A growing number of high-profile video games include loot boxes filled with in-game goodies that you can buy for money. Gamers are speaking out, likening them to exploitative gambling. The Italian antitrust authority set new transparency standards for video games that contain loot boxes and in-game payments by players. The Italian antitrust authority (AGCM), which has jurisdiction in Italy also on unfair commercial practices, has accepted the commitments presented by some video game publishers regarding the information that must be provided to consumers in the case of in. Loot boxes are now a common part of major video games and gaming culture. Gambling Commission published a report last week that three in 10 children had opened a loot box in a video game.

1. In Game Loot And More
2. Loot Box Ban

Loot Boxes “Loot boxes” or “loot crates” are like locked treasure chests that contain an array of virtual items that can be used in the game once unlocked. In some games loot boxes can be earned through gameplay and/or can be purchased using either real money or in-game currency. Video game companies that use loot boxes in their games have been put under a lot of fire by various governments throughout the world for a very, very, serious problem. Namely, these companies use loot boxes, loot crates, and other means to effectively cause addiction to which the player would spend more money in the game.

Around one in six children steal money from their parents to pay for video game loot boxes – in-game 'treasure chests' that award players random virtual prizes.

In a survey of British teen and young adult gamers, Gambling Health Alliance (GHA) found 15 per cent had taken money from parents without permission to buy loot boxes.

Overall, one in ten – 11 per cent – had used their parents' credit or debit cards to fund their loot box purchases, while 9 per cent had borrowed money they couldn't repay for the addictive in-game feature.

Three young gamers' loot box buying habits resulted in their families having to re-mortgage their homes to cover the costs, according to the study.

GHA is currently putting pressure on the UK government to class loot boxes in video games as a form of gambling.

WHAT ARE LOOT BOXES?

Loot boxes feature in many modern games, including popular shooter Overwatch and football simulator Fifa.

The boxes are regularly given to players when they level up or accomplish certain tasks, and when opened give the player a random in-game reward.

On top of boxes earned through playing the game, players can also buy them with real money, causing some to argue they are a form of gambling.

One video game publisher that includes loot boxes and other 'micro-transaction' features in its games is Electronic Arts, which is behind the Fifa franchise.

Fifa's popular Ultimate Team mode, in which players buy and open digital 'packs' of cards, earns EA £600 million ($800 million) a year.

Manveer Heir, a game designer who has worked with EA, told video game guide site Waypoint in November 2017 month he had seen people 'literally spend £11,400 ($15,000) on Mass Effect multiplayer cards.'

It follows Digital Minister Caroline Dinenage issuing an appeal in September for evidence they encourage or lead to problem gambling among children.

'We know that many teenagers will be unwrapping video games for Christmas,' said Duncan Stephenson, chair of Gambling Health Alliance and deputy chief executive of Royal Society for Public Health.

'While we know they give a huge amount of enjoyment for many, we are concerned that games containing loot boxes are having an impact on the finances of young people.

'Our research suggests that the drive to play games containing loot boxes is encouraging many to beg, borrow and steal – loot boxes really are the gift that keeps on taking.'

Loot boxes appear in around 70 per cent of the most popular games on the gaming platform Steam, and 60 per cent of the top mobile games on Google Play and the Apple app store.

They could contain a new gun in a shooting game, a new car in a driving game or even a high quality footballer on the game FIFA.

But they may also contain nothing the player wants or needs, even though they've spent real money on it.

In 2018, $30 billion was spent on loot boxes worldwide, and it's estimated this figure could rise to $50 billion by 2022.

While in the UK alone, it is estimated that £750 million is spent on loot boxes annually.

Gabe Zichermann, an expert on addiction to technology, previously said that loot boxes use 'operant conditioning'.

This means they give out the best rewards at random intervals to stop people from recognising a pattern.

'It is literally, exactly, a slot machine,' he told Canadian broadcaster CBC.

'They're all based on the same basic fundamental behaviour pattern – when people cannot predict how much they're going to get, they often get very focused and fixated on it, and want to do it over and over again, past the point of rationality.'

The GHA decided to investigate the damage of loot boxes this year, following reports people have spent longer playing video games to offset the boredom of the coronavirus lockdown.

Between October 29 and November 16 this year, survey data was collected from 611 respondents aged 13 to 24 living in England, Scotland and Wales.

In Game Loot And More

LOOT BOXES 'A FORM OF GAMBLING'

Loot boxes use a mechanism similar to the one in a slot machine and should be classed a form of gambling, according to the GHA.

Gamers pay money in the hope of getting a prized item, not knowing what the odds are of winning it, with chance deciding whether you do or not.

Inside, there may be an item which helps you progress within the game or enhances your character’s appearance.

But equally it might be something that is of no value.

Gamers have no way of knowing how much they'd need to spend in total to get the item which you really want.

The reason loot boxes aren’t already regulated is because the items inside loot boxes are not designated as 'money or money’s worth'.

But there are plenty of third-party sites where the prizes can be bought and sold or gambled for money (known as skin betting).

Source: GHA

The survey sought to understand loot box purchasing habits, and the impact of loot boxes on health and well-being.

On top of the purchase price of a video game – which averages at £35 – almost 22 per cent of respondents spent more than £100 on loot boxes over the course of completing a game, the GHA found.

In all, 24 per cent said they felt addicted to loot boxes, while 44 per cent said they experienced more frustration and anger due to a sense of being cheated or ripped off by loot boxes.

Just under a third – 31 per cent – said they struggled to keep track of how much they spent on loot boxes and 33 per cent said they did not feel in control of their spending on loot boxes.

It wasn't just the young adults accounting for the worrying stats – 23 per cent of 11 to 16-year old gamers surveyed said they had paid money to open loot boxes.

Young people have described feelings of addiction and pressure to spend more on loot boxes so they can win items to impress their friends, GHA previously found – which leads to deeper problems.

'Aside from the financial cost our latest survey with gamers suggests that the fixation with loot boxes can lead to classic symptoms of addiction including mood swings, problems sleeping and impacting on their social life,' said Stephenson.

Gamers are being set on a path 'to an expensive and potentially addictive habit this Christmas', which is why GHA is advising people not to buy games featuring loot boxes as last minute presents.

'We are calling for parents to be aware of the risks of loot boxes when buying presents this Christmas,' Stephenson added.

'Boycott games with these predatory mechanics until we see them classified as a form of gambling and removed from games played by under 18s.'

In the UK, the House of Lords Gambling Committee has also called for loot boxes to be brought under the Gambling Act, which would make them illegal for under-18s to buy.

The Children’s Commissioner, Anne Longfield, has also recommended that loot boxes be classified as gambling.

According to a previous GHA survey of 1,100 young people, 58 per cent thought loot boxes counted as gambling.

GHA was established by the Royal Society for Public Health in 2019 with the aim to bring together organisations and individuals with a shared interest in reducing the damage caused to health and well-being from gambling.

Members include the Royal British Legion, Citizens Advice, and NHS Substance Misuse Providers.

IS VIDEO GAME ADDICTION REAL?

Research published earlier this month found that video game addiction probably isn't real.

Very few gamers meet the criteria for addiction, known as 'internet gaming disorder' (IGD), and instead use games to fill gaps in other areas of their life.

IGD is loosely defined as someone who suffers from five or more of nine criteria, including: Jeopardising jobs or education because of playing video games; lying about time spent gaming; and using gaming to relieve anxiety.

The research, from experts at Cardiff University, followed thousands of online gamers over a period of six months.

The team gave over 2,000 adult US gamers questionnaires about their physical activity, health and lifestyle.

None of the participants met the criteria for IGD at both the start and end of the six-month study and so weren't diagnosed with addiction.

'The study's results suggest that it's not clear how many resources should go to gaming addiction, compared to other addictions like drugs,' lead author Dr Netta Weinstein told New Scientist.

The research also found that those who showed some symptoms of gaming addiction were more likely to be unhappy in other areas of their life, such as their relationship or career.

One form of digital promotion that has recently drawn attention across several states and countries is the sale of treasure chests or “loot boxes” in video games and apps. Loot boxes typically offer players a chance-based opportunity to obtain virtual items for use in a game. These in-game items may help improve a player’s chances of success in the game, or they may merely be decorative and simply give a player bragging rights based on rarity (often called “skins”).

Although the items found in a loot box often are available by “grinding,” or continuing to play the game over time, buying a loot box gives a player a chance to obtain the same item faster. In short, it can be a trade-off of time vs. money (though without a guarantee what is in any given loot box).

Loot boxes also may give a player the psychological excitement and stimulation of feeling like the player has “won” something (regardless whether the “thing” has any real-world value or utility outside the virtual world of the game). It is largely based on these psychological factors that some jurisdictions have begun to take the position that the selling of loot boxes may constitute a form of gambling – or at least warrant some form of regulation – even in the absence of prizes with real-world value being available in the loot boxes (such real-world value/prizes generally being a threshold requirement for a finding of illegal gambling under most existing U.S. precedents at this time).

Outside the United States

A few countries have publicly addressed loot boxes. Below is a summary of some of those countries’ public positions. The positions vary. Some deem the sale of loot boxes a form gambling. Others stop short of that conclusion, but nonetheless require certain disclosures when offering loot boxes. Yet others have gotten comfortable with the sale of loot boxes, at least when the items available to be won are purely virtual rewards with no real-world value.

Loot Box Ban

• Australia: The Office of eSafety has expressed concern that loot boxes may be a gateway to later addictive gambling behavior, and the state of Victoria stated that loot boxes are a form of gambling.
• Belgium: The Gaming Commission has stated that loot boxes are “games of chance” subject to gambling laws.
• Japan: The National Consumer Affairs Agency issued an opinion that virtual items in paid loot boxes could be considered “prizes” where players find the items to be strongly desirable, even without any demonstrable real-world monetary value.
• Netherlands: The Gaming Authority issued a report that games with paid loot boxes and the ability to transfer items are illegal under gambling laws.
• China: Game companies must disclose odds for paid loot boxes. (Some companies have avoided this requirement by selling other items – such as in-game currency – and pairing those items with “free” loot boxes.)
• South Korea: The Fair Trade Commission fined video game companies nearly $900,000 in 2018 for misstating odds related to loot boxes. In April 2019, it requested information from video game developers regarding in-game purchases, particularly related to underage users.
• The UK and New Zealand: The Gambling Commissions have stated that loot boxes offering purely virtual rewards are not gambling (presumably with no authorized secondary market).
• France: The Autorité de régulation des jeux en ligne (ARJEL) took a somewhat similar approach to the UK and New Zealand in its 2017-18 report (link in French), although it seemed to suggest that loot boxes may not be in line with the public policy on gambling.

Inside the United States

Several states (CA, HI, IN, MN, NY, and WA) have considered legislation related to loot boxes. Most of the state bills would require various types of disclosure and/or limit sales to persons over 18. However, none of the states have yet passed legislation to require disclosures or limit sales.

At the federal level, Sen. John Hawley (R-MO) introduced the Protecting Children from Abusive Games Act in May 2019. The bill would ban loot boxes and microtransactions (in-app purchases to speed up game play) in games specifically targeted at children as well as games for which the game developer has “constructive knowledge” that users are minors. Although the bill has bipartisan support, it is not clear whether it will proceed to further consideration, as the Federal Trade Commission (FTC) has announced its intent to hold a workshop on Aug. 7, 2019, to consider consumer protection issues related to loot boxes and microtransactions. Click here to read submitted public comments on the subject.

Requirements for Apps

Separate from any legal requirements, as of December 2017, Apple has addressed loot boxes in its App Store Review Guidelines, where it requires app developers to disclose the odds of obtaining each type of virtual item in a loot box. In 2019, Google adopted the same disclosure requirement in its Google Play Developer Policy.

Current U.S. Considerations

Pending further legislative developments, game developers offering loot boxes to players in the United States may wish to consider the following precautions:

• Ensure any items available are purely virtual and have no real-world value outside the game. To reinforce these facts, consider making the items not redeemable for money, or exchangeable with other players.
• Strictly prohibit sale of the items in secondary markets outside the game, with any such activity resulting in immediate cancellation of the items and expulsion of the offending person(s) from further participation in the game. Permitting (or sometimes promoting) sales of virtual items in secondary markets has become a controversial issue in several cases where allegations were made that virtual items in loot boxes may have real-world value.
• Avoid selling the loot box items for real-world money in a game store, since such offering/sale could be viewed as a way of establishing a real-world price/value for the items. Instead, focus on items that are otherwise reasonably available through grinding in the game (without the need ever to pay for a loot box) and do not have a regular price tag in the game store.

LINKS

Read more on Loot box workshop here.