The era of the unregulated loot box is coming to an end. After a concerted effort by lawmakers, parent groups, and players, the video gaming industry has finally agreed to introduce measures that will make the business of loot boxes more transparent. The new policies aim to protect vulnerable players from developing problem gambling behaviors, and to minimize the risk of players (or their parents) running into mountains of debt due to uncontrolled spending.

Time Frame

The Entertainment Software Association has confirmed that a large number of gaming software developers will implement the new policies by the end of 2020. Nintendo (Nintendo Switch), Sony (PlayStation), and Microsoft (Xbox and Windows) will lead the way, followed by Electronic Arts, Warner Brothers Interactive, Bethesda, and Activision Blizzard, among many others. The policies will not only apply to new games, but also to any updates that contain loot boxes.

Transparency

The main issue that these new policies seek to address is the gambling aspect of the loot box. The contents of a loot box remain a mystery until the box is opened, which means that the act of buying a loot box is essentially a gamble; players are taking a chance that the item that they’re hoping for will be inside the box. Once the new policies come into effect, the game developer will have to provide more detailed information regarding the contents of the box. The contents can still remain hidden, but the developer must reveal: “the relative rarity or probability of obtaining randomized virtual items.” This means, that players will have a much clearer idea of how likely it will be that the item they’re hoping for will actually be inside the box. This makes their purchase less random, less like a gamble.

Self-Regulation

In an effort to avoid the stringent rules and regulations that govern the online gambling industry, the video game industry has made great strides towards more comprehensive self-regulation. We have already seen the introduction of specific labelling on video game packaging relating to in-game purchases, and many game consoles and online gaming platforms now come with parental controls that can prevent under-age players from making purchases. Parents can also use the controls to limit screen time and ensure that their children only have access to appropriate content. The recent policies aiming to make loot boxes more transparent are a welcome step further forward, but will it be considered a big enough step by government gambling regulators?

Issues

Gambling regulators in Belgium have already seen fit to ban loot boxes. The UK’S House of Lords Gambling Committee are pushing for loot boxes to be classified as gambling games and to be regulated as such, and many policymakers in the US agree. In Germany, casino test done by Stiftung Warentest is also looking into loot boxes.

Even with the new policies, a loot box remains a game of chance, and herein lies the problem. Players with poor impulse control are likely to purchase a loot box, even if the odds are stacked against them. In fact, loot boxes are purposefully priced low enough to make them an impulse buy. The new policies may help to protect children, but do they fully address the needs of vulnerable adults?

Video game software developers argue that their games should not fall under the remit of gambling regulators because the purchase of a loot box is not essential to gameplay – it is a personal choice, and the game can still be played and completed without the loot boxes. However, the purchase of a loot box almost always enhances gameplay, which makes them extremely tempting. A problem gambler can end up spending a small fortune on these games of chance, and a vulnerable player who lacks impulse control can develop serious gambling problems. Online gambling hubs have the mechanisms in place to help identify and protect at-risk gamblers. The online gambling industry is heavily regulated in order to protect against the damage caused by gambling addiction. But a player spending thousands of dollars on loot boxes is completely overlooked.

The End Game

The loot box (or in-game purchase) is an extremely lucrative concept and one that allows game developers to release their games for free. Without the in-game purchases, the video gaming landscape would look dramatically different. Many small game studios would fall by the wayside, and the games released by big-name companies would undoubtedly become more expensive. It is essential that the industry as a whole comes together to find a solution to the gambling aspect of the loot box. These new policies are a good start, but we doubt they will be enough to fight off gambling regulation in the long run.