In May 2024, France took a decisive step towards regulating emerging digital economies with the adoption of the SREN (Sécurisation et Régulation de l'Espace Numérique) law. Among the many provisions of this text, articles 40 and 41 have particularly caught the attention of video game developers and companies in the sector.
For the first time, French lawmakers have introduced an experimental framework for online games that allow players to win digital objects monetized by chance. A real revolution in a country with a traditionally strict approach to gambling.
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A new experimental framework for monetizable digital objects
The SREN law introduces a three-year experiment allowing gamers of legal age to win valuable digital objects by chance. This provision represents a significant step forward for the video game industry, which until now has relied on ambiguous business models concerning loot boxes and other random reward mechanisms.
This development has been long-awaited by the industry. The global market for virtual objects is now worth several tens of billions of euros, and French publishers were at a disadvantage due to the absence of a clear legal framework. Now, they can develop functionalities based on randomness, provided they comply with the strict safeguards laid down by law.
The text defines monetizable digital objects as game elements that confer specific rights on players and can be transferred to third parties. This definition therefore potentially encompasses avatars, equipment, virtual terrain and other assets found in modern games. Crucially, however, these items cannot be exchanged for real money or bought back by the game company or its partners, which fundamentally distinguishes them from traditional non-fungible tokens (NFT).
Declaratory obligations: an essential preliminary step
For developers wishing to integrate monetizable digital object mechanisms into their games, the first step is to make a prior declaration to theNational Gaming Authority (ANJ ). This formality is not insignificant - it is an absolute prerequisite for operating legally.
The declaration will have to contain precise information, the details of which will be laid down by decree. According to the initial information available, companies will be required to provide :
- A detailed description of the game mechanics and the nature of the digital objects on offer
- Technical measures implemented to verify player age
- Measures to prevent excessive and pathological gambling
- Resources dedicated to transaction security and fraud prevention
In addition, only companies headquartered in the European Union or a European Economic Area country that has signed anti-fraud agreements with France will be able to offer these games on French territory. This provision is designed to prevent the emergence of unregulated offshore operators.
Identity verification and protection of minors: a major responsibility
The protection of underage gamers is one of the legislator's key concerns. The law requires developers to implement strict age and identity verification mechanisms. It's no longer a matter of simply asking users to tick a box to prove their majority, but of implementing robust technical solutions.
The text specifies that participation in games with monetizable digital objects is strictly reserved for people of legal age. Companies will therefore have to implement RGPD-compliant verification mechanisms, which generally involve two-stage verification: an initial declaration by the user, followed by validation by an identity document or other reliable technical means.
This obligation raises considerable technical and legal challenges for developers. Identity verification must be robust enough to prevent circumvention, while remaining respectful of user privacy and compliant with RGPD requirements. A complex equation that often requires the support of a gambling lawyer familiar with these specific issues.
The stakes are all the higher, as the penalties for non-compliance can be severe, ranging from administrative fines to outright closure of the service. Managers may also be held criminally liable in the event of a systemic failure to protect minors.
International comparison: France in the middle
The French framework is in an interesting position on the international scene when it comes to regulating digital objects in games. While certain countries, notably in Asia such as Japan and South Korea, have for several years adopted permissive approaches that have encouraged the growth of their videogame industries, other territories maintain much more restrictive positions.
Belgium, for example, qualified certain loot boxes as games of chance as of 2018, forcing several major publishers to modify their games specifically for this market. Conversely, some US states like Nevada have developed more liberal frameworks, while maintaining strict transparency and consumer protection requirements.
France has opted for a middle way, with this supervised experiment. This pragmatic approach allows market developments to be observed, while retaining the possibility of adjusting the regulatory framework at the end of the three-year period. For developers, this means designing systems that are sufficiently flexible to adapt to future changes in legislation.
Tax implications: still a grey area
One of the least defined aspects of this new regulation concerns the tax treatment of transactions involving monetizable digital objects. While the SREN law lays the foundations for the legal framework, it is relatively silent on the tax aspects.
Nevertheless, publishers will need to anticipate a number of crucial questions: How should income generated by the initial sale of these items be declared? Are any capital gains made by players on subsequent sales taxable? What are the VAT obligations for these particular transactions?
The tax authorities have not yet published any specific doctrine on these issues. Pending clarification, developers would be well advised to adopt the most cautious approach possible, by accurately documenting their financial flows and applying the default tax regime for intangible assets.
This tax uncertainty represents a significant risk for companies in the sector. A tax reassessment could compromise the economic viability of projects based on these new monetization models. Prior consultation with accounting and tax experts specialized in the digital economy is therefore highly recommended before any commercial launch.
Compliance strategies for developers
To effectively navigate this new regulatory framework, game developers and publishers should adopt a methodical approach to compliance. A step-by-step approach is recommended, starting with an in-depth analysis of the game mechanisms envisaged in light of the criteria defined by the SREN law.
This analysis must cover both technical aspects (implementation of age verification systems, transaction security) and legal aspects (drafting of general conditions of use, definition of the contractual nature of digital objects). Rigorous documentation of this approach will be a valuable asset in the event of an inspection by the authorities.
Transparency towards players is also a major compliance issue. Developers must clearly inform users about the nature of digital objects, the likelihood of obtaining them, and the limitations inherent in their use. This information must be easily accessible and understandable, to avoid any accusations of misleading commercial practices.
Finally, it is crucial to integrate compliance into the game design phase ("compliance by design"), rather than trying to adapt non-compliant mechanics after the fact. This preventive approach not only minimizes legal risks, but also optimizes development costs by avoiding late structural modifications.
Future prospects: towards a sustainable model?
The experimental nature of the system introduced by the SREN law logically raises the question of its durability. At the end of the three-year period, the legislator will have to assess the benefits and risks of this new framework before deciding whether to maintain, evolve or abandon it.
This assessment will probably take several criteria into account: the economic impact on the French video game industry, any abuses observed in terms of addiction or protection of minors, and the ability of players to respect the safeguards imposed by the law.
Developers therefore have every interest in adopting an exemplary attitude during this transitional period, in order to demonstrate the viability and responsibility of the model. This includes increased vigilance regarding problem gamblers, full transparency on random mechanisms, and a constant willingness to engage in dialogue with regulatory authorities.
In the long term, we can reasonably envisage a move towards a permanent framework, potentially with a few adjustments based on observations made during the experimental period. Companies that anticipate these developments by adopting the most demanding standards from the outset will then have a significant competitive advantage.
To sum up
The SREN law undeniably marks a major turning point for the French video game industry. By authorizing, even on an experimental basis, games with monetizable digital objects, the legislator recognizes the evolution of the sector's business models and offers French players the opportunity to position themselves in a rapidly expanding market.
However, this openness is accompanied by strict requirements that should not be underestimated. Age verification, addiction prevention, transparency of mechanisms, prior declarations... The obligations are numerous, and failure to meet them can result in severe penalties.
In this context, developers and publishers have every interest in surrounding themselves with the expertise they need to navigate this new regulatory framework with peace of mind. Because beyond mere legal compliance, it's the confidence of gamers and the sustainability of their business models that are at stake.
