The very idea of a user-generated content free-to-play MMO for children with whack-a-mole moderation is totally bananas. Even good whack-a-mole moderation would be a bananas design.
I'm okay with little kids online gaming, but it needs to be in content that has been approved by a responsible adult in a setting where either adults are actively supervising or the children are on a server where we know everybody who's in there.
Laws are only real if they're enforced.