UPDATED! Second Life Bans Gacha Machines

Have you read this blogpost? The Top 20 Controversies and Scandals in the 15-Year History of Second Life (August 2018).

Gacha machines in Second Life are devices which you pay to play. For each play, you receive a random non-copy item from a selection illustrated on the gacha machine. They have become extremely popular, and many SL brands use them. For example, Second Life shoemaker Garbaggio also has an entire section of her store set aside for gacha machines vending dolls:

The massive gacha machine section at Garbaggio
Four drag queen dolls (I did not play the gacha machines from Garbaggio to obtain these; instead I purchased them from gacha resellers on the SL Marketplace)

Today, Second Life dropped a bombshell announcement, banning gacha:

Due to a changing regulatory climate, we’ve had to make the difficult decision to sunset a very popular sales mechanism for content in Second Life.  It’s widely known as “gacha”, and is defined by a chance-based outcome as a result of a payment.  

We know that creators plan their content releases far in advance and will need to re-tool their products, so to mitigate the impact to those affected, we are giving a 30-day grace period, until midnight SLT on August 31.  After that time, selling content via gacha machines will no longer be permitted in Second Life.  Enforcement won’t start until September 1; after that date an Abuse Report for “Gaming Policy Violation” will be the preferred method of reporting this content to Linden Lab.  

We will continue to allow any sales where a payment is given for a known item, which means that items that had been purchased as “gacha” will be allowed to be re-sold as long as the buyer knows in advance the item and quantity they will receive. We will, of course, still allow fatpacks, and any other currently-allowed distribution mechanisms. 

We did not make this decision lightly and we understand that it will impact creators as well as event organizers and certainly the shoppers! We look forward to fun creative ways of engagement that will come instead. 

We realize that this announcement may leave the community with questions.  This forum thread is going to be monitored and we will answer any related questions in there. 

UPDATE August 3rd, 2021: A FAQ section has now been added to the original statement, which reads as follows:

We have developed an FAQ to assist with answering some of the most common questions we are being asked.  This list is not exhaustive, and we will continue working to get answers and add them here.

Q:  Is it possible to extend the policy deadline?

A:  We are sorry that we are not able to further extend the policy deadline.  However, we have been able to extend the enforcement of the policy change an additional 30 days.  To be clear, starting on September 1 we expect gacha as a sales mechanism to cease. However we will start with warnings, and any enforcement of the policy as it would be applied on an account will not begin until after September 30.

Q:  How are breedables impacted by this policy change?

A:  This current policy change and deadline does not apply to breedables or other life simulation products.  At the present we are working with external counsel on the subject of breedables.  If any action is required we will make a separate announcement and have a separate timeline associated with it. 

Q:  Will popular games like 7seas be impacted by this policy change?

A:  No, because the purchase of bait to go “fishing” is a purchase being made of a known item, and also the fish you catch while playing the game are non-transferable. To be clear, if they are not currently, they must be going forward.

Q: How are subscription boxes affected?

A: Subscription boxes are not affected as long as all subscribers are getting the same content box. Different items being sent to different subscribers on a chance basis is not allowed. 

Q:  How are Linden Homes affected?

A: Linden Homes are not impacted by this policy change.  Linden Lab owns the homes and they are not transferable.  

There are still several great questions which we are working to answer with our legal team.  We will update with additional information as soon as possible.

The original announcement mentions a “changing regulatory climate”, and several comments in the above linked thread bring this up, for example this one:

For people who haven’t been paying much attention to the gaming atmosphere…

Government regulatory bodies have been critically eyeing loot boxes as the gambling mechanisms they are and starting to enforce new regulations on them in various countries; and gachas are, basically, the exact same thing as a loot box.

So, I would imagine that is what is behind this decision. It’s better to be ahead of the curve than behind it.

For example, loot boxes have already been banned in Belgium and the Netherlands (both countries that Second Life operates in).

The impact of this announcement cannot be overstated. Gacha is big, BIG business in Second Life, and even with the grace period, many content creators are going to have to make significant changes in the way they sell items formerly only sold via gacha machines.

Some SL folks (myself included among them) am happy to see the end of gacha sales, feeling that they only encourage excessive gambling, especially if you only want one item from a gacha machine. I am glad to note that resellers can still sell their items won from a gacha machine, however. (However, the gacha resellers themselves might not be so happy that the sales mechanism that enables their business is ending!)

More details later as I receive them!

UPDATE 2:45 p.m.: Patch Linden has posted the following update to the official thread on the Second Life Community forums:

I wanted to address a few themes I’m seeing so far.  

One of the bigger one’s is ‘why’?   As we mentioned in the post, the regulatory climate around these sorts of selling mechanisms abroad have been under scrutiny for some time, as many have also already mentioned.  This includes the formation of some precedence already in place.  We did not make this decision without a lot of thought on the impact this has and sadly we know how burdensome this can be for many.  Through legal guidance, we are giving as much notice as we possibly can, but we also understand that it may not be enough is all cases.  While we will begin enforcement on September 1, we will not start this out with an aggressive approach.  Your account will not be at risk on a first offense basis.  Please don’t take that as an opportunity to break the rules until you get caught, but we are committed to taking a proactive approach to any enforcement. 

Next, is some of the comments on the mechanism or the gacha machines themselves.  It is the act of paying for something and in return the item/thing you receive back is based on chance.  The level of chance does not matter, or if you disclose it, including the ratios, percentages, etc, if the output is unknown (chance based in any way), that combination of mechanisms is what will be prohibited moving forward.

I have seen some interesting counter-points to how to handle the sales of the content themselves.  Of course any already purchased gachas will continue to be able to be re-sold by resellers so long as the sales mechanism doesn’t use a chance based outcome to give you the item.  Limited quantity items is another that would be perfectly ok to do, so long as the item being represented for purchase is what you receive upon purchase.

As posts are still coming in faster than we can respond to, we will do our best to respond as quickly as we can.

UPDATE 6:45 p.m.: Nodoka Hanamura has posted a Twitter thread FAQ about this, which I would like to thank her for, and reproduce here:

I will be giving a FAQ in this thread.

Now, fair warning as a conflict of interest, I am technically a gacha reseller, who sells them on the Marketplace, though that’s mainly because I still have some stock left there, and even then It’s not that much of an income for me – but regardless, I thought that It’d be best to note.

Q: I am a content creator that distributes content via Gacha. What do I have to do?
A: All Gacha Machines must either be disabled or removed from your store effective August 31st to avoid punitive action from Linden Lab. You are not prohibited from selling the contents of the gacha as individual items or as a ‘fatpack’ in a conventional sales format, in fact, i, and I would assume Linden Lab as well, encourage that you do so.

Q: I am a gacha reseller. Do I need to stop selling my Items?
A: Due to the fact that gacha reselling does not involve gambling, gacha reselling is permissible under the revisions to Linden Lab’s Skill Gaming Policy, under which gacha now applies.

Q: Why is this happening? Why Is Linden Lab destroying a profitable method of selling Items in Second Life?
A: The reason being is that, for anyone familiar with the video games industry and subsequently, legislative bodies’ interests regarding the industry, many national and regional legislatures have made their intent known to either ban or extensively regulate gacha and loot boxes, seeing them as equivalent to gambling.

While there is a debate to be had on the efficacy and justification of banning and regulating gambling, this is not going to spare Linden Lab, nor content creators, the gavel if they are taken to court by California, U.S., or other state and national courts for violating their laws. I know this will frustrate many people.

I know many people will point at Linden Lab and say it is their fault. But this is for the best. For the longevity of Second Life and the prosperity of our platform, we must sacrifice gacha so that we can continue legally existing…Again, I cannot stress this enough. This isn’t something LL did to spite people. This is because it was either they banned gacha, or LL would be in hot water for hosting it…

UPDATE 7:24 p.m.: I particularly like this comment from the official thread, especially the final point made:

Ok, lets break this down to rawest principles…

1: $L are directly convertible to and from $US and so to a regulator they are “real money” assets, in spite of any “in-game token” language. Anything you pay for with $L will be viewed as a “real money transaction” by those regulators and their enforcement arms.

2: loot boxes, i.e. random rewards for a fixed payment in-game, which can be purchased with “real money” are being regulated and/or banned at a swift clip around the world in many jurisdictions including several US states. These jurisdictions almost uniformly class such things as “gambling” and draw their regulation and enforcement authority from the laws that exist almost everywhere to control gambling. Loot boxes for real money are regarded as equivalent to slot machines.

3: Gacha machines are loot-box vendors in which the chances of a particular item and the relative value of the items it is possible to get are completely outside LL’s control.

4: Whether such a definition as in #2 above is right or not is irrelevant. It either is, or is becoming, the legal lens through which such things are viewed almost everywhere. As such, LL MUST become compliant with those laws and regulations. Since they CANNOT regulate Gacha machines to the extent required for their existence to be compliant, due to their lack of control over their configuration, they are gone. Period.

5: Merchants who “make more money from Gachas than I ever would selling the individual items” are not victims here. They are the “poster children” for the predatory nature of a gambling-based sales model, setting the reward odds to “favor the house” every time. If selling the individual items as known items for a price commensurate to their actual value leads to lower profits, that difference in profit level is entirely due to the odds favoring the house in the gambling element. As such rather than protesting they should be allowed to continue fleecing their marks it would be better to zip it, quietly fold their tents and go looking for the next bunko game that hasn’t been caught yet. Any carnie knows how that part works.

Harsh, but accurate!

UPDATE August 3rd, 2021: If the official Second Life Community forums thread (now at a whopping 51 pages long!) isn’t enough for you, there’s also a lively thread over on the r/secondlife subReddit in Reddit!

Also, two lists have already sprung up, to keep track of the special deals many SL stores are offering in the final legal month of gacha sales:

UPDATE August 4th, 2021: Very early this morning, Patch Linden had posted another update to the official thread:

…[W]hatever comes out on the other end of this can no longer be called “gacha”.  Make no illusions or ways to circumvent getting around it, but “gacha” is gone for good; we should not call it that anymore going forward with any proposed idea to reincarnate it in some way.  We have been seeing a lot of good suggestions on new, interesting ways to sell content, many of which we have given to our general counsel for further legal opinion.  When we have that information back, the FAQ will be updated.

We have also been analyzing the 7seas Fishing Game further (yes, we play it 🐠), and there is another mechanic at play which is the one-time purchase of the fishing rod (free or paid). The fishing rod to catch fish is all that is really required to play the game, there is no additional purchase required and with that you can catch all the fish (or other items) you desire.  In effect, the catches are free and have no value.  Purchasing bait to play the game gives experience for competition.  If purchasing bait increases the value of the fish (or items) caught, then the fish (or items) would then have to be no transfer.   I have seen some suggestions that it is a disguise to legalize gambling and a handful of other theories to twist the mechanics of the game.  This is clearly not the case and that is spreading misinformation, which needs to cease immediately.  

On edit:  Further in the problematic mechanics of the gacha systems, and in addition to what I said earlier, regarding the act of paying for something and in return the item/thing you receive back can not be based on chance, this includes the purchaser must know what they are purchasing in advance of the sale being made.  In other words, the purchaser must clearly see and understand what they are purchasing at the time of sale.

UPDATE August 6th, 2021: Linden Lab has issued an update to the original FAQ:

Q:  Should any newly developed sales mechanism or newly created items be called “gacha” going forward?

A:  No, as we would like to eliminate any confusion with the usage of the term going forward.

Q:  Is a game that requires skill to win the prize you want permitted going forward?  For example, you throw a dart and you must hit a certain number to get the prize corresponding to that number.

A:  This would need to go through the Skilled Game review process and be presented in a Skilled Gaming region, if approved.

Q:  I am selling an item that is known, paid for and delivered to a purchaser, and for each purchaser they are entered into a prize drawing where randomly selected people who bought the item may receive a rare item as a result of the drawing, is this permitted?

A:  You must also provide a free, concise and easy way for anyone to enter into the random drawing with an equal chance to win.

Q:  Can I sell an item, and also then include an unknown random item attached as a bonus? For example, Like a buy one, get one free (BOGO), but the free item is the random/unknown item.

A:  No.

Q:  Could a “conveyor belt” system work?  

Example:  The vendor board selects an item at random and displays it for purchase.  That item remains on display and available for purchase until a buyer touches the vendor which locks it to them for purchase.  This allowed the buyer to purchase the item and deliver it.  The vendor unlocks and then selects another item at random and displays it for purchase and the cycle repeats.

Example image here and credit to Nadi Vemo for the approved vendor design.

A:  Yes, as long as the item currently being purchased is known. Note however that you should discontinue the use of the “gacha” term for these sales. 

Q:  But what about breedables (again)?

A:  If you buy a brown cat, and a blue cat (as examples), as long as you knew you were getting a brown cat and a blue cat at the time of sale, this is acceptable at the present including the various unknown traits they may come with or develop.  Secondarily, when those cats make little kittens with unknown outcomes, this is also acceptable.  Lastly, the resale of any breedables will require at the time of purchase that the purchaser knows what they are purchasing at the root level (for example, it is a blue cat).  

Q:  What about my specific idea, you didn’t cover it here?

A:  We wish we could cover all the great ideas we’ve seen proposed to date. Sadly we can’t address them all and if there are any questions or proposed ideas that would suggest any other permutations on the policy, we recommend a simple and thoughtful approach to stay within the boundaries of the policy.  Failing that, please feel free to contact customer support.