Laws to regulate claw machines, arcade games and loot boxes mooted as MHA looks to update gambling rules

• MHA proposes to introduce a prize cap of S$100 for mystery boxes, arcade games and claw machines
• For online games, it proposes to introduce conditions to ensure that transferable virtual items are retained in the context of gameplay and entertainment
• Physical social gambling among family and friends will be exempt from gambling laws

SINGAPORE — Mystery boxes, claw machines and online loot boxes could soon come under government regulation, as the authorities note that the boundaries between gambling and gaming are blurring. 

The Ministry of Home Affairs (MHA) announced on Monday (July 12) that it will be amending the gambling legislation later this year, to ensure that laws and regulations remain effective in the face of evolving gambling products and business models.

It said that the proposed updates are aimed at addressing two trends in the gambling landscape. First, advancements in technology due to the internet and mobile computing, which have made gambling products more accessible. Second, the blurring of boundaries between gaming and gambling. 

The ministry is inviting members of the public to provide feedback on the proposed changes to the laws, which are listed below.

1. Definition of gambling

MHA proposes to amend the definition of gambling to make it “technology-neutral”, so that it can cover existing and emerging gambling products.

2. Social gambling

The ministry said that it is proposing to exempt physical social gambling among family and friends, subject to conditions that safeguard against criminal exploitation. Social gambling among family and friends may therefore be explicitly permitted under legislation. 

However, it added that it is proposing to take “strong enforcement action” against syndicates that exploit this exemption to conduct illegal gambling activities. 

It also considered whether to exempt online social gambling among families and friends, but proposed not to. Currently, online social gambling is criminalised under the Remote Gambling Act. 

3. Games with gambling elements

MHA proposes to introduce a prize cap of S$100 for mystery boxes, arcade games and claw machines. 

“This cap will be sufficient to address the inducement effect of high-value prizes, without increasing the regulatory burden on operators,” it said.

For online games with virtual prizes, laws and regulations will be updated to address virtual items that can be transferred out of the game and potentially be exchanged for money or money’s worth. 

The proposal, therefore, is to introduce conditions to ensure that transferable virtual items are retained in the context of gameplay and entertainment.

Online games of chance that allow players to use virtual items from other games as a form of stake on casino games or match outcomes such as skin-betting sites will not be allowed. 

One other proposed change is to allow in-game monetisation facilities for free-to-play games.

4. Penalties across gambling legislation 

MHA proposes to rationalise penalties across various gambling laws. 

The Remote Gambling Act provides a three-tier penalty structure for illegal online gambling, with the highest penalties imposed on operators, followed by punters.

The ministry proposes to apply this penalty structure that differentiates between punters, agents, and operators across all forms of gambling activity, to ensure consistency between online and physical gambling activities. 

It also proposes to raise penalties for repeat offenders who facilitate or operate illegal gambling services, to increase deterrence. 

Penalties for punters of illegal gambling services will not be raised for now.