H.B. NO.














relating to consumer protection.





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-A Video 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.

481B-B Video games; labelling; disclosure. (a) Each video game subject to section 481B-A shall:

(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.








Report Title:

Video Games; Disclosure; Labelling



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




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