Video Games and Gambling: Blurring the Lines?

Not so long ago, it was straightforward to distinguish between video games and gambling.

Not so long ago, it was straightforward to distinguish between video games and gambling. The two seemed very far apart — in terms of usage, target audience, and the legal framework governing them. On one side, we thought of traditional consoles and the games of our childhood (Mario Kart, Tetris, etc.); on the other, slot machines and games sold at tobacconists.

The lines then gradually shifted with the development of new technologies, the internet, and, more broadly, the dematerialisation of media.

Then, as we came to recognise that we all potentially had a gaming console in our pocket, this trend accelerated sharply with a multitude of different game mechanics and formats. The growth of mobile gaming upended the business model by offering games free¹ to download, within which in-app purchases are available to unlock features or accelerate progression. Advertising adds to game publishers' revenues, completing the monetisation of this new model.

On the legal side, things were equally straightforward:

• On the video games side, no specific legislation: legal issues were logically approached from an intellectual property perspective, with a body of case law beginning with protection under the software regime, before video games were ultimately recognised as a complex work² where "each of its components is subject to the regime applicable to it according to its nature"³. This distributive approach covers an ensemble made up of both technological innovation and artistic creativity. From the user's perspective, a video game was a "product" like any other that one purchased to use or resell.
• On the gambling and games of chance side: specific regulations were introduced very early to govern this lucrative activity, most often by establishing a state monopoly. The general principle prohibiting games of chance in France was established as early as the 19th century through several specific laws: the Act of 21 May 1836, which prohibited lotteries; the Act of 2 June 1891, penalising bets on horse races; and the Act of 15 June 1907, which authorised, under conditions, the operation of casinos in certain towns. A general Act of 12 July 1983 then prohibited games of chance in general.

The advent of the internet and the accessibility of foreign online gambling sites, as well as pressure from the European Commission to remove restrictions on competition⁴, led the French legislature to open part of the market. Accordingly, online poker, sports betting, and horse racing were regulated by the 2010 Act⁵, which introduced a licensing regime, while the physical world (casinos, retail outlets, and racecourses) remained under a monopoly regime, and online casino games remained prohibited.

Today, these two industries no longer seem so distant from each other — to the point where a certain permeability between the two worlds can be observed.

Thanks to in-app purchases, the financial flows from "free" games have become enormous, and new technologies — whether NFTs or blockchain in Web3 games — have enabled the development of these alternative models without any specific legal framework. Indeed, unlike online gambling, the 2010 Act does not apply to them, and they therefore have no obligations regarding player identity verification, anti-fraud and anti-money laundering measures, or addiction prevention… even though they are arguably just as concerned by these issues, given that such games tend to attract younger players.

The SREN Act of 21 May 2024⁶ addressed this blurring of boundaries by creating an intermediate regime for the so-called "monetisable digital objects games" sector (JONUM), sitting between online gambling and video games. Operators offering this type of game⁷ will therefore be required to submit a prior declaration to the Autorité Nationale des Jeux (National Gaming Authority), which already supervises monopoly operators as well as those holding a licence to offer online gambling.

While we are still awaiting the implementing decrees defining the contours of this new experimental regime, there is little doubt that significant challenges lie ahead given the diversity of game types and mechanics currently in use.

Plenty to keep us entertained from a legal standpoint too!

Article published in issue n°102 of the Journal du Management Juridique (October–November 2024)