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Is it Game Over for Loot Boxes?

May 24, 2019

8:20 am

You might think that video games are the last thing for the government to get worked up about. But, a new proposal against loot boxes – an in-game virtual item that contains an unknown prize – is currently in the works, and could radically upend the gaming industry.

With concerns about the similarity of the loot box reward incentive to gambling, many are questioning their place in games aimed at younger players. Concern is growing over the negative psychological impact that loot boxes could be having, as well as their risk of running up serious real-world costs.

A paper, put forward by Republican Josh Hawley, aims to quash the practice once and for all.

What is a Loot Box?

Loot boxes are a fairly new addition to the gaming lexicon. Primarily conceived as a way to increase revenue and engagement in multi-player focused titles, such as Overwatch and Call of Duty, they have quickly become a familiar sight in all sort of game genres.

So what exactly are they? Essentially, they’re a more modern version of the old game show trope of the “mystery box”. Players buy (or are gifted) loot boxes in game, and open them to reveal their prizes. These could be purely cosmetic items, such as an outfit for a character, or new abilities, skills or weapons.

The problem is that they are mostly unregulated, and some claim that encouraging gamers to spend on an unknown reward is, in essence, gambling. This is especially true of the loot boxes that cost real-world money, and can vastly improve the player’s game with the items – or make little difference at all.

In many countries such loot boxes are not subject to any sort of age restrictions, and it’s a bad look for the gaming industry.

Belgium Against Loot Boxes, EU to Follow?

Video game loot boxes have become something of a hot topic globally in recent months, with some countries banning the practice altogether. Belgium has taken action against some notable titles, including Overwatch and Fifa 18.

A study by the Belgian Gaming Commission found loot boxes to be “games of chance”, and ordered that loot boxes be removed from these two games in Belgium. If they didn’t comply, the publishers would be saddled with a €800,000 fine.

While the decision has only affected a handful of titles so far, Belgium’s Minister of Justice, Koen Geens, has called for a wider EU ban on the practice.

This has led to several publishers either removing the loot box element from their games in the country, or simply shutting down the game completely. Recently, Nintendo closed two of its mobile titles in Belgium rather than implement the required changes.

US Government vs Loot Boxes

If Senator Josh Hawley gets his way, the US could soon follow the Belgium approach. Having been a vocal proponent of legislation against loot boxes for some time, the Republican has managed to bring together colleagues from his own party and the Democrats to propose laws that ban the practice of selling loot boxes to those aged under 18.

“When a game is designed for kids, game developers shouldn’t be allowed to monetize addiction, and when kids play games designed for adults, they should be walled off from compulsive micro-transactions. Game developers who knowingly exploit children should face legal consequences.” – Senator Josh Hawley

Hawley has put forward a potential bill, called ‘The Protecting Children from Abusive Games Act‘. If passed, this will see game publishers held accountable for the practice, and issued with hefty fines. Hawley certainly has support too, with representatives from both side of the floor coming together to tackle this issue.

The body that represents the games industry, the Entertainment Software Association (ESA), has responded to this proposal by pointing to the countries that have already been through this process, and concluded that loot boxes don’t constitute gambling. These include the UK, Australia and New Zealand. It goes further too, suggesting that it is the parents’ responsibility, rather than the government’s, to protect children from loot boxes.

“We look forward to sharing with the senator the tools and information the industry already provides that keeps the control of in-game spending in parents’ hands. Parents already have the ability to limit or prohibit in-game purchases with easy to use parental controls.” – ESA statement

Are Loot Boxes Gambling?

This is the real $64,000 question, and naturally, it depends who you ask.

If you were to punt that question to the games industry, then you’d get a resounding ‘no’ from almost all corners. Loot boxes are a hefty money spinner for games studios, and can provide a constant stream of revenue long after a games release. However, with the public starting to turn on the concept, some publishers are stepping down from the practice. When EA released Battlefield V last year, the lack of loot boxes was used heavily in its promotion, and the company painted itself as more consumer-friendly because of it. The game did contain its own premium currency, but that’s a matter for another time.

A large scale study in Australia last year, commissioned by its parliament,  found links between loot box spending and gambling, and could meet the same “physiological criteria” as gambling. It’s also interesting to note that this study came from Australia – the ESA had stated that Australia found that loot boxes don’t constitute gambling. Despite this, Australia has yet to take action on the practice.

Another paper, published in journal Addictive Behaviours, surveyed over 200 adult gamers, and found that the average player spent $17.50 per month on loot boxes, while over 10% reported spending more than $50. The report concluded that loot boxes were a form of gambling.

Whether the US bill is approved or not, the thorny issue of loot boxes doesn’t seem as though it will be fixed any time soon. Even if the bill is passed, it only covers those under 18. The question of how to protect adults from gambling in gaming remains.

And then there are the games themselves. With many titles built around a loot box economy, it may not be feasible to simply remove this element from all games overnight without drastically altering the gameplay.

Lastly, there’s the ugly question of what could replace loot boxes. With a supposed worth of $30 billion in 2018, it’s unlikely that the industry will want to kill them off any time soon. At least, not without replacing it with the next cash cow first.

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Jack is the Content Manager for Tech.co. He has been writing about a broad variety of technology subjects for over a decade, both in print and online, including laptops and tablets, gaming, and tech scams. As well as years of experience reviewing the latest tech devices, Jack has also conducted investigative research into a number of tech-related issues, including privacy and fraud.