Code increases the legal risks that “paying for lotterywinnings” in online games as a gambling perpetration.

Many courts have held that gambling asprovided in Criminal Code refers to a practice of uncertain nature in which thesuccess or failure of an uncertain matter determines the winning or losing of aproperty. For example, if it is uncertain whether the player will win thein-game item after paying, then such a model is at risk of being identified asgambling.

As far as the gacha mechanism in currentmainstream mobile games is concerned, after players pay, most of them will receivedigital merchandise (e.g., character cards, virtual items, and equipment). Theonly uncertainty is the type of item the player will receive. Although the itemswon may not be preferred or needed by the players intentionally, since theplayer will receive an item in any case,  there does not exist the issue of winning orlosing property as a matter of fact, and hence, the risk of constituting theoffense of gambling should be relatively low. However, since each game isdesigned differently, whether a game’s gacha mechanism contains elementsprohibited by the Criminal Code’s provision on the offense of gambling shouldstill be carefully evaluated to avoid inadvertently incurring criminalliability.

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This article was published in the Expert’sCommentary Column of the Commercial Times：https://view.ctee.com.tw/tax/46243.html