Compliance Updates
Pearson, Simon & Warshaw, LLP and Kaliel PLLC: New Class Action Lawsuit Challenges Fortnite’s Sale of Loot Boxes
Pearson, Simon & Warshaw, LLP and Kaliel PLLC filed suit, Altes v. Epic Games, Inc. Case No. 2:19-cv-01488 in the U.S. District Court for the Central District of California on February 28, 2019, alleging that Defendant Epic Games, Inc., the developer of the wildly popular video game Fortnite, uses predatory tactics to lure players into making in-game purchases. Specifically, the Complaint challenges Fortnite’s unfair and deceptive marketing of its “loot boxes,” known as “Llamas,” in Fortnite Save the World.
The Complaint, which is filed as a class action on behalf of California consumers, is brought by Mr. Altes on behalf of his child, a minor. Melissa Weiner, an attorney representing Mr. Altes and his son, commented, “Fortnite’s conduct with respect to loot boxes is especially egregious because so many of its players are kids.”
A “loot box” is a virtual pack of goods which contains a randomized selection of virtual items to be used in a game. Loot boxes can contain everything from purely cosmetic items—known as “skins,” which offer no competitive advantages—to a variety of items such as “power ups” that can dramatically alter a player’s chance of progressing in the game. The loot boxes in Fortnite Save the World, known as Llamas, are of the latter variety, offering players a chance to advance in the game.
Recently, loot boxes have generated significant controversy, with some countries, such as Belgium, Netherlands, and Australia finding that they constitute illegal gambling, based on the fact that consumers pay real currency for potential “loot” that is not guaranteed.
Other countries, including China and Korea, have recently issued regulations requiring games with loot boxes to disclose the odds of winning loot box contents. In the U.S., the Federal Trade Commission has vowed to investigate the use of loot boxes in video games, but so far, has taken no action.
Mr. Altes’ Complaint, which was filed in federal court in California, alleges that through both misrepresentations and omissions, Epic markets loot box Llamas in Fortnite Save the World as highly likely to contain valuable loot, but in reality, the Llamas do not contain the loot expected by the reasonable consumer, and especially by the reasonable minor. The Complaint alleges that Epic fails to disclose that the odds of receiving valuable loot are next to nothing, and, if players knew the actual odds of receiving the items they desired, they would not purchase the Llamas.
Sophia Gold, another attorney representing Mr. Altes, commented, “In nearly every other game of chance, the odds of winning are disclosed.”
Mr. Altes, who brings his claims under California consumer protection law, seeks both an injunction and a class-wide refund.
Compliance Updates
U.S. INTEGRITY AND ODDS ON COMPLIANCE ANNOUNCE REBRAND AS INTEGRITY COMPLIANCE 360
Following the successful completion of their merger, U.S. Integrity and Odds On Compliance Launch IC360, Establishing the One-Stop-Shop Standard for Integrity and Compliance Solutions
U.S. Integrity and Odds On Compliance announced the completion of their merger and the launch of the combined entity’s new name, Integrity Compliance 360 (IC360). The merger cements IC360 as the unequivocal global leader in delivering best-in-class integrity and compliance regtech products and services for the sports betting and gaming sector.
IC360 will leverage the combined expertise, resources, and industry knowledge of U.S. Integrity and Odds On Compliance to continue delivering innovative solutions that empower organizations to achieve and maintain the highest standards of integrity and compliance.
“The coming together of U.S. Integrity and Odds On Compliance represents a strategic alignment of values and a shared commitment to excellence,” said IC360 CEO Matt Holt, formerly CEO of U.S. Integrity. “As IC360, we are dedicated to providing our clients with 360-degree solutions that address their unique compliance challenges, ensuring they can operate with integrity and confidence in today’s complex regulatory environment.”
The strategic unification of these two prominent organizations reflects a commitment to providing unparalleled compliance and integrity solutions in a rapidly evolving regulatory landscape. “Our vision is clear: to help lead our industry forward on compliance and integrity standards, empowering our partners to raise the bar. We believe the IC360 brand represents just that. This is only the beginning of an exciting chapter for Integrity Compliance 360,” commented Eric Frank, President of IC360, formerly CEO of Odds On Compliance. The merger creates a comprehensive and dynamic suite of solutions and services.
IC360’s portfolio of services includes integrity monitoring, compliance advisory, and education, along with established products like the Integrity Monitoring dashboard, a foundational product for monitoring real-time sports integrity issues, PlayBookAI, the robust online repository of sports betting laws and regulations, and ProhiBet, the pioneering solution for ensuring compliance for athletes, coaches, and staff.
“With a comprehensive suite of services and leveraging the collective expertise of U.S. Integrity and Odds On Compliance, this is an evolution of a journey dedicated to setting industry benchmarks and creating a one-stop-shop for integrity and compliance needs,” added Scott Sadin, COO of IC360, formerly COO of U.S. Integrity. “Integrity Compliance 360 looks forward to a future marked by continued growth, impactful partnerships, and a steadfast dedication to the highest standards of integrity and compliance.”
Platform provider Hub88 has secured a supplier licence in Peru, a significant step as the company pursues further expansion across Latin America.
Granted by Peru’s Ministry of Foreign Trade and Tourism (MINCETUR), the new B2B certification permits Hub88 to provide its casino aggregation platform to locally licensed operators in the country.
New legislation entered into force in Peru at the end of 2023, introducing a licensing system for online betting and gaming with the regulated market soon to go live.
The regulatory approval further establishes Hub88’s position in LatAm where the provider has made great strides to become the aggregator platform of choice for local operators.
Hub88 can offer a gateway into the exciting region where its content is resonating well with local players, including titles from proprietary provider Bombay Live, the first supplier to be granted a licence to offer its live casino portfolio in the Province of Buenos Aires, with a dedicated studio in the region.
Hub88’s online casino game portfolio hosts more than 12,000 titles from more than 120 suppliers, including exclusive in-house studios OneTouch and Bombay Live, and a powerful back-office offering.
Ollie Castleman, Head of Hub88, said: “We’re delighted to receive this highly sought-after licence from MINCETUR as the regulated Peruvian market is about to launch, offering great potential.
“LatAm is a region of great importance to us and this approval will further strengthen our position as a leading platform provider in the territory, with a wealth of local knowledge and content proven popular with regional audiences. We are now looking forward to partnering with operators in Peru and bringing our games to local players.”
The Alcohol and Gaming Commission of Ontario (AGCO) has mandated all Ontario-registered sportsbook operators to halt offering and accepting wagers on World Boxing Association (WBA) events immediately. This measure is being taken to protect the Ontario betting public following concerns that WBA-sanctioned boxing matches are not adequately being safeguarded against match-fixing and insider betting.
Since December 2023, the AGCO has been conducting a comprehensive review of suspicious wagering activity on a WBA-sanctioned title fight between Yoenis Tellez and Livan Navarro that was held in Orlando, Florida. Suspicious betting patterns on the bout lasting over 5.5 rounds were reported to the AGCO by two registered independent integrity monitors and detected in Ontario by a registered igaming operator. Media reports also alleged that Tellez’s Manager placed $110,000 on the match lasting longer than 5.5 rounds at a Florida casino. The bout ended with Tellez knocking out Navarro in the 10th round.
Following an intensive review that included outreach to the WBA, Ontario-registered gaming operators, independent integrity monitors, and regulators in other jurisdictions, the AGCO has concluded that bets related to WBA events do not currently meet the Registrar’s Standards for Internet Gaming.
The AGCO requires all Ontario-registered gaming operators to ensure the sport betting products they offer are on events that are effectively supervised by a sport governing body. At a minimum, the sport governing body must have and enforce codes of conduct that prohibit betting by insiders.
Registered gaming operators were unable to demonstrate to the AGCO that the WBA prohibits betting from insiders, which could include an athlete’s coaches, managers, handlers, athletic trainers, medical professionals, or others with access to non-public information. Further, registered gaming operators were unable to demonstrate that the WBA took any action to investigate or enforce the allegations of potential match-fixing and insider wagering.
The AGCO has indicated to registered operators that in order for WBA betting products to be reinstated in Ontario, operators must demonstrate that the WBA effectively supervises its events, thus bringing them into compliance with the Registrar’s Standards. In December 2022, the AGCO required gaming operators to stop offering bets on UFC events for similar issues related to insider betting safeguards. Within a month, UFC amended its policies and implemented new protocols that allowed the AGCO to reinstate betting on UFC events in the province.
“Ontarians who wish to bet on sporting events need to be confident that those events are fairly run, and that clear integrity safeguards are in place and enforced by an effective sport governing body. Knowing the popularity of boxing in Ontario, we look forward to reinstating betting on WBA events once appropriate safeguards against possible match-fixing and insider betting have been confirmed,” Dr. Karin Schnarr, Registrar and CEO of AGCO, said.
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