Looking at the legality of loot boxes

Belgium recently began a criminal investigation into FIFA’s loot boxes, bringing the issue to the mainstream and prompting what seems to be a major shift in their regulation debate. The gambling regulators from 15 European countries and one from the US have announced that they will look into loot boxes in order to “address the risks created by the blurring of lines between gaming and gambling”. But what are loot boxes, and why do they matter?

To begin, let’s look at what exactly a loot box is. Think of it as an in-game lottery ticket of sorts – you pay a small fee (in real money) and are rewarded the chance to gain an assortment of items that promise to enhance the video game experience in return. Game developers love them because they’re an appealing source of income. They’ve also been an integral part of the rise of smartphone ‘freemium’ games – things like Clash Royale, which are free to download but can’t fully be appreciated unless the player pays for the boosts that the loot boxes provide.

Their appeal derives from something called the variable-ratio reinforcement award

Games with loot box mechanics have proven controversial since their inception, and politicians have been calling for action in recent months. One of the major issues is that they operate in a very similar manner to slot machines and other forms of gambling – their appeal derives from something called the variable-ratio reinforcement award, which makes the uncertainty and the temptation of potential high odds very attractive to the player. It’s unlikely that the player will actually win the rare items, but there’s a chance, and that chance encourages them to play – the parallels to traditional forms of gambling are striking.

There are also compelling similarities on the human level. Psychologists in New Zealand analysed the loot box systems of 22 games released between 2016 and 2017 and noted how closely they aligned with five standard psychological criteria for gambling (these included whether the loot boxes cost real money, whether they have tangible value in the game/can be cashed out, and whether the contents are randomly determined). They found that 10 of the games matched all the criteria, and six of them were rated as 13 and over. This is particularly an issue because the New Zealand study went on to suggest that these games could potentially instill gambling behaviours in a younger generation (boys are especially susceptible), and that could have greater consequences further down the line.

They found that ten of the 22 games matched all the gambling criteria and six of them were rated as 13 and over

Gambling has been an issue in the gaming community before, and some developers have taken some steps to remove gambling from their games in the past. In the UK, this was mainly prompted by stricter PEGI game rating restrictions that were introduced around 2007. Essentially, a game was no longer legally allowed to include anything which encouraged, promoted or taught gambling unless it had an 18 rating. Games for a more mature audience – titles like Fallout New Vegas, Red Dead Redemption and the Grand Theft Auto series – all featured gambling elements, with developers removing mentions from more age-inclusive titles. Look at the Pokémon series, which moved the Game Corner from slot machines to minigames like Voltorb Flip, before shutting it down completely in Omega Ruby/Alpha Sapphire.

Image: EA Sports, IGDB

Where can the industry go from here? Electronic Arts recently announced that it would remove loot boxes from some of its upcoming titles and, as one of the largest game studios in the world, it is likely that other companies will follow and make an effort to self-regulate. Given that games are sold in a vast array of different countries, it would probably be the easiest approach to ensure their sales don’t suffer in countries that take a harsher view of the practice – the aforementioned Belgium and the Netherlands, for example, which declared at least some loot boxes to be illegal. Not every country had taken this view – both the UK and US have ruled that the boxes don’t contradict their gambling regulations – but their joining this effort signifies a potential shift in that position.

The loot box debate could lead to an interesting and important discussion about ethical practices in game development, and affect the shape that games take in the future. It would be worth following the debate and seeing the changes that it brings about within the gaming community.