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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 (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.
- Loot boxes and other in-game microtransactions involving randomisation have been controversial for at least the past five years.
- If existing Belgian law cannot be interpreted as outlawing all paid loot boxes, then the Belgian Gaming Commission cannot be allowed to purport to take enforcement actions ultra vires or beyond its powers and without legal authority.
- When “accessed,” look boxes provide players with a random set of other virtual items.
- Some commenters have suggested modifying the ESRB rating for games with loot boxes, for example by rating all such games as Mature or Adult Only, or by creating a new rating.
- Our experts at Lexology have been wondering whether it’s finally time to start regulating an industry that has so far benefited from a regulatory protective bubble.
- More and more countries have put together reports examining the problem, and the United States and the United Kingdom both have lawmakers calling for laws to be put into place.
Loot boxes are prevalent in video games internationally and across different hardware platforms (Rockloff et al., 2020; Xiao, Henderson, Yang, & Newall, 2021; Xiao, Henderson, & Newall, 2021; Zendle et al., 2020). Loot boxes have also been identified as sharing certain psychological similarities with gambling (DeCamp, 2020; Larche et al., 2021). Specifically, players that self-reported higher scores on problem gambling severity scales tend to buy more loot boxes, the theorised implication of which is that video game companies are likely disproportionally profiting from such potentially at-risk players (Close et al., 2021). The same correlation has also been found within samples of underage players, and it has been suggested that young people might be a group that is particularly vulnerable to potential harms (Wardle & Zendle, 2021). Regardless, to achieve a better compliance rate, the Belgian Gaming Commission must then need to carry out its threat of criminal prosecution of non-compliant companies. Note that actually enforcing the law here is likely to lead to a legal challenge of the Belgian Gaming Commission’s interpretation of the law by one of the prosecuted companies.
An examination of psychological features of loot boxes in personal computer (PC) and console games released in 2016–2017 revealed that almost 50% of reviewed loot box systems were psychologically akin to conventional gambling activities1. Perhaps because of this, problem gamblers spend more on these mechanisms than non-problem gamblers2,3. Thus, policymakers are debating whether loot boxes require regulation as bona fide gambling. Loot boxes were popularised through their inclusion in several games throughout the mid-2010s.
Incentives for monetisation
By the later half of the decade, some games, particularly Star Wars Battlefront II, expanded approaches to the concept that caused them to become highly criticised. Such criticism included "pay to win" gameplay systems that favor those that spend real money on loot boxes and negative effects on gameplay systems to accommodate them, as well as them being anti-consumer when implemented in full-priced games. Due to fears of them being used as a source in gray-market skin gambling, loot boxes began to become regulated under national gambling laws in various countries at the same time. The Belgian Gaming Commission instituted the ban through applying pre-existing gambling law that did not envisage technological developments, such as video game loot boxes. This means that, technically, the Belgian ‘ban’ on loot boxes was applied executively by the regulator (albeit based on duly passed legislation).
That drew the attention of regulators in Belgium and the Netherlands, which forced Valve to disable item trading on Steam to players in those countries. Item trading was brought back after Valve pushed through changes in 2018 that blocked players there from opening loot boxes. A Belgian ruling on loot boxes in 2018 also caused Blizzard to pull them from real-money sale in Overwatch and Heroes of the Storm.
A consultation period informing ministers and officials overseeing the review closed this week. In May 2019, a bill was introduced in the US Senate that would regulate “certain pay-to-win microtransactions and sales of loot boxes in interactive digital entertainment products.”15 The bill has been read twice and referred to the Committee of Commerce, Science, and Transportation but has not yet been voted on. With the rise of avid video game players livestreaming gameplay to followers, these players are reminded of the need to follow FTC Endorsement Guidelines. These guidelines require, among other things, disclosure of any material connections between the players and the products they are touting, such as compensation agreements. RuneScape publisher Jagex admitted to the committee that players could spend up to $1,000 a week on micro transactions within the game. "They cited those things, but then they equally said there’s no evidence of causation here. They might not be able to support causation, but if people at serious risk of harm are engaging heavily in this form of monetisation, then it doesn’t matter whether loot boxes cause problem gambling."
The key to loot boxes is that the buyer never knows what they’re going to get in exchange for their purchase. They could receive something of equal or higher value, but chances are that they won’t. The Lords suggested several changes to online gambling in the UK, including stakes limits, better prevention of payments to offshore operators, and speed limits that would ensure games can’t be played more quickly online than in live venues. No loot box-related actions were taken by the Illinois legislature in 2022 per se. A bill (HB2943) seeking to require a warning label was introduced in February 2021. The 102nd General Assembly spanned 2021¬–2022, so the Bill would be dead when a new session begins in 2023.
"In particular, the prize does not normally have real world monetary value outside of the game, and its primary utility is to enhance the in-game experience. They have come under fire in recent years, with consumer groups in 18 European countries backing a report calling them "exploitative" in May. The committee also recommended requiring house edges to be displayed prominently on all gaming machines, both in brick-and-mortar casinos and online. The recommendation came as part of a wide-ranging report in which the committee suggested a number of changes to the gaming industry it says would better protect British gamblers.
Data availability
It is unlikely that video game companies would actively seek to comply with Manx law by making a special ‘national’ version of their software. Indeed, there is no Manx Apple App Store (where such an adapted ‘national’ version of the game could potentially be published) based on which a highest-grossing list might be captured for research purposes. This is in contrast to Belgium which has a much larger population of more than 11.5 million legal inhabitants (Belgian Federal Government, 2021) and where video game companies have reportedly taken dedicated, national compliance action (2K Games, 2018a; Blizzard Entertainment, 2018; Electronic Arts, 2019; Nintendo, 2019). It cited a series of issues with how loot boxes function, such as the use of virtual currency which can be purchased for real money, and the way that some loot boxes make players think they will gain an advantage despite their random contents. In particular, advocates for regulating loot boxes in video games are worried about their effect on children, who are less likely to recognize the potentially addictive and exploitative nature of loot boxes. In games, the gambling aspects of loot boxes are less immediate, unlike a visit to a casino where the gambling-nature of machines and games is obvious, and normalizing participation in gambling-like behavior from a young age may create unhealthy habits that can contribute to serious gambling problems later in life. China – China also has taken action with respect to the disclosure of item probabilities for in-game loot boxes.
Loot boxes can be “accessed” in a variety of ways, such as by earning access via game play or purchasing a “key” using virtual currency or real money to unlock the loot box. For example, state attorneys general may bring criminal or civil actions, or aggrieved consumers may bring challenges directly under most states’ anti-gambling laws. Even if loot boxes are presumptively legal and do not constitute gambling under applicable law, consumers may bring lawsuits based on consumer protection or false advertising laws if they believe that the loot boxes are promoted in an arguably misleading way. Loot boxes are virtual items that may be redeemed to receive a randomized selection of additional virtual items. These random sets of 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.). Only four percent of adults and three percent of children aged five to 15 in the United Kingdom have spend money on loot boxes in premium video games, according to the Online Nation report from UK communications regulator Ofcom.
Content Development
In 2018, the Netherlands Gambling Authority (NGA) opined (in English here) that loot boxes whose content possessed real-world monetary value (i.e., can be transferred to other players and ‘cashed-out’) legally constitute gambling. Some games complied by disabling the ability to transfer loot box rewards between players. The NGA brought an enforcement action against EA and imposed a financial penalty, which was initially upheld by the District Court of the Hague in 2020. The study recognised the correlation between those with an addiction to gambling and the tendency to spend more money on loot boxes. “It is our opinion that loot boxes should be regulated”, Zendle said in a press release for York St John University, showing support for Hawley’s bill to restrict loot boxes to players of legal gambling age.
Clamp down on Fifa ‘loot boxes’, urges children’s commissioner
The recovery of any costs incurred by the Commission’s enforcement actions through fines is likely difficult in relation to international companies with little to no corporate presence in Belgium. Further, it does not seem realistic to expect the Belgian Gaming Commission to examine every single video game on every platform (and every subsequent update to those games) and then to criminally prosecute each non-compliant case. As of June 2022, there are already over 1,000,000 individual games on the Apple App Store alone (PocketGamer.biz, 2022). Note, however, that direct criminal prosecution of all illegal loot box implementations is only one (very costly) potential approach to enforcement. Less direct and cheaper approaches, such as issuing correspondence addressed to individual companies prior to litigation requesting changes to game design and threatening prosecution might be sufficient at ensuring compliance and be more cost effective.
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Gambling law is applicable only to prizes that are either money or have monetary value; in-game virtual items don’t, even if they are traded or even resold on black markets outside of the game. A loot box is a feature in a computer game where a digital container of random virtual items, such as in-game skins or weapons, can be purchased usually using in-game currency. The in-game currency might be earned by playing the game, but often can be bought using real-world money. Loot boxes are a common feature of today’s computer games to encourage spending of in-game currency.
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.
A popular mechanic, particularly in some video games in Asia, was known as “Kompu Gacha.” With this mechanic, players typically acquired a loot box or “random” pack of virtual items, typically by payment of some amount of money. As discussed above, the player would get some set of virtual items, they just didn’t know which ones until they accessed or open the loot box. The goal with Kompu Gacha was to collect a complete set of specific virtual items. Typically, some items in the set were easily acquired but there was always one mystake casino or more that were harder to get. What the UK Gambling Commission fails to acknowledge is that these virtual currencies are deliberately meant to keep regulators in the dark as to how much real money is being spent on in-game purchases. For example, in Fortnite’s Save the World game mode, loot boxes are stylised as llamas with thought bubbles displaying a rare, sought-after item inside. In reality, the Fortnite llamas have “undisclosed, abysmal odds”, as Fortnite players argued when they announced they would be suing the game.