SB3024 SD2

SECTION 1. The legislature finds that according to a 2011 study, ninety-one per cent of children aged two through seventeen played video games. Games and game content are now easily accessible and may be purchased at the touch of a button through smart phones, gaming consoles, or personal computers, or by minors with cash or 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 designed. These mechanisms allow players to purchase chances at winning rewards within games, similar to a slot machine. One common variety of this type of predatory mechanism, known as a loot box, can present the same psychological, addictive, and financial risks as gambling. The legislature notes that 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 Psychiatric Association has incorporated diagnostic criteria for internet gaming disorder as a condition warranting more clinical research and experience, in order to feature this diagnosis in future versions of the Diagnostic and Statistical Manual for Mental Disorders. The World Health Organization has defined gaming disorder, characterized by a pattern of persistent or recurrent gaming behavior, and plans to add this disorder to the latest version of its list of diseases and mental health conditions, the International Classification 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 that include loot boxes and other exploitive gambling-like mechanisms, and the legislature notes that games featuring these mechanisms are often marketed to youth. Furthermore, there are no disclosure requirements that these types of games may contain predatory, potentially harmful loot boxes and gambling-like mechanisms. The legislature also notes that game publishers can insert gambling-like mechanisms into games at any time via game updates, without prior player or parental knowledge.

Compared to casinos, games rarely disclose the odds of winning items of value in loot boxes or in-game gambling-like mechanisms. Video games also lack gaming commissions to ensure players are being treated fairly and not being exploited by gambling-like mechanisms that do not pay out as advertised. Furthermore, game publishers have already begun to develop algorithms that are far more exploitive than casino games and can change the odds of winning valuable items in real time, based on a player's reactions and likelihood of continued spending.

The legislature additionally finds that no meaningful protections exist to prevent consumers, particularly vulnerable youth, from being exploited by predatory video game mechanisms that are aggressively marketed on smart phones, gaming consoles, and personal computers. 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, especially vulnerable youth and young adults.

Accordingly, the purpose of this Act is to prohibit the sale of video games that contain a system of further purchasing, including 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 that includes:

(1) A randomized reward; or

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

(b) For purposes of this section:

"Randomized reward" means a reward in a video game that is based on a variable ratio schedule, wherein a player receives a reward after a random number of actions.

"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 on July 1, 2050.

THE SENATE	S.B. NO.	3024
TWENTY-NINTH LEGISLATURE, 2018		S.D. 2
STATE OF HAWAII