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I'm a prospective law student currently conducting research on the legality of loot boxes in the United States, and I find Magic the Gathering very relevant. (Reference for Loot Boxes and Booster Packs below). The main debate is whether or not these type of products are illegal lotteries.

The law at question is California Penal Code 319, and specifically the definition of a lottery:

  1. A lottery is any scheme for the disposal or distribution of property by chance, among persons who have paid or promised to pay any valuable consideration for the chance of obtaining such property or a portion of it, or for any share or any interest in such property, upon any agreement, understanding, or expectation that it is to be distributed or disposed of by lot or chance, whether called a lottery, raffle, or gift enterprise, or by whatever name the same may be known.

Does this constitute MTG Booster sales (physical sales) as a lottery?

Please note:

  • The definition makes no mention of receiving/losing "value" from any such property, only that you received it by chance. IMO, by purchasing a booster, you have purchased a chance at receiving individual cards on a statistical spectrum (rarity). The chance bit is all that matters, not even the value of the cards. Because there is no mention of inheriting some value, or the ability to obtain a greater monetary value after the lottery, then the argument around not acknowledging the secondary market is negated.
  • The definition makes no mention of receiving anything vs receiving nothing, thus the argument of "everyone receives something" is negated
  • The definition makes no distinguishment of such property having sole monetary value vs some other intrinsic value such as being able to play a competitive game.
  • However, I believe that the nuance in this law is the definition of such property. Does a range of cards on a statistical spectrum of rarity each constitute an individual property vs the booster itself as the individual property? But, couldn't this argument be made about a lottery ticket? Would wizards need to make every card the same rarity and distribute each evenly if this were true? How can we navigate around a booster pack being purchased to receive a chance at some cards?
  • One area I find difficult to research is Magic Repacks on eBay. Not sure if anyone has any thoughts on this?

For Magic Arena (electronic version of the game):

  • The argument might stand that WOTC does not give up actual "ownership" of the cards, however, in the context of 319, there is no explicit mention of ownership. Only "distribution" of such property. The game aspect may not conceal the fact there exists a purchase of chance within the game.

Reference:

Booster Pack

Loot Box

California 319

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So the way I understand the thinking, is that TCG Booster cards have a set number (lets say 11) per each pack and each pack costs a set value X. The producer of the card thus values all cards in the pack at a price x/11 = $cost to make + $profits for work per card. That is the materials and packaging per card in pack is all valued at the same regardless of rarity. After the company sells the card, secondhand sales of the card are not factored into their valuation of the card. A rare card could potentially be valued much lower than a common card based on the games current meta and popular strategy and use, though usually, the rare cards tend to be more important to the game.

They also have a gareente that out of these 11 cards a subset of them will always be common, another subset will always be uncommon, and the remainder will be rare or super-rare. Usually it will be something like 7:3:1. There might be an additional "Secret Rare" card that will occur once per box of booster packs. Again, while the value of the cards on the secondary market is going to be wildly disparent based on the pack of cards, the manufactured value will always be x/11 per pack.

As far as the law is concerned, the fact that everyone gets the same amount of cards from the rarity and that all cards are valued the same is enough. The secondary market doesn't matter. They don't care if the rarist card you get isn't a good card in a meta-game or a popular character in the fandom (i.e. Charizard), so long as it's cost to the manufacturer is the same as the secret rare card that occurs once per shipped box.

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  • Excellent point about the irrelevancy of the secondary market value of the cards, as it's something completely out of the hands of WotC. If people suddenly valued green M&Ms highly, making green-heavy bags more valuable, Mars Co. would not be running a lottery. They're selling a product with a fixed real value, which may be worth more or less on the secondary market, depending on the mood of the market. A winning lottery ticket's value is known, a Black Lotus could be worth nothing tomorrow if everyone decides to abandon MTG. – Nuclear Hoagie Jan 28 '19 at 16:24
  • @NuclearWang: Or more likely the meta changes to make it neutral. Or in my personal case, I have no clue what a Black Lotus is, and dump it in the trash. – hszmv Jan 28 '19 at 16:52
  • @hszmv so then similar activities in the secondary market (selling repacks of individual cards) could actually be subject to the law as it costs the retailer whatever the individual cards costs were which do differ on the secondary market? – rambossa Jan 28 '19 at 19:50
  • I wouldn't know as the resale value is much more negotiable between the seller and the buyer. If the seller is offering a selection from a stock of cards following some even distribution, it could be similar as the price y of an amount of cards x with a garentee of A common, B uncommon, and C rare+ cards could be valued in a similar model and following the increase. Again, we do not know how these cards came into his possession but he's still setting a fixed price for a fixed assortment of random cards. – hszmv Jan 28 '19 at 20:37
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    @hszmv "even distribution" as in every pack has the same secondary market value? What if the repack seller leaves out odds? Also from my observation of ebay, it seems some repack sellers may buy bulk cards as well as chase cards, and create the repacks with that inventory they purchased – rambossa Jan 29 '19 at 0:09
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Its probably not a lottery.

This is because of the relevance of the immediate next section (319.3) dealing with "grab bag scheme[s]" for sports trading cards. The fact that the legislature deemed such a provision necessary in 1995 is likely because a court had decided that such a scheme was not a lottery and the lawmakers needed to make it clear to the court that it was.

319.3 is very specific and the electronic "cards" do not meet the definition given for "sports trading cards" even though they operate in very similar ways. Given the specific nature of the provision a court is likely to exclude the electronic system from the code and find that it is not a lottery.

That said, a number of jurisdictions are investigating the phenomena and this may lead to law changes.

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