LOOT BOXES AND GAMBLING IN GAMES – SHOULD IT BE LEGAL?

Players could not hide their joy when loot boxes first made their debut in video games. The video games alone were enough to enthrall them over and over. But now, they had a chance to make things a bit more exciting by accessing more features in what seemed to be a betting-based strategy. Players would exchange in-game items and crypto or fiat currencies for the loot boxes. And the best part about it was that they never knew what was in the boxes. So, in essence, it was like gambling. And authorities were quick to track down video games with such features, seeking to understand what they entailed.

The Relationship Between Loot Boxes and Gambling

But how would loot boxes be similar to gambling? Gambling in video games has become the norm. Bettors single out the games with the highest activity as these have the highest payouts. Take an example of CS: GO tournaments. These are enough to attract enough wagers to contribute to prize pools worth thousands to millions of dollars. Add the fact that most sites now offer the best sign up offers, and betting on these games has become easy. Many people now eke a living by playing these games or placing wagers on them. But in the case of this gambling, players already know what’s in it for them if they win because the odds and payouts are clear.

In the case of the loot box, players are taking a chance because they do not know what is in the box. So, is it quite like gambling?

The Stance of the Authorities

Governments are always quick to investigate any activities that may constitute gambling. Take the UK authorities as an example. The stakeholders held that purchasing loot boxes was akin to gambling. Why was this?

• There was a payout feature: While players were not sure what they would get when they exchanged something for the loot box, they knew they would get something. And that likened these transactions to placing actual bets.
• The loot box market was extensive: By the end of 2020, the loot box market was worth over £700m. And that signaled interest from the players and the loot box providers, which was similar to the gambling market (bookies and bettors).
• The nature of the transactions and the psychological influences they had were similar to gambling. When players place a wager on a game, they have no control over its outcome. All they can do is decide how much they can stake and cross their fingers. As such, stakeholders felt that the transactions elicited similar reactions to betting. And that participants had as much a chance of getting addicted to these transactions as they would to betting.

But why were the authorities so keen to uncover the ins and outs of these loot boxes? Well, the population of children who play video games has grown. Over 80% of the children in the UK engage in these games. And of these, a good >20% had been involved in the loot box transactions at some point. The stakeholders feared that such early exposure to what they termed as games of chance would set the children up for problem gaming.

Is it Illegal?

Licensing the provision and purchase of the loot boxes has turned out to be quite a grey area. On the one hand, it has a monetization aspect coupled with the fact that it is like a game of chance. As such, it does feel like gambling which is highly licensed in most countries. On the other hand, the in-game purchases are not cashed out and are instead used in the game. Regulating such transactions would thus be an uphill task as the government cannot entirely step in and decide how players should approach these processes.

Is it Moral?

Academics have raised questions about whether purchasing loot boxes could be a gateway to gambling for children. While there aren’t enough studies to back their concerns at the moment, it’s clear that the separation between gambling and gaming continues to thin. As such, it is up to parents and guardians to step in and assess how their children spend time online.

Purchasing loot boxes is not illegal per se. Thus, adult gamblers can buy as many of these as possible and boost their adrenaline with some actual wagers. But when it comes to underaged players, parents and other stakeholders must put their heads together and figure out if this could be a problem in the future.

Good Luck!