Loot box operators would be barred from instant payouts to New York consumers

People and businesses would be prohibited from operating, promoting, or conducting instant payout loot boxes for New York consumers. This covers applicants, licensed businesses, gaming and key employees, investors, board members, affiliates, contractors, agents, and other people or entities involved with the loot boxes. An instant payout loot box includes one that awards something valuable or lets consumers sell, redeem, exchange, transfer, or otherwise convert its contents into something valuable. A consumer's use or sale of the contents without the operator's participation or benefit would not, by itself, make the loot box an instant payout loot box. The provision would take effect immediately if the act becomes law.

Loot boxes would be prohibited from containing certain money-like rewards, status benefits, or points that can buy valuable items. The restriction would apply to every loot box covered by the proposed section. Prohibited contents include money, cash equivalents, cryptocurrency including non-fungible tokens, status or membership benefits, and points redeemable for another loot box or other valuable item. The provision would take effect immediately if the act becomes law.

Certain businesses would be prohibited from knowingly supporting prohibited instant payout loot boxes in New York. The rule would cover applicants, licensed businesses, financial institutions, payment processors, location-checking services, gaming content suppliers, platform providers, and media affiliates. A business would act knowingly if it knows the loot boxes are prohibited or receives written notice from a listed state authority and does not stop supporting them within 30 days. Ordinary-course financial, payment, location, content, platform, hosting, advertising, or similar services would not alone establish knowing support. The 30-day period would begin when the business receives qualifying written notice.

Violators could face fines, loss of a gaming license, or ineligibility for a gaming license, and state authorities could investigate and enforce the rules. The penalties would apply to people and entities found to violate the proposed section; the Gaming Commission, State Police, and Attorney General's Office could enforce it. Fines would range from $10,000 to $100,000 for each violation. The listed authorities could investigate, hold hearings, issue subpoenas, and send cease-and-desist letters. Collected fines would go to the commercial gaming revenue fund for problem-gambling education and treatment. These penalties and enforcement powers would apply immediately if the act becomes law.