The dictionary definition of gambling is ‘to bet money on an event in the hope of a financial return.’
So, when we spin the roulette wheel, take our seat at the blackjack table or bet on our favourite sports teams, we are risking our money in the pursuit of a greater fiscal payout.
As definitions go, that’s as black-and-white as it gets. But what about the grey areas, such as video game loot boxes. Should these be classed as gambling too?
It’s an important question to answer, because gambling regulators should be cracking down on loot boxes if it’s agreed that they fall under the definition of betting.
Most pertinently, these ‘rewards’ are typically aimed at young players, which sets off a number of legal and moral alarms straight off the bat.
So should loot boxes be considered a gambling product?
What Is a Loot Box?
We should slow down a bit, because not everybody will be aware of what a loot box is.
Players can effectively pay for these boxes in a bid to upgrade their characters or avatars, acquiring new skins (basically what they look like on screen), weapons, skills and so on.
The ever-popular FIFA series offers another example of a loot box. Gamers can create their Ultimate Team by buying packs of players, hoping that they will reveal a Lionel Messi or a Kylian Mbappe. But, of course, there are hundreds of players in the game, and so the chances of revealing a superstar are slim.
Loot boxes require an initial investment in the hope of getting a desired return, but the outcome of the purchase is completely random – hence why they have been linked to gambling.
But is it morally justifiable to push children to potentially ‘gamble’ their money in this way?
Are Loot Boxes Illegal?
As more and more game developers began to utilise this monetisation model, unsurprisingly regulators and law-makers around the world have been keeping a close eye on developments.
But in July 2022, the UK government decided that loot boxes did NOT fall under the remit of gambling, and so they will remain largely unregulated. That was despite the fact that as far back as 2016 the Gambling Commission, the government’s appointed regulator for the industry, revealed research that confirmed that lolot boxes promoted gambling-like behaviour, e.g. kids continuing to buy FIFA player packs until they get the stars that they want.
One of the key findings of the Commission’s report was that ‘the line between video gaming and gambling is becoming increasingly blurred’, however the government refused to act by updating their laws accordingly, responding:
“[we] do not intend to amend or extend the scope of gambling regulation to cover loot boxes at this time.”
Perhaps more troubling still, a survey of the most downloaded app-based games back in 2020 revealed that more than half contained loot boxes and other forms of monetisation. Of those games, 94% were available to children as young as 12.
With studies showing a clear link between loot boxes and gambling addiction in young people, you wonder how long it will be before the government does order a clampdown.
Are Loot Boxes Banned?
Game developers are quite canny, and firms like Electronic Arts – who make the FIFA titles amongst many others with monetisation – have taken to calling their loot boxes ‘surprise mechanics’ instead. That’ll fool the regulators….
Even so, it’s a tactic that has seen them evade regulation in key markets like the UK and the USA, and amazingly – at the time of writing – less than half-a-dozen countries have updated their laws to even reference loot boxes.
In China, loot boxes are allowed however game developers have to explicitly detail the probability of a player obtaining each available reward, while there are caps on the number of loot boxes…sorry, surprise mechanics, that can be purchased in any single day.
Some firms, like Blizzard (who make Overwatch), have attempted to circumnavigate the new laws in China by allowing their players to buy in-game currency instead, with loot boxes given as ‘gifts’.
In Japan, they already have their own term for loot boxes – ‘complete gacha’ – that has been in their lexicon for more than a decade. The difference here is that rewards had to be purchased in order for a player to progress in their game. These have now been outlawed, although some forms of so-called micro-transactions are still allowed.
In the Western world, only two countries have been moved to update their gambling and gaming laws in the wake of the explosion of loot boxes. Belgium were the first – they banned micro-transactions outright as long ago as 2018.
Belgium’s neighbours, the Netherlands, moved to update their own laws on gaming and gambling. They decreed that loot boxes, from which the contents had a ‘market value’, were to be prohibited. Those which rewarded players with items that could only be used within their own game are allowed.
Soon, there could be movements in a fifth country. Australia is looking to ban loot boxes in all computer games that don’t have an 18 age-rated certificate.
“Loot boxes give rise to many of the same emotions and experiences associated with poker machines and traditional gambling activities,” said the Australian MP, Andrew Wilkie.
“This is especially concerning as many games which contain these features are popular with adolescents and young adults.”
See You In Court
Some parents are so adamant that loot boxes are encouraging their children to gamble that they have launched class action lawsuits against a number of development firms.
A number of legal bids have been launched in France as to the fairness of FIFA’s Ultimate Team packs, with one player spending upwards of €600 in a bid to land his favourite stars of the beautiful game.
The makers of the NBA 2K series, Take-Two, were taken to court in March 2022 over the sale of loot boxes to minors.
But the most significant lawsuit was filed against Epic Games, the makers of teen favourite Fortnite, who faced a class action suit regarding their use of randomised loot boxes.
They were one of the first major firms to actually lose in their legal battle, and ended up forking out more than $26 million (£21.5 million) to settle the action brought by disgruntled players. A judge upheld the argument that loot boxes were ‘unlawful’ in their scope.
What Does the Future Hold for Loot Boxes?
How long some of the most powerful governments, covering the biggest gaming jurisdictions on the planet, can continue to claim that loot boxes are not ‘gambling’ products remains to be seen.
There is very little in the way of motivation for gaming firms to self-regulate – one of their most consistent revenue streams would be harmed, of course, and so it seems any change is a long way off.
But some development firms do seem willing to change. Popular games such as Star Wars: Battlefront II, Rocket League and Forza Motorsport have had micro-transactions removed completely, while Electronic Arts have also started to introduce a ‘preview feature’ that enables players to see the contents of a pack before they buy it.
Self-regulation is often considered to be an easier, smarter way to avoid more formal, government-level legislation, and so more development firms will presumably look to modify the ways in which loot boxes are presented to their players – and especially so in games aged at children.
It’s interesting to see too that, while remaining a multi-million pound mini sector, the growth of loot boxes has stalled markedly. Since 2021, the growth of gaming packs has fallen significantly, and decline in consumer spending is predicted to set in for the next few years.
But an outright ban on micro-transactions, or the classification of them as gambling products, seems unlikely to say the very least.