Skin betting and loot boxes - Video gaming or gambling?

The past years have seen a focus on video games with elements from gambling, including loot boxes and skin betting. On this page, we have compiled useful knowledge about skin betting and loot boxes, among other things, you can find definitions, rules, and legislation. 

What is a skin? 

GeværIn many video games it is possible to earn or purchase virtual items, for instance a particular coloured weapon or type of clothing for the in-game character. But it may also be virtual items with a function in the game such as a new weapon or an additional life. All these are called skins. 

Skin betting  (skins used as stakes outside the game)

Skins can be used on online gambling sites outside the game as a stake or prize. Skin betting covers all types of betting, casino games, and lotteries (games with an element of chance) where the stake and/or the prize is a skin. 

Is skin betting covered by the Danish Gambling Act?

Skin betting is not necessarily covered by the Danish Gambling Act, and as a consequence it does not necessarily require a licence from the Danish Gambling Authority. 
However, a licence to provide gambling is required from the Danish Gambling Authority if the following three criteria are met: 

  • It involves a stake (the skin can be converted into items of monetary value)
  • There is an element of chance
  • It is possible to win a prize (the skin can be converted into items of monetary value)

To be covered by the Danish Gambling Act, the game must either be provided or arranged in Denmark. 
Although a game is provided from another country, it may be covered by Danish legislation if it is clearly directed towards the Danish market. 

A game is considered directed towards the Danish market if one or more of the following criteria are met: 

  • Danish language can be chosen 
  • Danish currency can be chosen
  • Payment methods can be used which would normally only work in Denmark, e.g. Dankort 
  • Danish customer service
  • The composition of the provision of gambling products are directed towards the Danish market
  • Steam as login (Digital distribution platform for several video games)

A game may also be considered directed towards the Danish market if marketing is directed towards Danish gamblers, for instance by direct mail.
Gambling operators are not allowed to receive stakes from individuals under the age of 18, when the game requires a licence. 

Skin betting in Denmark

Consolidation Act No. 1494
Of 06 Dec 2016

The Danish Act on Gambling

There are no gambling operators that have applied for a licence to offer skin betting in Denmark. 
In early 2018, the Frederiksberg court decided in favour of the Danish Gambling Authority to have several websites blocked because they offered skin betting without a licence from the Danish Gambling Authority. 

Read more about the court decision
On 25 March 2019, the Copenhagen city court decided in favour of the Danish Gambling Authority in a case regarding the blocking of 25 websites that offer illegal gambling in Denmark. 

Read more about the court decision

What is a loot box?

Lootbox

A loot box is a box, chest, or similar, and is used as a general term for elements that can be earned in video games either by purchasing it or spending time playing the game. The item inside the loot box (skin) is random, e.g. cosmetic enhancements for weapons, virtual gold coins to be used only in-game or other virtual items. The item is not necessarily of monetary value, but if it is, it may either be of less or more (relative) value than the amount paid for the loot box.

Are loot boxes covered by the Danish Gambling Act? 

Loot boxes are not necessarily covered by the Danish Gambling Act, and video games with loot boxes does not necessarily require a licence. 
A licence from the Danish Gambling Authority is required if the following three criteria are met: 

  • It involves a stake (the skin can be converted into items of monetary value)
  • There is an element of chance
  • It is possible to win a prize (the skin can be converted into items of monetary value)

It is not possible to make a general assessment of whether the items that can be won in loot boxes are of a monetary value. Consequently, an individual assmessment is necessary to determine whether loot boxes are covered by the Danish Gambling Act. 

In December 2017, the Danish Gambling Authority gave a statement specifically on loot boxes.  

Read the statement

What does the Danish Gambling Authority do about skin betting and loot boxes? 

Agreement on new initiatives against compulsive gambling and adjustments to the gambling agreement

For several years, the Danish Gambling Authority has paid particular attention to skin betting. We have entered into a dialogue with relevant operators in the area both in Denmark and internationally. With our own webcrawler, we continually work on stopping illegal skin betting sites. 
On a national level, the issue has gained great political attention. In June 2018, a political majority of the Danish Parliament decided on an agreement on new initiatives against compulsive gambling. One of the initiatives the parties agreed on was a research project on young people's relation to and possible addiction to video gaming. 

International cooperation on skin betting and loot boxes 

The Danish Gambling Authority is also interested in the, sometimes, blurred lines between video gaming and gambling. The past years, the Danish Gambling Authority has participated in a number national and international panel debates on e.g. loot boxes and the possibility to use the content of these as stakes in gambling activities. 

Moreover, the Danish Gambling Authority participates in an international cooperation that focuses attention on the grey area between video gaming and gambling. For now, 17, primarily European countries, have signed a declaration of intent to look closer at the blurred lines that arise when elements from gambling are incorperated in video games. These may be elements such as loot boxes or skin betting. The games in question are often played by young people under the age of 18, which all signers agree is alarming. You can read the reports on illegal gambling below.  
You can order a presentation on skin betting and loot boxes here

Report on illegal gambling 2018
Report on illegal gambling 2017
Report on illegal online gambling 2016