How Will Gambling Laws Impact the Future of Loot Boxes?

Casual gamers will be most familiar with the concept of in-game micro-purchases, such as in the form of extra lives in mobile games like Candy Crush, but in recent years the concept has appeared in big-budget multiplayer PC and console games as well. Blizzard is one of the most successful companies at promoting loot box purchases, with $4 billion of revenue in 2017. In Hearthstone, a strategy card game, players can purchase special packs of cards promised to contain at least one rare card. In some ways, this is no different from a pack of old Topps baseball or Magic: The Gathering cards.

Like those collectors’ items, designers work to make the unveiling an exciting experience. Animated explosions of colors and a slow reveal build anticipation, which subconsciously encourages gamers to spend more. PC Gamer explored the psychology of the phenomenon in 2017, identifying a principle called “variable rate reinforcement.”

Dr Luke Clark, director of the Center for Gambling Research at the University of British Columbia, stressed the effect of unpredictable rewards on dopamine centers. Most games have systems of experience or in-game currency that allows players a slow drip of loot without spending actual dollars, but for many that just whets the appetite.

Spending a few extra dollars for an edge over your opponents may not seem that insidious, but the concept made international headlines thanks to a controversy driven by the multiplayer online game Star Wars: Battlefront 2. Like in Hearthstone, the contents of the loot boxes are randomized, but the rewards are much greater. It was possible to level up your character by grinding away at the game, but to stay competitive, Star Cards became a requisite and the game’s developer EA pushed the boundaries of coercive design by making boxes resemble slot machines. The game received backlash from players because the Star Cards gave players such a large advantage, and it also led to a lukewarm critical reception of the game with complaints of a pay-to-play model. Shortly after launch, EA walked back the system for reevaluation, and in March they retired it for good.

"However it shakes out legally, the pressure to buy a competitive edge has undoubtedly changed the world of video games..."

Although loot boxes have become a major controversy within the gaming world, they didn't make many mainstream headlines until governments stepped in. Both Belgium and the Netherlands led investigations into the legality of loot boxes and found that the concept violated their gambling laws, because the games offered rewards at random that could be traded to other players, inside or outside of the game, thus giving them a market value beyond the initial purchase price.

As reported by Eurogamer, Belgium assessed the systems in place in Star Wars Battlefront 2, FIFA 18, Overwatch, and Counter-Strike: Global Offensive, finding all but Star Wars in violation. Potential consequences include up to five years in prison and an €800,000 fine, which could be doubled due to the consumer base being comprised of so many minors. The Netherlands also found FIFA 18 at fault, as well as Dota 2, PlayerUnknown's Battlegrounds, and Rocket League, demanding that the games outlaw addictive elements like flashy graphics and the ability to purchase multiple boxes in rapid succession.

In the U.S., Hawaii state representative Chris Lee delivered a statement via YouTube that called loot boxes a predatory practice. “Star Wars-themed online casino designed to lure kids into spending money... It's a trap,” says Lee (making an inadvertent reference to Admiral Ackbar's legendary line in Return of the Jedi in the process). He recently proposed House Bill 2686, which regulates retailers from selling such games to minors, as well as House Bill 2727, which would force publishers to disclose the odds of winning specific items and allow the Department of Commerce to audit the game code for confirmation. The states of Washington and Indiana have both followed suit with bills of their own.

However it shakes out legally, the pressure to buy a competitive edge has undoubtedly changed the world of video games, and it's no coincidence that this creative monetization comes on the heels of gaming becoming recognized as a professional sport. Given the incredible revenue stream, it doesn't seem like that they will be disappearing anytime soon, but if elements of chance are removed for legal reasons, that might even further encourage a pay to play philosophy. Right now, the answer might just be up to chance.