SB3024

SECTION 1. The legislature finds that according to a 2011 study, ninety-one per cent of youth aged 2-17 played video games. Games and game content are now easily accessible and may be purchased at the touch of a button through phones, consoles such as the XBOX or Playstation, or personal computers, or by minors with cash through gift card purchases.

In recent years video game publishers have begun to employ predatory mechanisms designed to exploit human psychology to compel players to keep spending money in the same way that casino games are so designed. These mechanisms allow players to purchase chances at winning rewards within games, similar to a slot machine. These predatory mechanisms, a common variety of which are known as loot boxes, can present the same psychological, addictive, and financial risks as gambling. There are even online marketplaces where players can buy and sell digital items won from loot boxes and other gambling-like mechanisms in many games, enabling players to effectively cash out their winnings.

The legislature further finds that the American Psychological Association has identified internet gaming disorder as an emerging diagnosis which warrants further study in the Diagnostic and Statistical Manual of Mental Disorders and the World Health Organization has identified gaming disorder, alongside gambling, as a pattern of gaming behavior which appreciably increases the risk of harmful physical or mental health effects in the latest draft of its International Compendium of Diseases. Mental health experts have raised particular concern about the exposure of youth and young adults to gambling-like mechanisms which can affect cognitive development and lead to addiction and to which youth and young adults are particularly vulnerable.

There is currently no age restriction on games which include loot boxes and other exploitive gambling-like mechanisms. In fact, games which include these mechanisms are often marketed to youth. There is currently no disclosure required at time of purchase that video games contain predatory loot boxes and gambling-like mechanisms which may pose a harmful risk for some people, particularly youth and young adults. Further, game publishers can insert gambling-like mechanisms into games at any time with game updates without prior player or parental knowledge.

Unlike at casinos, there is rarely disclosure of the odds of winning items of value in loot boxes or in-game gambling-like mechanisms. There are no gaming commissions to ensure players are being treated fairly and not exploited by gambling-like mechanisms which do not pay out as advertised. Game publishers have already begun to develop algorithms which are far more exploitive than casino games because they can now change the odds of winning valuable items in real time based on a player's reactions and likelihood of continued spending, an ability which has already been included in multiple patent applications.

The legislature further finds that no meaningful protections exist to prevent consumers, and in particular vulnerable youth, from being exploited by predatory video game mechanisms which are now aggressively marketed on home computers, gaming consoles, and the smart phones in people's pockets. Unlike traditional card games or other games of chance, the ubiquitous reach of video games which require active, lengthy participation and exposure to the psychological manipulation techniques of exploitive loot boxes and gambling-like mechanisms presents potentially harmful risks to the financial well-being and mental health of individuals and especially of vulnerable youth and young adults.

The purpose of this Act is to prohibit the sale of video games that contain a system of further purchasing a randomized reward or a virtual item that can be redeemed to directly or indirectly receive a randomized reward to consumers under twenty-one years of age.

SECTION 2. Chapter 481B, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§481B- Video games; restrictions. (a) It shall be unlawful for any retailer to sell to any person under twenty-one years of age a video game that contains a system of further purchasing:

(1) A randomized reward or rewards; or

(2) A virtual item which can be redeemed to directly or indirectly receive a randomized reward or rewards.

(b) For the purpose of this section:

"Retailer" means any person who offers video games for sale, including resale by the purchaser, through any means, including sales outlets, catalogs, or the Internet.

"Video game" means an object or device that stores recorded data or instructions, receives data or instructions generated by a person who uses it, and, by processing the data or instructions, creates an interactive game capable of being played, viewed, or experienced on or through a computer, gaming system, console, or other technology."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	3024
TWENTY-NINTH LEGISLATURE, 2018
STATE OF HAWAII