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Video Game Giants on Thin Ice — Loot Box Gambling

2018 is infamous as a highly controversial year in the video gaming world due to the mass implementation of a popular business model by the biggest video game publishers out there — loot boxes. For those unfamiliar with the term, loot boxes (a.k.a. loot crates) are a virtual item which players can receive as a reward by playing most new video game titles. These chests contain different types of goodies players can utilize, such as in-game currency, cosmetics, game items for their characters, or different kinds of power-ups.

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# of slot games:

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game types:

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welcome bonus

$40

payout

98.12%

# of slot games:

150+

compatibility

All mobile devices

game types:

Progressive, Traditional, 3-Reel, 5-Reel, 7-Reel

Now, you might be wondering — what is wrong with that? Isn’t rewarding players a good thing? Well, it is, but what if we told you that you could also purchase those loot boxes with real money? In essence, that wouldn’t be an issue if the rewards from these containers weren’t completely random. Yes, you’ve heard that right — the outcome of these loot boxes is as unpredictable as slot machines. That is why a lot of people consider loot boxes as a form of gambling in video games and demand that they be regulated accordingly.

But before we start dealing with loot box features that incited such harsh criticism, let’s do a short review of the history of loot boxes. We are going to see how they became a staple in the gaming industry, and more importantly, a highly profitable video game element.

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How Loot Boxes Infiltrated Video Gaming Industry Worldwide

  • The whole story started in 2004, in Japan, with the introduction of Gachapon tickets. Gamers could buy these for 500 yens and exchange them for various items they could then use in the “Maple Story” video game. These tickets were the first in gaming that had mechanics similar to those of loot boxes. 
  • This story continues in China in 2007 when loot boxes appeared in Zhengtu, widely known as ZT Online. Its creators made the move of introducing loot boxes to compensate for the game’s lower income from sales. That way, ZT Online became the first video game to offer loot boxes on the Chinese gaming scene. That turned out to be an intelligent move because Zhengtu Network reported an incredible $15 million profit from loot boxes within a year.
  • This lucrative concept spread to the Western World in 2009, following the amazing success of games with loot boxes on the Asian gaming market. The game release with loot boxes in America was Team Fortress 2 by Valve. Gamers could open these crates after they bought a key. 
  • Not long after, Valve decided to switch to free-to-play games to attract more players, and their playerbase soon reached 12 million. At the same time, this gaming company increased the production of games with loot boxes.
  • Soonafter, numerous Multiplayer Online Battle Arena games (MOBAs) started implementing these elements, which resulted in a plethora of free-to-play games with loot boxes, such as DOTA and League of Legends.
  • This course of events created a snowball effect in the video game industry that resulted in a wide variety of similar releases on the American gaming market. 

We are going to present some of them, with specific loot boxes they offered in the table below

This was a short review of the history of loot boxes, from their first appearance to the period when these video game features were still looked upon as the entertaining addition. It didn’t take long before the first concerns about the possible harmful effects of these additions were expressed. 

Nowadays, more and more people believe that loot boxes should be banned from video games because they work on the same principle as games of chance. We are going to address this soon.

Gambling Is a Lucrative Industry

The recent increase in popularity of online gambling is an excellent indicator of how profitable the industry really is. For example, the online gambling industry in America alone brings in around $20 billion annually. This number sounds quite juicy, doesn’t it? Well, video gaming giants like Activision and Electronic Arts couldn’t agree more. These two video gaming companies are the biggest proponents of loot box gambling. And let’s be real; it comes as no surprise that these corporations took this excellent opportunity to increase their revenue.

The Predatory Nature of Loot Boxes

Now, microtransactions similar to loot boxes aren’t anything new. Developers of free-to-play mobile games like Candy Crush used a similar type of business model. That way, they could remain in business, even though their products were available free of charge.

However, when full-fledged PC gaming titles leave room for players to buy loot boxes, we are left with a horde of angry consumers. The reason for that is because that course of action is considered as a perfect example of corporate greed. Namely, AAA gaming titles come with a steep purchasing price — usually not under 50 USD. And when you add to that the possibility of endlessly purchasing loot boxes, you’ve got yourself one hell of a gold mine.

Ultimately, it’s no wonder why the Hawaii state representatives labeled loot boxes as a ‘predatory practice.’

Problem Gambling in Children Is on the Rise

Sadly, it is no secret that the number of problem gamblers among children has quadrupled in the past two years, as research shows. This information comes from one of the world’s most renowned gambling regulators — the United Kingdom Gambling Commission. If you ask us, these numbers are quite alarming. So it’s not surprising that the video game industry has been taking so much flak recently.

Exposing children to gambling from an early age is the primary reason why governments from all around the world have started taking issue with the idea of loot boxes in video games. Although there is no concrete evidence of loot boxes causing problem gambling, the link between the two is undeniable. Even the UK Gambling Commission’s latest reports support that claim. And considering that the number of children who actively play video games is enormous, them being exposed to something that resembles gambling so much is a major issue. Hence, a significant number of countries have been actively trying to ban loot box gambling as of late. Unfortunately, many video gaming companies have decided to turn a blind eye to the problem at hand, at the scorn of many.

The World VS. Loot Boxes

In an attempt to combat loot box gambling, many countries around the globe have already taken steps towards regulating gambling in video games. The leaders in this endeavor are Belgium and the Netherlands. Both of these countries determined that some types of loot boxes don’t adhere to their countries’ gambling laws. Here are some of the games that feature loot boxes that were deemed illegal by these countries’ legislation:

  • FIFA 18
  • Counter-Strike: Global Offensive
  • Star Wars Battlefront II
  • Overwatch

 

Video Games That Infuriated Players and Incited Restrictive Measures in Some Countries

FIFA video game was a target of enraged criticism of the gaming community because of their trading cards. Namely, the most recent additions to the FIFA series included an attractive “Ultimate Team” mode. This mode provided gamers with an opportunity to assemble their strongest teams by collecting trading cards they could pay for either with in-game currency or real money. The spark that incited the outrage was the fact that players couldn’t use the same cards for the subsequent version of FIFA. Simply put, they were forced to make up their team from scratch, spending money on these cards all over again.New Games skin from Overwatch

Star Wars Battlefront II was another game that outraged numerous online gamers because of its in-game progression system. Namely, if someone wanted to advance in this game, they had to unlock star characters like Princess Leia, for example, by collecting specific items from loot boxes. Many players regarded this as a tall order that required spending a lot of money on loot boxes before they were able to get to the next level. This flagrant example of this “pay to play” practice incited the reaction of the Belgium Gambling Commission that banned Battlefront II. EA DICE withdrew these controversial loot boxes from the game because of this decision. However, it didn’t take long before this game developer decided to bring microtransactions back into Battlefront II and ban Belgium players at the same time.

However, not all games were found to be in violation of these countries’ laws. How is that, you may ask? Well, it’s simple, really. Even though loot boxes are identifiable with games of chance, in some particular video games, players cannot purchase them with real money. In them, they are purely a reward for their hard work in-game. That, according to popular belief, should be the only acceptable way of implementing loot boxes in video games.

What is more, besides these two European countries, many more have been in favor of regulating or altogether banning loot boxes. For example, China and South Korea made it mandatory for developers to disclose the exact probabilities of receiving any particular reward from them. However, in 2017, China passed an even stricter law, which made multiple gaming companies retract loot boxes from their games for the Chinese market.

The latest attempts to tackle the issue of loot box gambling came from Great Britain. British Parliament discussed the report of the Digital, Culture, Media, and Sport Committee on this issue. According to this committee, loot boxes are gambling, and they should be regulated by gambling laws. This conclusion stemmed from this committee’s research that showed numerous teenagers have piled up debts playing loot box games.

What Does the Future Hold?

So in the end, are loot boxes gambling? Well, there is no definite answer to that question. As you have seen, it all depends on the viewpoint and the laws of different countries. But are they a potential hazard for our youth? Yes — we can say that with certainty.

Unfortunately, even with all these countries deciding to stand up against loot boxes in gaming, this practice is unlikely to cease in the near future. However, we can remain hopeful.

As far as we know, only Belgium banned loot boxes entirely, while there are initiatives in numerous other countries to regulate the loot boxes gambling issue. Some American states have made up bills regarding loot boxes, but it is unlikely that these will be voted into laws any time soon.

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Loot box contains a number of random items, and they are a common feature of numerous video games. Players can use these either to boost their gameplay or to customize game characters. For example, you can find various weapons, energy packs, or skins in these. Gamers can buy loot boxes using in-game currency or real money.

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That is highly unlikely to happen in the near future. First of all, no one can force video game developers to exclude these lucrative elements from their games. Secondly, even

the age restriction would not work because there is no way to stop people from sharing online accounts or gaming consoles.

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In most games, loot boxes are acquired either through playing the game, in-game currency, or real money.

The rules for acquiring and unlocking loot boxes vary from game to game. What loot boxes contain also varies wildly from title to title.

In general, there are still no rules, but most of the time, you’ll be paying with either time or money for loot boxes.

The proper answer would be: “We don’t know yet.”

Regulatory bodies and lawmakers still haven’t reached a consensus on how to categorize loot boxes. There are arguments for both sides, and the jury’s still out on that question.

However, with the way the wind is blowing, it seems that loot boxes might be considered gambling soon.

It’s hard to say. We suggest judging on a game-by-game basis.

Let’s take Overwatch as an example no. 1. It contains loot boxes, but those are only filled with cosmetic items. These cosmetic items can’t be traded. The only way to profit from these boxes is to sell your account.

However, if Blizzard finds out that you sold your account, that account will be immediately banned. Although, this doesn’t stop accounts from being sold every day.

We would say that, while this could be considered unethical, this isn’t gambling.

Let’s take Counter-Strike: Global Offensive as an example no. 2. CS:GO also contains loot boxes, also filled with cosmetic items, but there is one key difference — you can sell these items on the Steam marketplace.

That makes a world of difference since you could spend $10 on a loot box and receive a $5,000 skin, which you could then sell on the marketplace.

This introduction of the Steam marketplace in the equation makes CS:GO loot boxes stray way too close to gambling territory. Especially considering there were many many (illegal) CS:GO skin gambling sites in the past.

While we would still be reluctant to call it gambling, it gets dangerously close.

In the end, it is not up to us to decide but up to the people and governments of the world.

Well, currently, there is no answer to this question.

Lately, there has been a much-heated debate about this very question. Some organizations and individuals have compared loot boxes to gambling. Due to the way games are age-restricted, those people have accused game developers of exposing minors to gambling.

Game developers, generally, tend to compare loot boxes to other products like “Kinder Surprise,” “Hatchimals,” and “LOL Surprise,” and avoid any comparisons to gambling.

However, generally, loot boxes only give in-game items which have no actual value other than to the player. The only flaw with that thinking is that certain games which contain loot boxes also have online markets where you can sell your items for real money, which additionally complicates the issue.

In essence, the regulation and lawmakers are drastically behind the times and are trying to catch up with gaming.

Basically, loot boxes aren’t gambling… yet.

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