Loot boxes are upgrades purchased inside the game.
A current YouTube controversy centers around the question of whether in-game “loot boxes” in video games, computer games, and smartphone games are a form of gambling. YouTube personality John Bain, among other notables, have called on the Entertainment Software Rating Board to take action against loot boxes.
So far, the Entertainment Software Rating Board — which assigns age and content ratings for US, Canadian, and Mexican video games — classifies loot boxes as appropriate for all audiences.
Loot boxes are in-game caches of weapons or other useful gadgets that help players with their quests or battles. Loot boxes are sold to players for real money.
EA, Bungie, and Microsoft all sell their own versions of loot boxes, and the ESRB allows it to happen.
Freemium Loot Boxes
The loot box idea is common on free gaming apps. A player downloads a free app at Google Play or the Apps Store, but they’re given the option to make unlock in-game items or have an overall better gaming experience by paying for loot boxes.
Players call it “freemium” content, and the freemium model is one reason free gaming app developers exist in such big numbers.
In fact, the business model has been successful enough that is console games and computer games have adopted the freemium model. Now, it is common practice for most computer games to offer some kind of premium in-play upgrade to the game experience.
Skin-Gambling Sites
Success can sometimes create unintended problems. In the case of loot boxes, it spawned a cottage industry of third-party sites with no official connection to game developers, but which generate revenues from the primary game. Paid freemium upgrades on the most popular games eventually spawned sites where players can bet their loot against other players’ loot in even-money contests.
Skin-gambling scandals on Counter-Strike: Global Offensive could change the mood, though. Last year, Valve was sued because of third-party sites allowed players to gamble “skins” (virtual guns) for the Counter-Strike: Global Offensive game.
Washington GC Warns Valve
Because the third-party CSGO skin sites allowed underage members as young as 13 to bet their skins, it led to the Washington Gaming Commission to force Valve, owner of Steam, to police those sites.
Valve sent 22 cease-and-desist letters to skin-gambling sites, though the company later allowed a deadline to pass to submit paperwork to the state showing their progress. Eventually, the two sides worked together to put distance between the Steam gaming community and the skin-gambling sites, but the gaming commission’s intervention underscored a growing concern on the part of public officials about the billion-dollar US video game community.
High-profile lawsuit do not help the matter. Parents whose children gambled on sites like CSGO:Lotto eventually sued Valve for the underage gambling.While a judge threw out one of those cases, loot boxes are controversial and expose gaming companies to a certain amount of risk. Certainly, they expose over-enthusiastic underage game enthusiasts to certain risk, too.
Asian Loot Box Regulations
Several leading Asian countries have passed laws regulating skin gambling and loot crates, including China, Japan, South Korea, and Singapore. In those countries, a game developer which designs loot boxes in their games much apply for a gaming license, like a casino or sportsbook would. No such thing exists in the United States, but it will if YouTuber John Bain has his way.
UK Gambling Commission on Loot Boxes
In the United Kingdom, lawmakers are discussing laws similar to those in China and Japan. The UK Gambling Commission announced in August 2017 it would investigate the proposition, with a report forthcoming.
Though the United States is not considering any such regulations at the moment, some companies have taken precautions. Blizzard and Riot each have changed their loot box economy so they can be purchased with virtual currency used only in the game, instead of real currency useful outside the game. The two companies want to protect themselves from changes in the law or legal entanglements.
PEGI and UKIE Agree
The top European gaming industry associations agree with the Entertainment Software Rating Board. The heads of both PEGI and UKIE gave definitive statements on loot boxes in the recent past. In both cases, the organizations stated that purchased in-game loot is not gambling.
Dirk Bosmans, operations director for Pan European Game Information (PEGI), told WCCF Tech, “In short, our approach is similar to that of ESRB (I think all rating boards do, USK in Germany as well). The main reason for this is that we cannot define what constitutes gambling. That is the responsibility of a national gambling commission.”
Our gambling content descriptor is given to games that simulate or teach gambling as it’s done in real life in casinos, racetracks, etc. If a gambling commission would state that loot boxes are a form of gambling, then we would have to adjust our criteria to that.”
Dr. Jo Twist of Ukie, the UK’s game industry trade association, agreed with PEGI. Dr. Twist said in an interview with Eurogamer that loot boxes “are already covered by and fully compliant with existing relevant UK regulations. The games sector has a history of open and constructive dialogue with regulators, ensuring that games fully comply with UK law and has already discussed similar issues as part of last year’s Gambling Commission paper on virtual currencies, esports and social gaming.”
Total Biscuit Criticizes Star Wars Battlefield II
John Bain, better known on YouTube as “Total Biscuit”, launched a complaint about the upcoming Star Wars: Battlefield II video game. Bain criticized the game’s designers for allowing paid loot boxes, while retaining a Teen Rating.
In Bain’s view, the decision allows teenagers to engage in real money gambling, if they go to the third-party loot sites.
