Loot Boxes Gambling- Their Status, History and Regulations

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Loot Boxes Gambling- Their Status, History and Regulations

Loot boxes, also called loot crates, are mystery boxes purchased through video games, i.e., virtual items in games that do not reveal their content in advance and can be purchased with real-world money or in-game currency. They are also considered as an extension of randomised loot drop systems that were popular in earlier versions of video games, commonly used to “give out randomised rewards in massively multiplayer online role-playing games”. Loot boxes are, essentially, an entertainment portion of the iGaming industry that generates a multi-billion-dollar return.         

With gambling restrictions, laws, bans, and regulations being in focus more than ever before, loot boxes are seeing a new wave of comments and debates surrounding their legality, (un)fair or deceptive business practices, whether or not they are similar to gambling addiction, and most importantly their effect on the underage consumers. As the future of loot boxes in the iGaming industry is currently in debate. Here, we explore features and more about loot boxes. Read on to find out.

History of Loot Boxes

The whole dilemma on who invented loot boxes could be easily traced back to June 2004, when the first known instance of a loot-box system came about. At the time it was first introduced in the Japanese version of MapleStory, a side-scrolling MMORPG. It was called “Gachapon ticket” and with each such ticket rounding at 100 Japanese yen. Another early example of video games that contained loot boxes is the Chinese Zhengtu.

The Western region saw a delayed appearance of loot boxes, with Team Fortress 2 being the first release in September 2010. This happened at the time when Valve introduced the option of earning random “loot crates” that needed purchasing keys to open. Separately, FIFA Ultimate Team Mode was included by the FIFA series from Electronic Arts (EA), allowing players to use digital trading cards to build a team. In August 2013, Counter-Strike: Global Offensive added “weapon cases” in an update which had another packaged game with loot boxes in them. Despite not becoming purchasable until May 2014, following Counter-Strike, Battlefield 4 added “battle packs” in October 2013. After these two, the Call of Duty: Advanced Warfare, released in November 2014, contained “supply drops” that included randomised items with different variants of the game’s character gear, weapons, and experience points used for character customisation.

Loot boxes development has had a very progressive streak to its expansion. Although loot boxes were initially viewed as an addition to the already-exciting gameplay, later on varying mechanics in certain games’ loot-box systems have led to a critical review of the practice starting October 2017. This resulted in several developers pulling loot boxes from their games, including titles like Middle-Earth: Shadows of War, Star Wars Battlefront II and Forza Motorsport 7. Heroes of the Storm removed the option of buying loot boxes with real money back in March 2019, as well.

Response from different countries

Countries around the world are changing their attitudes towards whether or not loot boxes are gambling in response to their legislation. Although there are still plenty of games with loot crate mechanics available on the market, countries around the world (and in response to their legislation and gambling regulation) are changing their attitudes towards whether or not loot boxes are gambling and to what extent they should be used. To this day, there are both random content and real money purchase loot boxes available on the iGaming market, with bans coming and going depending on the country of play.

The legality surrounding Loot Box Regulation

The legality of gambling has always been a tricky subject to answer because of every country’s viewpoint on gambling. The same predicament applies to decide whether loot boxes are illegal or not. Depending on a country, there is a, more or less, firm stance applied to the issue. The first European country to ban loot boxes was Belgium back in April 2018, but only after examining four games. Australia has still not banned loot boxes either as they do not fall within Australia’s existing definitions of online gambling. After the Gambling Regulators European Forum 2018, 16 jurisdictions including Austria, France, Czech Republic, Gibraltar, Isle of Man, Ireland, Jersey, Malta, Latvia, Norway, Netherlands, Poland, Spain, Portugal, the United States and the United Kingdom have signed an agreement to inspect the role of loot crates in digital gambling. For the time being and out of all these countries, only Poland issued a statement saying that loot boxes are not gambling.

Arguments surrounding loot boxes considered as gambling

The moment both kids and adults expressed addictive tendencies towards loot boxes, people started raising a question in terms of their gambling nature. A committee of the House of Commons agreed that loot boxes are gambling if they are purchased for real money and as such should be regulated as a game of chance under the Gambling Act 2005. Additionally, there is supporting evidence from cognitive psychologists who claim that such in-game features are designed to exploit potent psychological mechanisms associated with gambling-like behaviours.

Arguments surrounding why loot boxes are not gambling

A House of Commons committee states that loot boxes and in-game rewards that offer a randomised selection of items to players who buy or earn them, should not be regulated if they are exclusively earned for in-game success. Moreover, according to some academics, there is not yet enough evidence on the psychological effects that gambling-style features in games have on children. Gamers enjoying the benefits of loot crates along with many game manufacturers would certainly agree loot boxes are not gambling due to their entertaining and not (as) addictive nature. However, when it comes to deciding whether a particular segment of gameplay is or is not gambling, it is, after all, best to rely on a country’s gambling laws and regulations rather than one’s personal feeling.

Final thoughts on the future of loot boxes

With the state of things so far, it is highly unlikely loot crates will be entirely banned any time soon, but they may be going through more strict regulations than they have so far. If you are playing from a country that has banned loot boxes or frowns upon their usages, it is up to your personal preference and responsibility to decide if loot boxes are worth it. Problem gambling has been a much addressed and discussed topic both inside and outside of the iGaming community with the idea of helping players get maximum fun out of their gambling practices but staying grounded and safe.

Review Summary

Review Name: Loot Boxes Gambling- Their Status, History and Regulations

Posted On: 25/07/2020

Author: Emma Denton

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