In March 2025, the Consumer Protection Cooperation Network (CPC Network) took a major step toward protecting European gamers by introducing new guidelines for in-game virtual currencies.
Video games are increasingly dependent on virtual currencies purchased with real money. These currencies enable players to unlock in-game content. Until now, these transactions operated in a regulatory gray area. The new guidelines recognize in-game currencies as virtual representations of real money. When used for digital purchases, they now fall under the same consumer protection laws as traditional transactions.
This shift ties directly into broader issues of gambling-like mechanics in video games. While gambling regulations already exist in most countries, they often fail to address in-game currencies. These practices have become a sensitive topic, especially when they involve predatory tactics banned in other industries. The rise of in-game virtual currencies has blurred the line between gaming and gambling, particularly in cases where players are encouraged to spend excessive amounts of real-world money for virtual rewards.
“They call gambling a disease, but it’s the only disease where you can win a bunch of money.”
Norm Macdonald
The CPC Network, a group of national authorities enforcing EU consumer protection laws, has introduced new guidelines to tackle these issues directly. Rooted in European legislation, particularly the Council Directive 93/13/EEC on unfair terms in consumer contracts, these guidelines aim to guarantee transparent pricing. They also seek to prevent deceptive practices, such as bundling in-game currency in a way that forces players to overspend. This also extends to the protection of big-spender players (aka. whales) who are at risk of becoming victims of exploitative game design.
By addressing the gambling-like nature of in-game purchases and holding developers accountable, these principles aim to reshape the handling of virtual currencies and in-game transactions. As video games increasingly adopt monetization models that resemble gambling mechanics, these new guidelines are a crucial step in protecting players. While they currently apply only to the EU, they serve as a model that other countries could follow in the future.
Casino Games is a 1989 Sega Master System compilation featuring five gambling-themed games.
List of European Commission Key Principles for In-Game Virtual Currencies
- Price indication should be clear and transparent
- Practices obscuring the cost of in-game digital content and services should be avoided
- Practices that force consumers to purchase unwanted in-game virtual currency should be avoided
- Consumers should be provided with clear and comprehensible pre-contractual information
- Consumers’ right of withdrawal should be respected
- Contractual terms should be fair and written in plain and clear language
- Game design and gameplay should be respectful of different consumer vulnerabilities
Transparent Pricing
The primary objective of these new guidelines is to link real-world value to in-game virtual currencies, addressing the issue of video games exploiting cognitive biases to encourage overspending. This is often done by misleading players with deceptive exchange rates.
For example, let’s use Principle 1, which explains how a cat item can be purchased for 750 in-game currency (diamonds). The new rules would force its real price of 5 euros to appear next to the in-game currency price. Expanding on this example, we can illustrate the usual models games leverage, leading players to make purchases.
First, we need to determine the cost per coin. Given that 5 euros buys 750 diamonds, we can calculate the cost per diamond as follows:
- 5 euros ÷ 750 diamonds = 0.00667 euros per diamond
Now, using this value:
- 1,200 diamonds × 0.00667 euros = 8 euros
- 300 diamonds × 0.00667 euros = 2 euros
Next, let’s consider how discount bundles often obscure the real currency value. These bundles create an illusion of a better deal by offering a higher non-discounted value, which leads to price anchoring. This way the discount appears even more appealing. Video games also employ the Decoy Effect (or Asymmetric Dominance) by presenting multiple options. One being clearly superior to the others. In the illustration below, the middle option becomes the most appealing to players.
These pricing strategies can become even more complex when multiple currencies are involved. For example, some in-game items are purchased with ‘coins,’ but you need ‘diamonds’ to buy coins, and diamonds are bought with real money. This layered approach which complexifies the financial decisions of players is outlined as a ‘Practice to avoid’ in Principle 2.
Drowning the Fish
Principle 3 further focuses on these predatory behaviors as players should not be forced to buy unwanted in-game virtual currency. In-game currency bundles are often designed in ways to manipulate players by making them spend more real money than needed to buy the in-game content they want. This third Principle targets practices such as selling in-game currency only in bundles that mismatch the prices for digital content. Such practice prevents players from choosing the exact amount of in-game virtual currency they want to purchase. For example, players having to purchase a 1,200-diamond bundle or three 300-diamond bundles simply to acquire a 750-diamond sword.
Moreover, any contracts tied to these games are frequently filled with complex language and excessive clauses. These prioritize the interests of the gaming company or platform at the expense of players. Principles 4, 5, and 6 focus on guaranteeing a clear contractual relationship between games and players, while establishing the players’ right to withdraw.
Whale Hunting
In the world of gaming and online gambling, the term “whales” refers to players who spend an extraordinary amount of money on in-game purchases. These individuals are often big spenders who contribute a disproportionate amount to a game’s revenue, especially in free-to-play games with microtransactions. The term originally came from the casino industry, where it described high-stakes gamblers. Whales are estimated to make up about 2% of players while accounting for the majority of a game’s revenue.
However, whales and gambling addicts are not the same. While whales may spend large amounts on virtual items, this does not necessarily mean they are addicted. A whale generally has control over their spending and chooses to invest in the game without the harmful effects of compulsive behavior. In contrast, gambling addicts often engage in compulsive spending. Addicts may spend beyond their means chasing a prize or thrill. In games with gambling-like mechanics, such as loot boxes, the distinction between high-spending “whales” and gambling addicts can blur. While whales may have the means to spend, their high spending can inadvertently fuel addictive behaviors and normalize excessive in-game purchases.
As a result of this growing concern, Principle 7 of the CPC Network directly mentions whales. The principles recognize that these high-spending players may be particularly vulnerable to impulse control issues or gambling disorders. According to the guidelines, games that target whales may exploit this vulnerability, making it an unfair practice.
Understanding Whales
Whales are a necessary revenue source for many freemium games. Their spending helps support the overall game revenue and subsidizes the experience for non-paying or low-spending players. This reliance on whales leads many games to engage in “whale hunting” or actively targeting these players to generate profit. This is especially true when the majority of the player base does not spend enough to make the game financially viable.
However, Principle 7 now deems targeting whales as exploiting vulnerable individuals suffering from impulse control. As a result, the practice of targeting them is considered unfair. Whales are effectively being treated as a protected species!
Harpooned is a satirical game by Conor O’Kane for Windows and Mac. The game challenges Japan’s claim that its whaling program is scientific.
Below are words from ‘Big Jim’, a whale who spent $30,000 on a single game. Shared in an interview with Yu-kai Chou.
“There wasn’t any great strategy involved in becoming a top player. All it takes is spending a lot of money.”
[…]
“I got sucked into spending a lot of money because I was competing with other players to reach the top of The Arena. At first, I was just trying to get into the top 10. Then I got into the top 10, and I thought it wasn’t that much further to get to #1. Then I got to #1, and I thought ‘I’ll just get a little cushion to discourage other players from trying to take #1 from me.’”
Can You Stop Gambling? The Chinese Perspective
Gambling is mostly illegal in mainland China, with a few key exceptions. The government operates two state-run lotteries, both of which are legal forms of gambling. However, all other forms of gambling are prohibited under Chinese law. Casinos, online gambling, and overseas gambling by Chinese citizens are all banned under the law. China has been stepping up its efforts to limit cross-border gambling with fines and even potential life imprisonment in extreme cases. However, illegal gambling remains widespread in mainland China.
Despite the prohibitions, many Chinese citizens travel to Macau, a special administrative region of China where gambling is legal. These casinos attract millions of Chinese tourists each month, boosting the local gaming industry.
Government policies, gambling restrictions, and a slowing real estate market have driven some individuals toward equities. Moreover, recent government efforts to stimulate the economy have further pushed people into the stock market. Despite strict restrictions, the case of China highlights the impossibility of completely ending gambling, especially with new forms of gambling constantly emerging.
Japanese Capsule Toys Gambling
Gambling in Japan is also mostly illegal, but there are exceptions such as public lotteries and legal sports betting (horse, bicycle, and other types of racing). Japan is now slowly expanding regulated gambling activities. In 2018, Japan legalized casinos, but the first one has yet to open. The government has also approved plans to address online gambling addiction by imposing stricter penalties.
A legal form of gambling is through the popular Gachapon machines. These vending machines dispense random prizes (capsule toys) for a price. The objective is to obtain the rare collectible items they contain. Over the past decade, many video games (nicknamed “gacha games”) have adopted a similar concept. Players purchase or earn premium currency for shot at rare items. Similarly to the Gachapon machines, the odds are generally low and the system can be predatory. An example of abuse is the constant promotions of “discounted” bundles of currency to encourage repeated spending for a better chance at the prizes.
Loot Box Loophole
In games, the gachapon concept is reflected in loot boxes, where players hope for a rare item drop. It is essentially an outcome determined by luck. Gacha video games such as Overwatch and Star Wars Battlefront II rely heavily on this model, often frustrating players with low-value rewards.
Even if not entirely true, Belgium is often referred to as a country that has banned loot boxes. In 2018 the Belgian gambling regulator clarified its interpretation of existing gambling laws and announced plans to prosecute non-compliant video game companies. As a result, Belgian players have a harder time buying loot boxes compared to those in countries with fewer restrictions. Similarly, neighboring Dutch consumers are also better protected. In the same year, the Dutch Gaming Authority banned loot boxes, deeming them a violation of gambling laws.
Other countries have also addressed the loot boxes issue. The US has notably proposed legislation to severely restrict their use, although the bill has not advanced. In China, companies are required to disclose exact drop rates for loot box items, helping players understand how many boxes they might need to buy to get a specific item. However, most anti-gambling laws inadvertently create a loophole for video games, allowing them to avoid classification as gambling as long as players cannot directly win real-world money directly through loot boxes.
Toward a Regulated Gaming Economy
The new 2025 guidelines introduced by the CPC Network are an important step in protecting gamers, at least in the European Union. By recognizing in-game virtual currencies as digital representations of real-world money, transactions involving these currencies are now subject to the same consumer protection laws as traditional purchases.
The seven principles tackle the growing concern over gambling-like mechanics in video games, which have often operated in a regulatory gray area. The guidelines also emphasize the need for stricter oversight, particularly with predatory practices that have emerged in the gaming industry. Whether it be preventing misleading exchange rates, bundled offers, and the targeting of vulnerable players, game developers are now held to higher standards.
As the gaming industry evolves, this regulatory shift sets a precedent for more consumer-friendly in-game transactions. With regulators addressing the complex relationship between gaming and gambling, the focus remains on protecting the interest of players.
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