The use of loot boxes in video games is once again receiving scrutiny. On November 27, 2018, the United States Federal Trade Commission (“FTC”) announced it would investigate the practice, due to claims that loot boxes strengthen the link between children and online gambling. These concerns come after the UK Gambling Commission published its annual research study Young People and Gambling 2018, which asserts that 54% of children aged 11-16 were aware of in-game purchasable loot boxes, while 31% reported having purchased them in the past.
Loot boxes are a popular feature used by game publishers to bolster in-game purchases and increase monetization of the games they sell. They’re kind of like treasure chests containing a randomized selection of virtual goods: from purely cosmetic add-ons (e.g. skins or other customizations) to devastating power-ups. Players have the ability to unlock loot boxes through standard gameplay, but they can also be obtained by shelling out your hard-earned dough.
It comes as no surprise that the incorporation of loot boxes into video games, a medium often marketed to children, would raise some eyebrows. And publishers are not turning a blind eye to this issue. Earlier this year, EA announced that it would revamp the loot box system in Star Wars Battlefront 2 amid heavy criticism from casual and committed players alike. Items that impact gameplay, such as character enhancements and virtual currency, could no longer be obtained via loot boxes, removing the concern that this was a game in which the user had to “pay to win”. Child protection advocates applauded the decision, despite a lack of media attention around the issue of gambling addiction in children.
Of course, such a position assumes that loot boxes are, in fact, addictive. In an interview with GamesIndustry.biz, a UK Gambling Commission spokesperson disclaimed the notion that loot boxes represent a gateway to gambling in children. Rather, the data was gathered from participants in order to have as much information on loot boxes as possible. Some commentators have argued quite the opposite, claiming that loot boxes are “expertly crafted to appeal to the same human impulses a slot machine does, except here they are unregulated and marketed to children”.
As is often the case, the law can be slow to respond to innovations in tech. Despite public outcry, some publishers are transitioning portions of their business models to monetization through in-game purchases. A few jurisdictions, such as Belgium and the Netherlands, have taken a tough stance on loot boxes by banning their incorporation into video games. Government actors in other countries, such as the FTC and the Australian Senate’s Environment and Communications References Committee, have committed to investigating the practice. In Canada, there is no proposed legislation or governmental inquiry covering this specific issue. On a separate but related note, Canadian courts are currently reviewing the constitutionality of legislation that could have an indirect impact on the practice of skin gambling in the country. But that’s another story.
Following legal norms fragmented across multiple jurisdictions will continue to be an important challenge for developers and publishers, especially given that video games frequently have a single worldwide release date. The industry could shift to producing different versions of the same game for the sake of achieving widespread legislative compliance. However, the costs of such an approach would surely be significant and may outweigh the benefits of compliance. The next few years will be key in defining the industry’s use of loot boxes, and the role of microtransactions in video games generally.