Gimme the loot United States proposes ban on loot boxes

The House of Lords Gambling Committee has called for video game loot boxes to be classified as games of chance and regulated as gambling in the United Kingdom. The Country/Region setting of the Apple ID that was used on the coder’s iPhone was set to Belgium to ensure that the Apple App Store that loads is the Belgian Apple App Store. This guarantees that the game that was downloaded from then on was the Belgian version of the game specifically uploaded to and made available on the Belgian Apple App Store (regardless of whether or not the video game company actually made it different from the version(s) uploaded to other country’s Apple App Stores).

• Considering that some video games might contain loot boxes which are duly licensed by the Belgian Gaming Commission (whose confirmation was sought by the present study, as explained below), any games that were so licensed would have been excluded from the sample for the purposes disconfirming Hypotheses 1 and 2.
• The odds of receiving a less sought after player is always greater than those for receiving a superstar.
• Such compulsion loops are alleged to contribute to video game addiction, which is often analogized to gambling addiction.
• Exploratory analysis revealed that the Belgian version of Identity V continued to contain paid loot boxes in Belgium.
• Disclosure of loot box odds must be accurate and non-misleading to avoid a FTC Act Section 5 violation.
• GambleAware, the leading gambling charity that commissioned the report, also backed tighter regulation.

In addition, as with previous loot box prevalence studies, the present study examined the highest-grossing video games and so the results might differ if the sample was selected randomly amongst all available iPhone games. On one hand, it is possible that the highest-grossing games are more likely to comply because they are the most popular and frequently scrutinised by players, fellow companies and the regulator. On the other hand, it is possible that more compliant games that removed loot boxes are now performing worse financially and not appearing in the highest-grossing list.

Video game loot boxes should be classed as gambling, says Commons

In reality, loot boxes are evidently still widely available for purchase, and their potential harms have not been removed from the country and may have reduced only to a limited extent (which is due to the actions of the finite number of compliant companies). This unfortunate state of affairs is potentially harmful because consumers might have been lulled into a false sense of security because they might think that the loot box ‘problem’ has been completely resolved by the ‘ban’ imposed by the Belgian Gaming Commission. For example, a player choosing to be less careful with their in-game spending or a parent deciding not to educate their child about loot boxes because they have been falsely assured that there is no longer any risk of harm. Many video game companies are ‘breaking the ban’ in Belgium (maliciously or unknowingly) by continuing to offer loot boxes for sale in exchange for real-world money.

The Belgian ban has arguably infringed upon the freedom and right to choose of players who would never have been harmed (Xiao, 2022d). Indeed, in contrast to this prohibiting approach, other alternative regulatory approaches that better ensure consumer choice (although potentially providing less consumer protection) are available. Researchers have also suggested restricting loot box sales only to a certain extent by limiting players’ spending on loot boxes to a ‘reasonable’ amount, e.g., US$50 (Drummond et al., 2019; King & Delfabbro, 2019b), and designing more ‘ethical’ loot boxes that players are less likely to overspend on (King & Delfabbro, 2019a; Xiao & Henderson, 2021; Xiao & Newall, 2022). However, the manner in which the ‘ban’ was then subsequently enforced (or rather, not enforced at all) has a number of potential negative consequences that arguably render the ban worse than doing nothing at all. Firstly, by supposedly imposing a ‘ban,’ the Belgian Gaming Commission gave video game consumers (including children and parents of young players) the false impression that Belgian players are now safe from loot boxes because the mechanic has been deemed illegal under gambling law, ‘banned,’ and therefore eliminated from the Belgian market.

Now companies must give an exact drop rate for loot boxes items, giving players an idea of the maxim number of boxes they would need to be buy in order to ensure they get a certain item. Also, China has introduced caps on the number of loot boxes that can be bought in a certain day. Hypothesis 3 was tested using a binomial test teleport juego (two-sided test) to identify whether the percentage of the 100 highest-grossing iPhone games containing loot boxes in Belgium that was found by the present study was significantly different from a hypothetical loot box prevalence rate of 65.0%, which a Western country that has not restricted loot box sales is assumed to have.

Government says video game loot boxes will not be regulated

Some consideration should also similarly be given to older gambling-like products that have seemingly escaped regulatory scrutiny despite literally contravening gambling law, e.g., booster packs of randomised collectible and trading cards (Xiao, 2022c; Zendle et al., 2021). The uneven manner by which loot boxes have been targeted with a ban and physical card packs (real-life loot boxes) have not been addressed at all is arguably discriminatory against the video game industry (Xiao, 2022g). The main problem with enforcing the law is, however, whether it would be practical or cost effective to do so. This undertaking requires significant financial resources, manpower, and technical expertise, which the Belgian Gaming Commission arguably does not sufficiently possess, particularly in relation to non-traditional forms of gambling like video game loot boxes. This is evident in the lack of enforcement action, despite obvious loot box contraventions being widely available and highly popular.

Other issues, which are addressed below, include whether the age rating of games with loot box mechanics should be impacted based on the inclusion of the game mechanic, and whether consumer protection laws require disclosure of the odds of obtaining certain virtual items through loot boxes. An amendment must be made to the methodology of Xiao, Henderson, Yang, & Newall (2021), which assessed this variable based firstly on 40 minutes of gameplay and, if no such mechanic was found within that time, then based on up to 2 hours of internet browsing of video streams and screenshots. This is because it is not possible to rely upon internet browsing at all for the present study as the coder cannot know whether the video streams or the screenshots that he observes were captured from a Belgian version of the game. Only by playing a Belgian version of the game can the coder be confident that he is coding the correct, national version of the game that was possibly amended to comply with the law. Therefore, to avoid video streams and screenshots of non-Belgian versions of the games from biasing the results, the coder spent up to an hour playing the video game instead.

"The Gambling Commission has shown that it can and will take action where the trading of items obtained from loot boxes does amount to unlicensed gambling, and it will continue to take robust enforcement action where needed." In addition, since publishing the preprint, in relation to Game 8, ‘a Roblox-led program to comply with laws in The Netherlands and Belgium,’ has reportedly caused the removal of user-generated content involving loot boxes from Roblox in Belgium (Carter, 2022). The Belgian Minister of Justice responded to my study and explained that the gambling regulator does not have enough resources and that enforcing the law is too difficult in practice. This suggests that completely ‘banning’ loot boxes might not be practically achievable. But the Belgium Gaming Commission has disagreed, instead focusing on whether the loot boxes constitute a "game of chance" – the use of a game element which involves a bet that can by chance lead to profit or loss.

US politician Chris Lee condemned the use of loot boxes in video games in November 2017. Bird & Bird clarified that loot boxes do not meet the definition of a prize in the Netherlands, as outside the game they have absolutely no market value. Similarly, the Swedish government is the latest to investigate the legitimacy of loot boxes, with a decision to be announced on 1 October 2019.

Loot Boxes and Potential Regulation as a Form of Gambling

Six percent of children have purchased them in free-to-play games, compared to four percent of UK adults. As this summary demonstrates, the loot box regulatory landscape is rapidly changing and may indeed now be experiencing more turmoil than in previous years. Companies should keep abreast of relevant policy developments in all countries where they operate. Finally, companies should remember that, although they must meet all legal obligations, they can (and should!) always go above and beyond to provide an even higher standard of consumer protection to their players than what the law requires as a minimum. In March 2022, the highest administrative court in the Netherlands decided the final appeal in EA’s favour and determined that the ‘Player Packs’ (loot boxes) in the FIFA games do not contravene Dutch gambling law. The court decided that before considering the question of whether the loot boxes legally constitute a ‘game of chance’ or gambling, it is necessary to first consider whether the loot boxes represent a sufficiently separate and standalone game that is capable of being so assessed. If that is not the case (and the court’s view would be that in most cases, loot boxes are not sufficiently standalone), then the correct question to ask is instead whether the whole, overarching video game legally constitutes a ‘game of chance’ or gambling.

What are loot boxes?

A number of sites offer what is referred to as “skin gambling,” where players “stake” skins on the outcome of some event, oftentimes a game of chance. When “accessed,” look boxes provide players with a random set of other virtual items. These other virtual items can range from aesthetic items, which make something in the game look good (e.g., a visual customization for a player’s avatar or weapons), to functional items that improve in-game performance (e.g., weapons, power-ups, powers, etc.).

In video games, a loot box is a virtual item which can be redeemed to receive a randomized selection “loot,” ranging from customization options for a player’s avatar or character to equipment such as weapons and armor. In the United States, Sen. Josh Hawley (R-MO) recently introduced a bill to prohibit loot boxes and other forms of microtransactions in games marketed to or played by children, whether or not they are rated for their age groups. Hawley’s bill is supported by Sens. Richard Blumenthal and Ed Markey, both Democrats. The UK government has decided video game loot boxes will not be regulated under betting laws, despite it finding a link between them and gambling harms.

The payment of a stake (key) for the opportunity to win a prize (in-game items) determined (or presented as determined) at random bears a close resemblance, for instance, to the playing of a gaming machine. Where there are readily accessible opportunities to cash in or exchange those awarded in-game items for money or money’s worth those elements of the game are likely to be considered licensable gambling activities. In general, when a player receives a loot box, whether earned or purchased, they are going to receive some virtual items—they just don’t know which ones until they access or open the loot box. The odds of receiving a less sought after player is always greater than those for receiving a superstar. The rarity of the superstar cards is often what drove people to purchase pack after pack of baseball cards in hopes of getting lucky.

However, the following are examples of loot box-related laws or legislative activity in a few countries. Loot boxes have been used in massive multiplayer online games (MMOs) dating back to at least 2007, but as free to play video games proliferated, this mechanic has been increasingly employed as a monetization technique in other games. Loot box mechanics are known by various other names, including loot crates, lockboxes, crates, and packs, among others. Loot boxes have been commonplace in video games for many years now but have become significantly more popular since the rise of free-to-play games. These are free to download and play, but gamers are enticed to spend money on loot boxes as a means of monetization for the game.