Spain is considering adopting legislation to limit the presence of loot boxes in video games. This has spooked Dapper Labs, which is concerned that tighter controls could impact its NFT (non-fungible token) business, including a deal with Spain’s La Liga.
US-based Dapper Labs is banking on the future of NFTs, the digital collectibles that some view as the next step forward in trading cards and valuable art. Some NFTs have already sold for hundreds of thousands of dollars, and a few have pulled down eight-digit sums.
The company met with representatives of the Ministry of Consumer Affairs (MCA) during a public consultation promoted by the ministry, according to Spanish media outlet El País. The goal was to provide input on loot boxes and NFTs as the MCA considers its loot box stance.
Digital Divide
Digital trading cards in loot boxes, like those in FIFA 23, can be the next step for sports-related trading cards. If a Mickey Mantle physical card can sell for over $12 million, then digital cards can eventually reach that mark.
Dapper Labs has agreements with the NBA, NFL, and La Liga to develop digital sports cards and other digital sports-related offerings. These, it believes, are the indisputable future of sports memorabilia trading.
In 2019, the company joined forces with the NBA to introduce NBA Top Shot Moments, certified and unique videos that have become its flagship offering. In less than two years, Moments had seen over 28 million global transactions worth around $1.2 billion.
Loot boxes are items that certain video games offer that have randomized content – players don’t know what they’re getting beforehand. Gamers can either purchase them with cash or accumulate points in the game to acquire them.
The MCA – specifically Minister of Consumer Affairs Alberto Garzón – argues that these products share characteristics with gambling. This has been a topic of debate in Spain, as well as in other countries around the world.
As a result, there’s a push to either ban loot boxes entirely or control access to them. For this reason, and without forgetting that a large part of video game users are minors, the promotion of regulation is coming.
It’s likely that Spain’s approach to loot boxes will be one of control, not prohibition. It will reportedly target video game entities and allow some access, but game operators won’t be allowed to market or promote them.
In addition, the MCA will likely apply similar restrictions to loot boxes that it does to betting. In other words, there will be a ban on face-to-face advertising, as well as limitations on sports sponsorships.
Uncertain Future
Depending on how the MCA writes the final language of its update, Dapper Labs could face limits to its operations. As a relatively new product still trying to find success, limited marketing capabilities can damage the company’s ability to expand and establish roots.
One of the concerns Dapper wants to address is the language under consideration. The MCA is drafting a bill that could limit “random reward mechanisms” in a virtual setting, which might inadvertently draw in NFTs.
In Spain, Dapper is trying to expand its La Liga Great Goals pack, Kings of the World. The pack includes three Moments out of 36 possibilities, 10 “common” and 26 “rare.”
Two of the three Moments in the pack will be common, while the third could go either way. There’s an overwhelming chance that a common Moment will be included. There’s also an outside chance – 1%, according to Dapper – that it could be a rare one. The consumer won’t know before making the purchase.
Therefore, Dapper is concerned the MCA may consider its Moments packs to be a type of gambling, the same as it may with loot boxes. The company asserts that, because it’s only offering a collectible item without assigning any value to it, it doesn’t deserve to be included. In the end, Garzón will have to make that call.
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