Should Loot Boxes Be Regulated As Gambling?

Earlier this week, I had an incredibly impromptu chat with someone over a simple question: should loot boxes be regulated as gambling? So for this week's Big Question, let's tackle it head on.

Thanks to the nature of live radio, we didn't really get time to get into detail. But as more and more legislators around the world investigate the nature of loot boxes, including regulators in Australia, it's worth asking: should loot boxes be regulated, and what would that regulation look like?

The last time I spoke to ACMA, which regulates online gambling in Australia (separately to state gambling regulators), loot boxes don't fall under the definition of gambling. A sticking point is that a loot crate or box will always reward the player with a product at the end. Gambling doesn't: you could win big, you could win nothing.

Here was ACMA's stance, for clarity:

In general, online video games, including games that involve ‘loot box’ features, have not been regarded as ‘gambling services’ under the Interactive Gambling Act 2001, because they are not ‘played for money or anything else of value’. That is, the game is not played with the object of winning money or other valuable items.

The question is: should that definition change or be expanded? Loot boxes are very obviously designed to be an enjoyable experience, with uplifting music and specific effects meant to encourage positive associations. Poker machines have done the same thing for decades.

Another question that can't be ignored: if loot boxes should be regulated, how far does that extend? Should, for instance, the publication of drop rates be considered mandatory for all video games on all platforms? Should that extend further and developers be required to offer purchase or spending limits on accounts, similar to reforms made to help combat addiction gambling?

What do you think?


Comments

    I don't think they should. A line has to be drawn somewhere but loot crates sit closer to collectible card games than they do poker machines. That's not to say there shouldn't be some kind of regulation and industry code of practice, just that they shouldn't be considered gambling, specifically.

      Was going to post exactly this. Needs some kind of regulatory control to prevent them being predatory, but I don't think classifying them as gambling is accurate considering similar products have existed outside of digital transactions for many years.

      I still remember buying whole display cases of Magic: The Gathering booster packs and sitting down with my mate and opening them. Somehow we never really got good hauls. Always only a nice rare or two out of many, many packs.

      I think the difference is, and thus the need for regulation, that people are presented with immediate access to the loot boxes any time they are playing the game. There is no real opportunity to reflect on the impulse to purchase them, because the whole process from impulse to opening takes a matter of seconds, particularly if you have your credit card linked to your account (e.g. PS Store). The tactics of the publisher are therefore enhanced in effectiveness, similar to sitting in front of a slot machine. If you are outside the club where the machines are, you are less exposed to these tactics, but once you are in there, the club will do everything it can to make sure you don't leave. Similar to loot box games, the game play loop has to be enticing enough to keep you playing, and for you to be confronted with desirable items obtainable from loot boxes, which should then lead to you purchasing some.

      I like Chris Lee's comparison to Joe Camel. Developers are absolutely getting away with predatory practices. The ESRB is not going to do anything about it in the US either. They're an industry body not a government regulator. Until someone steps up and says that these are no better than online gambling then children and people with addictive personalities will be able to be preyed upon without any repercussions.

        Whether they're predatory is a separate issue to whether they're gambling, of course. It's also a case-by-case issue, I think some purchaseable loot crate systems are perfectly fine, some need minor tweaking, and some are outright exploitative.

      Except with card games trading is also part of the deal. If you have something you don't like you can trade it with someone who would. You can't trade a decal from a loot box.

        You can also sell trading cards - even today in the age of Hearthstone and Gwent there are stores all over that exist almost entirely due to selling/buying new and pre-owned cards.

        That's why I said closer to, not the same as. Being able to resell the product has nothing to do with whether it's gambling, though.

      Card games should be regulated too

    I think they should. They prey on people with addictive tendencies exactly like poker machines.

    Not to mention if companies are specifically hiring psychologists to make the loot boxes more psychologically attractive and addicting they should be treated like the gambling box they are

    Last edited 28/02/18 12:58 pm

    In a word, yes. Because they are.

    And they're an insult to gaming culture in general.

    I hate loot boxes, but the idea of government interference in games is an idea I detest more.
    If people want to waste their money, let them. Just makes sure kids are protected - that's all. Perhaps a default R18+ classification might be a good start.

      Wont work. Rarely are microtransactions in review copies or in the marketing material and can be added in game as a patch Day 1 or months later after the classification is set.

      Regardless of if it is or not gambling, its a consumer protection issue.

      Without a decent and fair regulation, such as a giving ACCC more power to protect consumers for in-app purchases, any token effort while be avoided faster than Blizzard avoided Chinas Loot Box Odds policy.

      a default R18+ classification IS government interference though

        Yes. For the love of God, please don't put the ACB in the driver's seat!

        Speak of government modifying how games are made, not how they are sold.

      Agreed, slap an R18+ rating on any game that has them and make them add the "gambling" tag down the bottom along with whatever else it has i.e coarse language. The only trick would be as others have said if they add it later.

    Its a tough one because while I respect they arent on the same level as gambling, they are still very much a highly questionable practise, one that should be regulated. In terms of child protections, people with high risk of addiction, and in terms of fairness. Like all sorts of gambling, lotto's, competitions, require.

    They are highly predatorial and publishers can no longer ignore the real risks from a customers point of view. Sure they may not contain the same level of life threatening concerns as real gambling does but at the same time they are not as harmless as a $1 lucky dip in a corner store. These things costs real money, with no transparency on odds, no regulations to makes sure publishers are 'playing fair', no protections for the customers to question the legitimacy of them.

      "Its a tough one because while I respect they arent on the same level as gambling"

      The thing is though that they can creep further and further to that line to the point that they're indistinguishable. If there is any way to trade these rewards then people will do it for money (they already do it with selling accounts). On the other hand I think trading these things in a secondary market prevents a lot of the predatory behaviour as buying something for a fixed price will often be what most people do.
      The comparison to trading card games like Magic: The Gathering often comes up, but most Magic players looking to obtain specific cards will usually buy them from someone instead of opening more boosters hoping to 'win'.

      To me gambling is anything where you wager something for a chance to win something where you cannot personally impact the results.
      This means pokies are gambling, betting anything for anything is gambling, loot boxes are gambling, booster packs are gambling, $1 random prize machines in supermarkets are gambling.
      The difference between these things is risk/reward and knowledge of odds.

      I don't think you can just slap a 'gambling' label on something and therefore restrict it. Not all gambling is equal.
      You need to categorise and come up with guidelines for what is acceptable.

      My current thoughts on keeping it reasonable are:

      1) Fixed or improving odds per loot crate:
      That is to say if I have a 1/10 chance of getting the skin I want, they shouldn't be able to add an extra 100 skins I don't want to that box dropping my odds again. To keep new content they can do it seasonally, giving you a new box with the new seasons things. This is the TCG approach, and means people can grind one season if they want to get specific things they care about, and ensures someones odds don't get worse over time.
      If someone can't get duplicates, that loot crate would have a smaller pool available to that person meaning their odds can improve, but never worsen.

      2) Published, in-game odds.
      Before buying a loot crate somebody should be able to see their odds of getting any given item in it, as well as average cost to win that item. This means that people know what they're getting into, and also means the publishers aren't allowed to change the odds per person per purchase as they currently can.
      Their back-end isn't allowed to fudge the odds based on my behaviour.

      3) Everything available in loot crate form must be available as a standalone purchase.
      If people really want that skin, they should be able to pay for it. Leave the loot boxes to the people wanting prizes not purchases.

      4) Everything won should be tradeable for money, with the game offering trade facilities, but also allowing players to trade them outside the game.
      This puts an upper-limit on how exploitative some of the loot boxes can be.
      If somebody only wants a certain skin, they can look for it in the dlc list, if the company wants too much, somebody else who doesn't want it will probably sell it for less.
      This again goes back to the TCG approach. If somebody really wants a certain card they

      Restricting randomised in-game purchases for the <18 crowd would probably be reasonable too, but to me it's far less important than my ideas above.

        I would add a regulator authority for oversight and auditing, preferably the ACCC. (ACMA is useless).

        Would add code of practice ingame advertising and bait marketing restrictions too... having games putting pressure to buy is also dodgey and against existing regulation. Eco sysyem trapping is a serious issue.

        Would like to see licencing amnd revenue monitoring too. All revenue from in-app purchases should be held for 30 days in an Australian bank account held by the developer/publisher and disclosed to be released by the regulator (not the store front) I think watching the money trail is the first thing we can do to stop the dodgey games on Apple and Google from scamming people.

        Fourth option is best. However, there's nothing to stop the publisher from putting out more ultra-rare or limited-time items so that people will buy more loot boxes in the hope of being able to trade with others.

        I'd add a limit to the rarity as well. Maybe nothing rarer than a 1/100 drop and must be available for a minimum of 1 week?

          Two-way exchanges between digital items and cash start to get into money laundering territory though, and that's a whole different set of laws that need to be abided by. It's why most games that allow buying in-game currency don't allow it to go back the other way.

    Is it? Or is it not? Gambling is irrelevant.

    Cause the arguement exists consumer protection and gambling authorities are arguing over jurisdiction... and its crwating a debate that shouldnt be a factor.

    Are software manufacturers using and abusing in-app purchases to trap and exploit consumers in their ecosystem by including target and misleading advertising (especially to children), bait marketing, addictive profiling including mechanics used in gambling, undisclosed odds and algorithmic based chance manipulation and difficulty adjustments to encourage more sales and are not being held accountable for their actions including ethically, finacially and legally. YES!

    Is loot boxes and other microtransaction a consumer issue? Yes, ACCC and a senate inquiry needs to happen sort out the jurisdiction mess. The lack of transparency and the industries behaviour in the gaming and mobile markets needs to be addressed.

    A new Microtransaction Act should exist to protect consumers in all electronic media purchases be it digital products, subscriptions, dlc, in app or lootboxes.

    ACCC had a recent victory with electronic services are consumer protected when they took Valve to court and it should be built upon to create more durable protections.

    Also they are not paying taxes on most of this money cause most transactions go through the Apple or Google Tax evasion schemes or are paid immediatly offshore through online store fronts that pay a minimum of GST some of the time. So their is no reason for the Australian goverment to side with them, they should cone down hard on the side of consumers in my opinion.

    I dont want my nephew to learn about risk and reward gaming odds from loot boxes before he learns basic algebra in school.

      I think this might be the most important point that is often missed. It doesn't matter if it is gambling or not, what matters is the consumer protection.

      Pretty much this. Gambling or not it is predatory and makes games worse not better.

      It’s like adding sugar to food to get people hooked and spend more.

    Why try to cram a new phenomenon into an old system? Why not create a new regulatory system specific to this issue? All we need is a system that:

    Enforces transparency
    Protects children
    Makes people fully aware of costs involved and odds of obtaining items

      I want a full spectrum Microtransaction Act 2018 regulated by ACCC.

    Go to some Fate/Grand Order forums some time and check out the roll threads or some of the popular streamers when a popular limited servant event happens.
    I've seen streamers drop over $1000 worth of ingame currency in a single sitting and not get anything they were after despite the chances being advertised as being a little more in their favor. I've seen streamers who have done this same thing many times before. I know one of them HAS to have spent at least 4k on the game and honestly that may be lowballing it.
    In forums you read stories from dozens of people dropping hundreds of dollars and having nothing to show for it.

    I like Grand Order. It's a fun dumb game that is perfectly playable without a dime spent on it.
    But when you are given the opportunity to spend such absurd levels of money in a game for a CHANCE of a thing? yeah that's messed up.
    Gacha systems especially need to be reeled in, they exploit the same part of your brain that pokermachines, roulette tables and blackjack do. Just one more try, just one tiny bit more of an investment and I'll justify all the money I just spent on nothing. Sunk cost fallacy in full effect.

    Last edited 28/02/18 1:42 pm

    my 11 year old son racked up $400 worth of debt on Loot Boxes without my knowledge, until I was billed of course. Little bugger somehow knew my password, but didn't realise it was for real money.

    Personally I detest loot boxes and microtransactions and have no issue whatsoever with the banning of them. I also won't play games that push them out of principle. It truly is a predatory practice, by low down scum companies, and the idea that they need to as it's the only way to make money is absolute horseshit.

    I think if they charge money for them, and there's a chance you'll get nothing useful or of any value, I'm ok with it being classed as gambling.Perhaps if there's a trade system where you can swap things you already have for something you don't, that might be enough to work around it. Either that, or the option to sell stuff you don't want, and a guarantee that you'll at least get something of equal value to what you paid. (Buy $5 worth of crates, get minimum $5 sale value of goods out of said crates)

    Yes they should be. now i have no issue with them in a free to play game like candy crush, but to have them in a 60 USD RRP is just taking the fucking piss. Publishers like to say that they need them because the cost of making games is expensive, but we all know that is a load of Triple A grade bullshit. No publisher should be spending more than 10million on Marketing. No Publisher should be spending a bullshit amount of cash on getting a celeb to do VA in theire game when there are way more talented professional VAs to the do the job

    I'm ok with it not being gambling, but there needs to be a system for selling or trading items. The market can the determine items values like in card based systems.

    Not necessarily government regulated but regulation seems to be required because developers and publishers aren't going to regulate themselves if it hinders their profits.

    I propose the following:

    For any reward or item in a game that-

    A. is not included in the initial purchase and/or package of the game; and

    B. is obtained through the exchange of real-world currency or the exchange of in-game currency and/or item(s) that is itself obtained through the exchange of real-world currency; and

    C. has a randomness to the actual reward or item being received such that the player does not know exactly what the reward/item is before committing to the exchange of currency/item(s) that would result in the player receiving it,

    the exact percentage of chances of receiving each possible item, item type, or reward/item tier must be clearly provided before the player commits to the exchange of currency/item(s) that would result in the player receiving the reward/item.

      Nice drafting but I think a blanket ban would be better. That way the publisher would just sell skins and stuff and would concentrate on releasing popular ones, not filling loot boxes with a few choice items amongst piles of crap (looking at you, Overwatch!)

    You can boil it down to one of two things, Is gambling the spending of money for a random unknown item at chance, or is it the risk of losing?

    The latter is what most of the defense arguments point towards.

      What do you classify as losing it though?

      Magic cards, for example, are 7 bucks at EB Games. If I buy a pack and get cards that are, in total, worth less than 7 bucks, I lose money. Not all of it, but it is a loss.

      As per Macquarie Dictionary, gambling includes "to stake or risk money, or anything of value, on the outcome of something involving chance".

      https://www.macquariedictionary.com.au/features/word/search/?word=gamble&search_word_type=Dictionary

      The outcome isn't pre-determined, so its something involving chance, and when you use currency, whether real or ingame currency you need to purchase, you're staking something of value.

      If its ingame currency you don't need to buy, I think its a lot greyer. That's a hard one to manage without being too nanny-state, but its also something that teaches kids the addictive behaviours early on.

        Odds need to be displayed. They must be displayed on slot machines by law. Why should loot boxes get a free pass? Like you say, you are risking money on trying to get a favourable outcome (e.g. a skin you really want, or anything that's not crap). If you don't get what you want, you have lost your money. That's gambling (wide definition) in my book. Needs similar regulation to slot machines.

          This ended up far more ranty than I meant :) Crib notes: I agree that stuff like odds would help, but I worry that its not solving the actual problem. Which is largely kids being kids. Also worry that it potentially creates more problems.

          As the day has gone on, and I've read the comments (and posted) both here and in the ESRB thread, I've slowly been thinking about bigger picture stuff. Namely, online gambling, and gambling in general.

          What happens to online gambling in general if this is handled the same way? So far this is more about kids using parents accounts that, for convenience, have credit cards attached. That's controllable, and a responsibility of the parent.

          But by calling this gambling, there are repercussions for what is an extremely controlled area. Do games want, or even need that?

          Is this a bit of an over reaction?

          I'm not saying this because I believe it, I'm just asking the question. So far most of the stories are kids using their parents linked credit cards, and the parent getting slugged. No card attached, no way kids can get sucked in.

          That's a more effective treatment than labelling this as bad as problem gambling on the pokies. Do games need warnings? Yes, I think they do. And odds. But beyond that, the parents need to accept their role in the problem, or it wont stop kids from falling foul of the system.

          You can put 50 warnings on the box, it wont stop those kids from clicking the button in front of them. I know this isn't a popular opinion, but I also see that the solutions being put forward wont solve the problem. As someone else said, its a bandaid that wont stop people being infected.

        The defintion of gambling is irrelevant, its a consumer protection issue and the industry is being manipulative and abusive of its customers by using Las Vegas style marketing mechanics.

        Full transparency and the whole industry being aligned under ACCC recent victory that "services" also fall under consumer protection must happen.

        I think they should ban in-game currency. I believe loot boxes will fall closer to gambling then in a legal sense.

    Regulation is needed, yes. But not in the same way gambling is. There are a few things that should happen.

    1. Regulation on the number of things per Loot Box with a max of 10-15 items. Maybe 20. The reason for this is that, looking at Overwatch in particular, where they have one box for everything, you could end up spending over 100 bucks on stuff you are not trying to get. Yes, they give you some of that gold if its an item you already have, but if you have over 100 items, that's pretty ridiculous.

    2. Percentage chance of items must be shown AT the perches screen, as well as on a public website.

    3. All games with loot boxes must be marked as 18+ and be labeled with 'Real Money Random Loot' or something to that effect.

    Yep. It's gambling and it's should be regulated and then destroyed, as all gambling should.

      But I like supporting fund raising raffles for good causes.

        That's fair. I suppose I'm at the point now where all the ills of gambling has ruined it for every little fancy of chance. It's all or nothing. Basically you want to fundraise, then fundraise - just don't do it by asking people to gamble on something.

          So essentially you don't enjoy it so no one else can?

            A lot of people have the same stance on hard drugs, guns or other things that have the capacity to harm society. Much like those, gambling can be enjoyed responsibly and in moderation, however I seen enough suffering, exploitation and other negative knock-on effects of gambling to firmly put me on this side of the fence believing the cons outweigh the pros. I can't even see a valuable argument for it, as there's no inherent downside to removing paid games of chance; everything could be replaced with a free play or 'pay for what you expect' system.

            Last edited 02/03/18 12:19 pm

    I find the technicality of their ‘out’ amusing.

    Let’s reverse it... could gambling escape its current regulation by introducing guaranteed rewards the way loot boxes do?

    Now there’s an interesting pandora’s lootbox to open.

      I feel like regulators could and should be pressed harder on this point. They would obviously splutter, ‘of course not’ and start drawing lines about what constitutes appropriate value to qualify as still gambling. What will be most interesting is where those lines are drawn and the justification for where they’re drawn. Because policy needs to be justifiable.

        Forget gambling. This is leading everyone to ask the asking the wrong regulators the wrong questions... I think this is basic Consumer Protection law and should be the jurisdiction of the ACCC.

      I can just see it now, the near future where pokie machines dispense mints every time they don't give you money, suddenly they're not gambling which means they're safe for kids and totally fine in schools and such.

      It's definitely an argument that falls down very quickly.
      I think any time you're risking something for a chance of reward when you have no ability to impact the odds you're gambling. All the way down to TCGs and random $2 toy dispensers in supermarkets.
      I don't think they're all inherently evil or unsafe though, but smart people need to figure out how to categorise, balance risk/rewards, and so on to keep predatory practices away.

    Other: The box art and a description page on any online storefront should state that the game contains loot boxes. Online game pages should have a link to a government information page exactly what loot boxes are. All games should have an option to not be able to purchase any loot boxes, but that they can be won through standard gameplay. Physical games should come with a single page stating the game contains loot boxes, with a quick overview as to what loot boxes are, and of course a link to the government info website. In this way gamers and non gamers are informed, parents can go into a game's options and disable the ability to purchase new loot crates (they can easily use a code or something like that to unlock this option), and there is transparency. Regulation is needed by the game designers to ensure that these options make their games easy to adjust for all gamer types, and information is needed by government to ensure that people know what is happening.

    What about those 'gambling' games at the local arcade, like claw machines?

      They shold be illegal cause a youtuber built a cheat machine that was accurate to milliseconds... to test a popular reaction game and it only won once ever once every 30 turns proving those are not skill games cause it rigged to lock out the prize payouts till enough people play.

      Or collector cards, raffles, lucky dip etc etc. People just hate loot boxes. Any other form of a gamble that they like gets a free pass.

        And running Melbourne Cup sweeps at workplaces should be regulated as well! That's definitely gambling.

      Claw machines are skill based so I don't count them as gambling.
      $2 random toy dispensers in the supermarket though are totally gambling in my eyes. Being a gamble doesn't make them immediately bad and kid unfriendly though, regulation needs to be a bit more nuanced than simply banning things.

    Congratulations. You just killed Pokémon cards.

      My 14 year old self would have loved this.

    It's not gambling and if you go read some of the tactics they use to sell loot boxes you might just stop buying them like I did with Overwatch. The limited time event loot boxes are marketed like "last chance to get this or that" to make you feel like your losing something. You don't need that skin you don't even play that character! Don't be a sucker.

    Yes, but only to a cirtain extent.
    All vaguly loot box like mechanics shouldnt just be blindly classified as bad as pokies or other traditional gambling, but some regulation is likely needed just with respect to dislosure, and extent of the mechanics.

    For example pokemon cards are fine because the cost of entry is low, the odds are known, constant, and good - you can almost always get something atleast somewhat interesting out of a booster even if it isnt a holo.

    Yes

    Peoe as.t game servers that run for ever, patches that continue for years. Constant tweaks and updates. At the end of the day the publishers want to make money. Something has to pay for all that. I'm not saying loot boxes are the answer and personally I'd lime to see it more like trading cards where you can sell or swap unwanted items, but the fact is companies are out to make money and people buy them. They aren't going to give up easily.

      "They aren't going to give up easily."
      No they're not, and since they've shown they won't regulate themselves we have to step in and force regulation on them.

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