SECTION 1.The legislature finds that according to a
2011 study, ninety-one per cent of youth aged two to seventeen played video
games.Games and game content are now
easily accessible and may be purchased at the touch of a button through phones,
consoles such as the XBOX or Playstation, or personal computers, or by minors
with cash 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 so designed.These mechanisms
allow players to purchase chances at winning rewards within games, similar to a
slot machine.These predatory
mechanisms, a common variety of which are known as loot boxes, can present the
same psychological, addictive, and financial risks as gambling.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 Psychological Association has identified Internet gaming disorder
as an emerging diagnosis which warrants further study in the Diagnostic and
Statistical Manual of Mental Disorders and the World Health Organization has
identified gaming disorder, alongside gambling, as a pattern of gaming behavior
which appreciably increases the risk of harmful physical or mental health
effects in the latest draft of its International Compendium 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 which include loot boxes and other exploitive gambling-like
mechanisms.In fact, games which include
these mechanisms are often marketed to youth.There is currently no disclosure required at time of purchase that video
games contain predatory loot boxes and gambling-like mechanisms which may pose
a harmful risk for some people, particularly youth and young adults. Further,
game publishers can insert gambling-like mechanisms into games at any time with
game updates without prior player or parental knowledge.

Unlike at casinos, there is rarely
disclosure of the odds of winning items of value in loot boxes or in-game
gambling-like mechanisms.There are no
gaming commissions to ensure players are being treated fairly and not exploited
by gambling-like mechanisms which do not pay out as advertised.Game publishers have already begun to develop
algorithms which are far more exploitive than casino games because they can now
change the odds of winning valuable items in real time based on a player's
reactions and likelihood of continued spending, an ability which has already
been included in multiple patent applications.

The legislature further finds that
no meaningful protections exist to prevent consumers, and in particular
vulnerable youth, from being exploited by predatory video game mechanisms which
are now aggressively marketed on home computers, gaming consoles, and the smart
phones in people's pockets.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 and especially of vulnerable youth and young
adults.

The purpose of this Act is to establish
certain disclosure requirements for publishers of video games that contain a
system to purchase a randomized reward or virtual item that can be redeemed and
directly or indirectly converted to a randomized reward.

SECTION 2.Chapter 481B, Hawaii Revised Statutes, is
amended by adding two new sections to be appropriately designated and to read
as follows:

"§481B-AVideo games; probability rates; disclosure.(a)Video game publishers that distribute video games that contain a system
of further purchasing:

(1)A randomized
reward or rewards; or

(2)A consumable
virtual item that can be redeemed and directly or indirectly converted to a
randomized reward or rewards,

shall prominently disclose and publish to the
consumer the probability rates of receiving each type of randomized reward or
rewards at the time of purchase and at the time any mechanism to receive a
randomized reward or rewards is activated so as to meaningfully inform the
consumer's decision prior to the purchase or activation of any mechanism to
receive a randomized reward or rewards.

(b)The department of commerce and consumer
affairs, in consultation with the office of enterprise technology services, is
authorized to audit the code of video games sold in this State and subject to this
section to ensure that the probability rates for receiving each type of
randomized reward or rewards are calculated correctly and working properly. The department may contract with a third party
to provide additional assistance as needed.The department shall not publicly disclose proprietary information
beyond that which is necessary to fulfill the intent of this section.

(c)As used in this section:

"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.

"Video game publisher"
means an entity that publishes video games that have either been created
internally or through a separate entity.

(1)Bear a
prominent, easily legible, bright red label on its packaging which reads:
"Warning: contains in-game purchases and gambling-like mechanisms which
may be harmful or addictive"; or

(2)If purchased
digitally and downloaded through the Internet or an online application,
prominently disclose to the consumer at the time of consumer purchase a bright
red label that is easily legible and which reads: "Warning: contains
in-game purchases and gambling-like mechanisms which may be harmful or
addictive",

so as to meaningfully inform the consumer's
decision prior to purchase.

(b)No video game publisher shall at any time
modify a game to contain or otherwise permit the inclusion of additional content
for which the game was not appropriately labeled at the time of original sale."

SECTION 3.This Act does not affect rights and duties
that matured, penalties that were incurred, and proceedings that were begun
before its effective date.

SECTION 4.In codifying the new sections added by
section 2 of this Act, the revisor of statutes shall substitute appropriate
section numbers for the letters used in designating the new sections in this
Act.

SECTION 5.New statutory material is underscored.

SECTION 6.This Act shall take effect upon its approval.

INTRODUCED BY:

_____________________________

Report Title:

Video
Games; Disclosure; Labelling

Description:

Establishes
certain disclosure requirements for publishers of video games that contain a
system of purchasing a randomized reward.

The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.