How Local Regulations Can Kill AR Mobile Games

Virtual Legality Blog

In January 2017, Milwaukee County started requiring makers of location-based augmented reality games to apply for a permit before placing points of interest in Milwaukee parks. Luckily, in July, this regulation was ruled as unconstitutional by the Eastern District of Wisconsin. Unluckily, the court’s reasoning left open plenty of room for a second ordinance.

You can find a copy of the court’s order here

Milwaukee required app developers to provide on-site security, on-site medical services, and detailed plans for garbage collection. Beyond that, app makers had to offer the following information: time, location, estimated attendance, a site map, and copies of advertisements. Any advertisements for an app could be forced to incorporate the logo of Milwaukee County if a permit was granted. These regulations were clearly incongruent with the realities of location-based AR videogames.

The court found the ordinance unconstitutional because the ordinance provided the county unlimited discretion to deny or approve permits at will. Many businesses in the AR industry saw the victory in the news and prepared to move on. The reality is unfortunately more nuanced. In rendering its decision, the court laid out a roadmap for future regulation.

What if a county implemented regulations with a constitutionally acceptable framework? A county could still impose specific regulations on an AR developer. The court helpfully identifies one such framework: a default rule of providing permits for every applicant, permits that can be revoked only upon a showing of “specifically articulated public-safety concerns.”

Further, the court found that the act of playing video games did not constitute a viewpoint and thus the park regulation was content-neutral, saying:

"As the Court explained, the fact that a County employee must review the content of a game to determine if it falls within the scope of the Ordinance does not in itself mean that the Ordinance is content-based. Id. To the contrary, the Ordinance can be interpreted and applied without reference to the subject matter of Texas Rope ‘Em—i.e., a Texas-themed poker game."

Identifying the ordinance as content-neutral is extremely important for the future of location-based AR videogames. If the court had found that the regulation was content-based, the regulation would have been held up to a high, almost impossible-to-meet standard. Now, any future content-neutral ordinance can simply meet four requirements — and for the purposes of location-based AR videogames — the primary factor being whether the regulation is narrowly tailored to avoid unnecessary restriction of free speech.

The court did find that the restrictions in this particular case were not narrowly tailored. But in so finding, the court once more laid out a helpful framework for other parks to impose local regulations on AR video games. The court expressly notes that limiting points of interest to particular areas within the park and/or punishing gamers who violate park rules might be constitutional.

With a local view, this is a reasonable stance. Once this is scaled up to a national level, the threat to AR videogames is massive. Imagine that every park and every municipality had slightly different regulations, each reasonable when viewed in a vacuum but unmanageable when on a national scale. A developer might have to apply for permits to hundreds if not thousands of localities (including research to find which municipalities have ordinances). This creates a not-in-my-backyard syndrome usually seen with nuclear power plants or windmills, but rarely seen in the game industry.

To be clear, it is a good thing for localities to be able to regulate different kinds of activities within their parks and public places. However, the sum total of local regulations have the capability to threaten this genre of videogames in new ways and potentially prevent a new Pokémon Go from ever happening again.

Only the most sophisticated actors with significant financial backing could plausibly break into a market with that kind of barrier to entry. For now, this fear seems to be relegated to the realm of theory rather than practice. But app developers looking to emulate Pokémon Go’s success should be very wary moving forward with any major new AR project.