Video Game Loot Boxes and the Risk of Virtual Gambling
Over the last decade, the popularity of video games as a source of mainstream media has dramatically increased. A leading cause of this was the COVID-19 pandemic: lockdown restrictions meant that people had more time on their hands than ever before. Consumers’ general greater purchasing power allowed video game sales to reach unprecedented heights as many occupied their time in the cyber space. To capitalise on this, publishers and game developers strived to develop lucrative methods of maintaining consumer engagement. It can be argued that the template with the highest success rate came to be the loot box model.
What are loot boxes?
Although loot boxes predate COVID-19, the pandemic skyrocketed revenues generated from the systems. Loot boxes form microtransactions that provide players with an opportunity to earn an in-game item. This can vary greatly between titles. The items may be purely cosmetic or provide players with a competitive edge against others.
Despite the differences, there is one common theme across in-game markets utilising the model – uncertainty. Players take a chance on the item they will receive, without any guarantees of being awarded the item contained in the box. There is typically a myriad of other items which inflate the ‘pool’ of potential digital rewards. Simultaneously, this decreases the likelihood of receiving the most sought after option.
It is not uncommon for people to spend large sums of money on loot boxes. This becomes particularly worrying when the model is integrated into games targeted at younger audiences. Concerns have been expressed regarding the exposure of children to gambling and the respective psychological impact.
loot boxes - A form of gambling?
Many games utilise loot boxes under the model of “play to earn”, a system that allows players to earn loot boxes through natural progression. This option means that the loot box system does not fall easily under the traditional definition of gambling.
This has been demonstrated by a recent lawsuit in Canada. In March 2023, Electronic Arts (EA) were challenged for the incorporation of the loot box system in their most popular annual title - FIFA. Justice Fleming rejected the accusation of incorporating gambling because the system did not feature a “cash out” option. He found that ‘there is no prospect of gaining or losing anything with a real-world value through the defendants’ in-house auction’.
Whilst there may be ‘no prospect of gaining’, the same cannot be said for losing. Players can inject cash into FIFA’s loot boxes to gain a competitive edge in the online space. Again, this becomes particularly problematic in games which are targeted towards, and predominantly played by, young people.
Moreover, an inconsistent approach towards gambling between countries poses a further complication to regulating virtual gambling. In contrast to the verdict of the Canadian court, in March 2023, EA suffered a defeat in Austria. The Austrian court declared that FIFA’s ‘Ultimate Team’ packs breached the Austrian Gambling Act. Both lawsuits revolved around the same form of microtransaction. The lack of a homogenous approach leaves consumers with varying levels of protection.
The approach in the UK
In September 2019, the Digital, Culture, Media and Sport Committee (DCMS) released a report concerning addictive forms of technology, suggesting an extension of the Gambling Act 2005 Act to cover loot boxes. The Gambling Commission has since confirmed that the 2005 Act does not cover loot boxes in online games, although they have expressed concerns regarding the “blurred line” between conventional gambling and video game gambling.
In July 2022, as part of its response to the DCMS’ call for evidence, the Government confirmed that children are more vulnerable to the harm associated with video game loot boxes. It suggested greater protection, including making loot boxes unavailable to children until they are enabled by parental controls. This is likely to reduce purchases, but it is not a silver bullet solution. Children may lie about their age when registering for online games or deceive their parents to enable loot boxes. Publishers are also likely to contest the responsibility of implementing this feature and its impact on their revenue.
Conclusion
Classifying loot boxes as a form of gambling is a cumbersome task, exacerbated by global inconsistencies regarding gambling. It remains to be seen whether loot boxes will ever be covered by general gambling legislation. Nonetheless, loot box systems featured in in-game markets should be carefully scrutinised, especially because of how accessible they are to young people and their potential for contributing to addictions. This article has strived to provide an overview of loot boxes in video games, alongside the associated issues that they have produced.
By Alexander McLean