SECTION 1. The legislature finds that, in recent years, video game developers of interstate and global online gaming platforms have employed predatory mechanisms designed to exploit human psychology to compel players to keep spending money in the same way casino games and slot machines are so designed. According to mental health experts, these predatory mechanisms can present the same psychological, addictive, and financial risks as gambling. Certain mechanisms in video games present similar risks as gambling, particularly to vulnerable youth. In 2009, mental health professionals estimated that 8.5 per cent of United States youth showed signs of behavioral addiction to video games, which is likely much higher today.

The legislature further finds that the American Psychological Association has identified "internet gaming disorder" in the Diagnostic and Statistical Manual of Mental Disorders as an emerging diagnosis that warrants further study. The World Health Organization has identified "gaming disorder" alongside gambling as a pattern of gaming behavior that appreciably increases the risk of harmful physical or mental health, and it included "hazardous gaming" as a threat to public health in the latest draft of its International Compendium of Diseases.

The legislature further finds that ninety-one per cent of persons aged two to seventeen years played video games in 2011. Video games and game content are now easily purchased at the touch of a button through mobile phones and game consoles linked to a credit card, or by minors through gift card purchases. Game developers can insert gambling mechanisms into games at any time, without player or parental knowledge, through game updates. Game updates can also change and withhold the odds of gambling mechanisms and intentionally exploit player vulnerabilities in real time. These are all potentially novel inventions that have been included in patent applications by some game developers.

The legislature further finds that games containing gambling mechanisms developed for mobile phone applications, game consoles, and personal computers are regularly marketed to, and target, youth and young adults. Often there is no meaningful disclosure at the time of sale of the inclusion of microtransactions and gambling mechanisms in those games. Consequently, it may be impossible for consumers or parents to make an informed decision about the appropriateness of the game that they intend to purchase. Additionally, online gaming dwarfs the United States film industry, growing to more than $30,000,000,000 in annual revenue in the United States, and the great majority of that revenue now comes from in-game microtransactions that create a continuous source of revenue.

The legislature finds that, unlike traditional games of chance, video games require active, lengthy participation during which consumers are exposed to the psychological manipulation techniques of exploitative variable-reward mechanisms that aggressively compel spending and lead to harm. Currently, no meaningful protections exist to prevent the general public, and in particular vulnerable youth, from being exploited by predatory video game mechanisms that are now aggressively marketed on personal computers, gaming consoles, and the mobile phones in people's pockets.

Accordingly, the purpose of this Act is to ensure proper oversight of game developers and marketers and protect consumers from predatory and manipulative practices by the gaming industry.

SECTION 2. Chapter 487, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§487- Hawaii digital gaming commission. (a) There is established a Hawaii digital gaming commission within the office of consumer protection for administrative purposes.

(b) The Hawaii digital gaming commission shall coordinate with other states, as appropriate, and provide oversight and monitoring of predatory or exploitative practices in digital games, including:

(1) The inclusion in a digital game of mechanisms that offer randomized virtual items for purchase using real currency, without disclosing the odds to obtain the virtual items in the mechanism;

(2) Designing a digital game to be impossible or unreasonably difficult for a user to complete without using real currency to purchase additional content;

(3) Designing a digital game that encourages a user to make purchases using real currency to remain competitive with other users of the digital game; or

(4) Other practices deemed by the commission to be predatory or exploitive, as appropriate.

(c) The commission shall consist of the director of commerce and consumer affairs, or the director's designee, and the director of health, or the director's designee, who shall serve as co-chairs. The commission shall include twelve additional members to be selected by the co-chairs, as follows:

(1) Two members with experience in the field of mental health or psychology;

(2) Two members that are parents or legal guardians of children that regularly play digital games;

(3) Two members with experience in digital game development;

(4) Two members that have regular and broad experience playing mobile digital games;

(5) Two members that have regular and broad experience playing console games; and

(6) Two members that have regular and broad experience playing personal computer games.

The terms of service provisions in section 26-34 shall apply to the members of the commission. All other provisions of section 26-34 shall not apply.

(d) The members shall serve without compensation but shall be reimbursed for reasonable expenses, including travel expenses, incurred in the discharge of their duties.

(e) Any action taken by the commission shall be approved by a simple majority of its members. Eight members of the commission shall constitute a quorum to do business.

(f) No later than March 31, June 30, and September 30 of each year, the commission shall publish a report on the department of commerce and consumer affairs website that identifies:

(1) Predatory or exploitive practices in newly released digital games;

(2) New mechanisms, practices, and trends in digital gaming; and

(3) Recommendations to prevent predatory or exploitative practices or the impacts of those practices in digital games.

(g) The commission shall submit an annual report of its findings and recommendations, including any proposed legislation, to the legislature no later than twenty days prior to the convening of each regular session. The annual report shall include the same information as described in subsection (f), and any supplemental information that the commission deems appropriate.

(h) The office of consumer protection shall provide staff support and administrative support to the commission, including clerical and research services, as needed.

(i) As used in this section, "digital game" means an object or device that stores recorded data or instructions, receives data or instructions generated by a user, and, by processing the data or instructions, creates an interactive game capable of being played, viewed, or experienced by a user on or through a computer, gaming system, game console, mobile phone, or other technology."

SECTION 3. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2018-2019 for the establishment of the Hawaii digital gaming commission pursuant to this Act.

The sum appropriated shall be expended by the department of commerce and consumer affairs for the purposes of this Act.

SECTION 4. New statutory material is underscored.

SECTION 5. This Act shall take effect on July 1, 2050.

HOUSE OF REPRESENTATIVES	H.B. NO.	2471
TWENTY-NINTH LEGISLATURE, 2018		H.D. 1
STATE OF HAWAII