Is video game’s ‘loot box’ gambling?
In the 1980s, arcade games chugged quarters as players tried to reach new levels. Today, many video games let players at home spend a dollar — or much more — to open digital “loot boxes” that offer features like new character outfits and powerful weapons.
Finding the rarest items in these boxes can be expensive for players and lucrative for game publishers because the contents are randomly generated.
That has legislators in several states concerned that the boxes constitute gambling and should be regulated like lottery tickets and slot machines.
A bill introduced in Minnesota on Monday would prohibit the sale of video games with loot boxes to people younger than 18 and require a stern warning: “This game contains a gambling-like mechanism that may promote the development of a gaming disorder that increases the risk of harmful mental or physical health effects, and may expose the user to significant financial risk.”
Politicians in California, Hawaii, Indiana and Washington state have also targeted loot boxes, which state Rep. Chris Lee of Hawaii said “are specifically designed to exploit and manipulate the addictive nature of human psychology.”
Most of those bills have stalled, though, sparing for now a substantial revenue stream for the video game industry, which is eager to counter rising production costs.
Activision Blizzard, whose portfolio includes popular games like “Candy Crush,” “Call of Duty” and “Hearthstone,” generated $4 billion in 2017 from in-game transactions, more than half its total revenue. That amount includes both loot boxes, whose specific contents aren’t revealed until after they’re bought, and traditional purchases.
Dan Hewitt, vice president of media relations for the Entertainment Software Association, an industry trade group, said loot boxes are not gambling because they each provide something to use in the game. They offer an alternate experience and players are not required to buy them, he said.
“Our industry constantly tests new business models because those innovations can drive creativity and fan engagement,” Hewitt said. He added that legislation is unnecessary because the industry responds to players’ concerns. The Entertainment Software Rating Board recently has introduced an “in-game purchases” label, and consoles have parental controls that can block children from buying in-game content.
Critics say those steps are inadequate and loot boxes are predatory, seducing people with murky odds and dazzling presentations. Even if they are not legally deemed gambling, they share core principles with casino games, said Keith Whyte, executive director of the National Council on Problem Gambling.
“Intermittent variable reinforcement is the means of delivering rewards that is the most exciting to the human brain,” Whyte said. “It is the fundamental basis to slot machines. It is the fundamental basis to loot boxes. There is no distinction.”
Most loot boxes can be accumulated free by playing the game, but they are also for sale: In “Overwatch,” a vibrant team-based shooter by Blizzard, they are sold in packages from two for $2 to 50 for $40. The items in the loot boxes vary in rarity: common, rare, epic and legendary.
The software association has compared loot boxes to packs of sports cards or games like Pokémon and Magic: The Gathering. In the 1990s, unsuccessful lawsuits made similar gambling claims against the companies of those products.
But there is a difference, said state Sen. Kevin Ranker, who sponsored the bill in Washington: “The entire setup of digital gaming, the entire visual of it, the entire sensory load of it, is rapid and is immediate.”
Those audiovisual cues are important, Whyte said, noting that casinos have preserved the sound of crashing coins even though slot machine winnings now come on slips of paper. When an elite soccer player is opened in the game “FIFA 18,” fireworks explode and confetti falls. The items in “Overwatch” soar into view to a triumphant tune.
Gaming commissions in the United Kingdom and New Zealand have said loot boxes are not gambling. The Netherlands Gaming Authority, however, announced this month that at least four popular games violate its gambling laws because loot box items can be transferred in a marketplace, assigning them value.
Player opinions are not monolithic.
James Tuttle, 38, of Wilmington, Mass., considered the $300 he has spent on “Overwatch” loot boxes worthwhile because he has played for more than 800 hours. “I don’t see it as a gamble; I see it as an investment for future fun,” he said.
Denis Kharlamov, 27, of Toronto has spent about $900, primarily when items are available for a limited time. “It is addicting,” he said. “When you are opening those loot boxes, there is definitely a feeling of euphoria when you get something you perceive as valuable.”
A public outcry came in November, during an early access period for “Star Wars Battlefront 2.” Frustrated players complained that unlocking popular characters like Luke Skywalker and Darth Vader for use in multiplayer modes would require playing for dozens of hours — or wielding a credit card instead of a lightsaber.
Faced with the perception it was greedy, Redwood City’s Electronic Arts, the game’s publisher, removed the option to pay for loot boxes hours before the game was released.
A company spokesman declined to comment, and it was unclear how it will incorporate loot boxes in future games. Blizzard did not respond to requests for comment.
Loot boxes have been prevalent for at least a decade, mostly in free games, but the “Battlefront” controversy was “the first real big punch in the gut,” said Christopher Hansford, political engagement director for Consumers for Digital Fairness, which wants randomized in-game transactions regulated as gambling.
It was also the catalyst for Lee’s legislative proposals in Hawaii. The bill that has survived would force publishers to publicly disclose the odds of loot boxes — a requirement that exists in China.