The FTC fined HoYoverse $20M for Genshin Impact's loot box system that obscured real-money costs and targeted minors

In early 2025, the U.S. Federal Trade Commission took enforcement action against Cognosphere (HoYoverse), the developer of Genshin Impact -- one of the highest-grossing games globally with over $4 billion in lifetime revenue -- ruling that its gacha/loot box system misled players about real-money costs through obfuscated virtual currency conversion rates and specifically targeted minors. The proposed order required a $20 million fine and prohibited the company from allowing children under 16 to purchase loot boxes, marking one of the first major U.S. federal enforcement actions specifically against randomized monetization in games. Why it matters: A $20M fine against a single game establishes federal precedent that loot box mechanics can constitute deceptive trade practices, so every game publisher using similar randomized monetization now faces regulatory exposure they previously assumed was limited to Europe and Asia, so publishers must redesign monetization systems or risk enforcement actions that dwarf the fine amount in legal and compliance costs, so the mobile gaming business model (which generates ~$90B annually and relies heavily on gacha mechanics) faces existential uncertainty, so the entire free-to-play gaming economy may need to fundamentally restructure how it generates revenue. The structural root cause is that game publishers deliberately use virtual currency layers (Primogems to Intertwined Fates to wishes) to psychologically distance players from real-money spending, and no U.S. federal law specifically addresses randomized digital purchases -- forcing regulators to use general consumer protection statutes (FTC Act Section 5) as a blunt instrument against mechanics that were intentionally designed to exploit regulatory gaps.