Regulating chance-based rewards: Legal challenges and emerging standards in gaming
February 25, 2025
Randomized reward crates remain one of gaming’s most controversial monetization methods, drawing scrutiny for their gambling‐like mechanics. Critics argue they encourage excessive spending, especially among minors, while industry advocates see them as essential for funding free‑to‑play games.
In response, governments worldwide have tightened regulations – some banning these randomized rewards outright, while others enforce transparency and age restrictions. The most significant changes in 2024 and 2025 demonstrate a growing global consensus that chance‑based reward packs require oversight – though the degree of intervention varies between jurisdictions.
Australia
One of the most impactful regulatory changes came in September 2024, when Australia introduced mandatory classifications for games featuring gambling‑like mechanics. Games with in‑game purchases linked to elements of chance, such as paid mystery crates, now receive a minimum classification of M (Mature – not recommended for children under 15). Additionally, games featuring simulated gambling, like social casino games, are legally restricted to adults with a minimum classification of R18+. The new guidelines apply to games classified after September 22, 2024; existing games are exempt unless they undergo significant updates or changes. This shift signals a fundamental change in how such chance‑based reward mechanisms are regulated. Unlike Belgium and the Netherlands, which ban them outright, Australia restricts access through age classification. This approach aligns regulation with traditional gambling laws, treating them as a potential risk requiring consumer guidance. For developers, Australia’s new rules set a precedent for other countries to follow, meaning that games with randomized in‑game rewards will likely face stricter age‑based restrictions in other markets as well.European Union
The Netherlands has been a leader in regulating digital loot crates, classifying them as illegal gambling since 2018. In December 2024, the Dutch Minister of Economic Affairs called for a Europe‑wide ban on paid chance‑based reward crates, urging the European Commission to introduce a uniform restriction across all EU countries. While the EU has not yet made a final decision, the proposal signals growing political pressure to tighten regulations on these randomized reward mechanics. If approved, this could become one of the biggest regulatory shifts in gaming history, requiring developers to either remove these mystery reward packages entirely or redesign their monetization models for the entire EU market.Russia
In January 2025, Russian lawmakers proposed comprehensive regulations targeting chance-based reward crates in video games. The draft legislation, currently in development, seeks to implement a nationwide ban on such paid reward crates, citing concerns over their potential to foster gambling behaviors among minors. Additionally, the proposal mandates that developers incorporate parental control features, requiring explicit guardian consent for any in‑game purchases minors make. Since the exact scope of the regulation is still being defined, it remains unclear whether the law will impose a total ban on paid mystery chests or a conditional restriction, limiting their availability to minors while allowing access under certain conditions. This dual approach aims to mitigate impulsive spending by young players and enhance parental oversight of gaming activities. If enacted, these regulations could prompt developers to reconsider their monetization strategies to ensure compliance. Some may choose to adapt their in‑game systems. In contrast, others might find it challenging to operate under these restrictions and opt to exit the Russian market – similar to how certain companies responded to bans on randomized loot crates in Belgium.United States
In January 2025, the Federal Trade Commission (FTC) reached a $20 million settlement with Cognosphere, the developer of Genshin Impact, over allegations of misleading chance-based reward mechanics and violations of children's privacy laws. The FTC found that Cognosphere failed to disclose the actual odds of obtaining rare in‑game items, creating a deceptive monetization model that encouraged excessive spending. Additionally, the company was accused of allowing minors to purchase these randomized in‑game reward chests without parental consent, violating the Children's Online Privacy Protection Act (COPPA) by collecting and processing data from children under 13 without proper safeguards. This case represents a significant legal shift in U.S. regulation of randomized reward systems, reinforcing that while such mechanisms are not classified as gambling under federal law, deceptive practices and/or non‑compliance with applicable regulations can still trigger substantial legal consequences. The settlement highlights the growing regulatory focus on transparency, consumer protection, and children's rights in digital gaming. For developers, this serves as a clear warning: failure to provide fair disclosure and protect younger players can result in severe financial penalties and reputational damage.The future of chance-based rewards regulation and Industry adaptation
As governments continue to tighten regulations, the gaming industry faces a pivotal moment in defining the future of monetization. The recent legal shifts in Australia, the EU, Russia, and the U.S. indicate a clear trend toward greater consumer protection, transparency, and restrictions on access for minors. While outright bans remain rare, the growing classification of these randomized rewards as akin to gambling suggests that developers must adapt or risk legal and financial consequences. For developers, the path forward lies in innovation and responsible game design. Many studios are already moving toward alternative monetization models, such as battle passes, direct item purchases, and subscription‑based content, which offer more predictable, compliant, and transparent revenue streams. By proactively embracing self‑regulation, clear probability disclosures, and ethical monetization practices, the industry can help shape the future of digital transactions without further government intervention. The coming years will likely see continued legal developments, but one thing is clear: the era of unregulated chance-based reward crates is coming to an end. For those looking to implement robust parental controls and take proactive steps toward compliance, check out Xsolla Parental Controls to ensure a safer and more transparent gaming environment. Authored by Oksana Galimova, Legal Counsel at Xsolla
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