Loot Boxes: Gambling or Necessary Cost of Quality Games

By: Edward Monaghan

In the past few years attention has been drawn to in game micro-transactions in video games, commonly referred to as loot boxes.  Loot boxes are growing more and more common in the gaming industry and the practice has drawn increasing criticism.  The main criticism of loot-boxes is that they are effectively slot machines being sold to young people[1].  Loot boxes, depending on the game, can contain anything from purely cosmetic items to items that will help you in game and each item has a different rate at which it can be obtained[2].

Critics claim that loot boxes are a form of gambling and need to be regulated as such.  Some have gone so far as to demand that games with loot boxes should be made to be unfair trade practices and regulated by the FTC[3].  Critics claim that even if loot boxes are not technically gambling they have the same psychological and addictive properties of gambling[4].

Video game publishers claim that loot boxes are not gambling.  They claim in part that because the items obtained cannot be used to purchase more loot boxes there is a significant difference between slot machines and loot boxes[5].  Games like Fortnite are free to play but have many in game forms of monetization, including loot boxes, which have allowed it to make billions of dollars[6].

Steps are being taken to regulate loot boxes in an appropriate way.  The FTC has investigated loot boxes[7].  Sony, Microsoft, and Nintendo have made an agreement to force game developers to be transparent in respect to the odds of obtaining the items in their loot boxes in order to publish the games on their platforms[8].

 

[1] Caroline Spiezio, What’s Inside the Loot Box? It Could Be Gaming’s Next Big Problem, Law.com (Dec. 12, 2017), https://www.law.com/corpcounsel/sites/corpcounsel/2017/12/12/whats-inside-the-loot-box-it-could-be-gamings-next-big-problem/?slreturn=20190731165801.

 

[2] Id. (“Depending on the game, the items can range from a simple new outfit for a character to a valuable weapon or armor that seriously boosts gameplay ability. And players can spend hundreds of dollars trying to win an item they have a minuscule chance of actually receiving.”).

 

[3] Tiffany Hu, New Bill Would Ban Loot Boxes, ‘Pay-To-Win’ Video Games, Law360 (May 8, 2019), https://www.law360.com/articles/1157737/new-bill-would-ban-loot-boxes-pay-to-win-video-games.

[4] Kishan Mistry, Note, P(l)aying to Win: Loot Boxes, Microtransaction Monetization, and a Proposal for Self-Regulation in the Video Game Industry, 71 Rutgers U. L. Rev. 537, 567 (2018).

[5] Spiezio, supra note 1

[6] Tom Hogins, Fortnite earned record $2.4bn in 2018, the ‘most annual revenue of any game in history,’ The Telegraph (Jan. 17, 2019), telegraph.co.uk/gaming/news/fortnite-earned-annual-revenue-game-history-2018/. Correct per R18.2.2.

[7] Hu, supra note 3.

[8] Makena Kelly, Nintendo, Microsoft, and Sony commit to disclose drop rates for loot boxes, The Verge (Aug. 7, 2019), https://www.theverge.com/2019/8/7/20758626/nintendo-microsoft-sony-loot-box-drop-rate-disclosure-video-games

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