The ESRB’s Response To Loot Boxes Is Useless

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I work for Tabcorp, a prominent Australian company that runs multiple wagering and gambling products. I spend my time designing gambling products.

I‘m not a gambler, I don’t gamble. But I don’t think gambling is evil, and I think adults have the right to choose. I do think, however, that products like alcohol, cigarettes, and gambling require strict regulation from government and independent bodies.

I think that loot boxes are unequivocally a gambling product, but I also think they have their place in gambling. I think the responsibility to create responsible gambling products falls to both the developer and the publisher, and I think the definition of ‘responsible’ falls to the relevant rating boards and governments.

Everything here is my opinion, and may or may not reflect the views of my employer.


Earlier this week, the ESRB put out this statement:

This comes as a response to the significant amount of criticism the ESRB has been getting from their complete lack of control around gambling mechanics (ie. loot boxes).

You might be pleased with the ESRB finally stepping up and rating microtransactions in games. After all, it’s about time. You’re wrong, though. This is a token reaction that proves the ESRB isn’t listening, and doesn’t understand the problem.

I work for one of the biggest gambling companies in the world. A lot of the time, it can feel like working on the Deathstar. Mitchell and Webb describe it well in their ‘Are we the baddies?’ sketch.

What differentiates the giant gambling conglomerate I work for, and the ESRB, is the following:

  • One of us has significant resources dedicated to acting responsibly in our communities.
  • One of us has government oversight that ensures objective regulation.
  • One of us understands the issues that our industry causes, and openly seeks to combat these issues.

Any guesses as to who I’m talking about? Yeah, it’s not the ESRB (and it sure as hell isn’t EA). In fairness, there’s a difference — we’re a provider, not a rating board. But you would think that some of these rules would apply to a ratings board, no?

Here’s why this new in-game purchases label is, frankly, nonsense.

A lack of empathy and understanding

The ESRB claims that its mission is this:

The Entertainment Software Rating Board (ESRB) is the non-profit, self-regulatory body that assigns ratings for video games and apps so parents can make informed choices.

As a ratings board, the ESRB has an obvious inherent responsibility to understand the products it is rating. After all, they’re supposed to be the front line defense against consumer abuse.

However, this new 'In-Game Purchases' label completely missed the point. TotalBiscuit puts it well:

It’s based on this completely unbelievable quote from ESRB president Patricia Vance (emphasis by me):

We’ve done a lot of research over the past several weeks and months, particularly among parents. What we’ve learned is that a large majority of parents don’t know what a loot box is. Even those who claim they do, don’t really understand what a loot box is.

So it’s very important for us to not harp on loot boxes per se, to make sure that we’re capturing loot boxes, but also other in-game transactions.

I’m sure Patricia Vance is a smart person, but that’s an incredibly dumb statement.

The new label will affect any game with digital purchases. That means that Star Wars Battlefront 2 will get labelled in the exact same manner as The Legend of Zelda: Breath of the Wild.

One has gambling boxes that affect competitive gameplay. The other has fixed-price additional single-player content. Hell, this label will bundle in games who are selling a soundtrack with games that are literally casinos. What a stupid, stupid system.

Ironically, we already know the ESRB has completely no idea what they’re talking about: back in October, when asked if loot box mechanics constitute gambling, they made this silly statement:

We don’t believe it does. We think it’s a fun way to acquire virtual items for use within the game.

You can read more about it below, but the crux is this: They don’t think loot boxes are gambling because you always receive an item.

ESRB Says It Doesn't See 'Loot Boxes' As Gambling

Over the past few weeks, as randomised loot boxes have dominated the conversation surrounding this spring's video games, there have been calls for the Entertainment Software Rating Board (ESRB) to classify them as gambling in its back-of-the-box ratings. But the ESRB says that isn't going to happen — because according to a spokesperson, loot boxes don't fit the bill.

Read more

They’re wrong. They’re so wrong.

To use the old adage, Dictionary.com says gambling is this: "To stake or risk money, or anything of value, on the outcome of something involving chance."

Sounds like a lootbox to me. In fact, I think there’s a strong argument to say that the fact you always get something makes them even more insidious, because there’s a good chance that the items you’re getting are useless or without value.

In traditional gambling, you know there’s a chance you will get nothing. For most people, they see the odds are stacked against them, and choose not to play. Loot boxes aren’t like this. Take Star Wars Battlefront 2 - you’ll always get something, but it’s probably total garbage.

If you are somehow still not convinced that the ESRB has no clue what they’re talking about (Or, worse, are feigning ignorance), take a look at this clip of Hawaiian state representative Chris Lee questioning an ESA (The parent company of the ESRB) representative:


It doesn't help the average consumer

Contrary to the vocal minority, parents do care about what games their kids are playing. I used to work for a prominent video game retailer, and I spoke to thousands of parents who are desperately trying to make the right choices. This is really hard - their kids are asking for Call of Duty or Grand Theft Auto, and their friends already have it, so there’s this immense pressure to acquiesce.

Digital games exacerbate the issue, where parents aren’t buying the end product. Whether it’s iTunes, the Play Store, Playstation Network, Xbox Live, whatever — the parent thinks they’re buying magical space points, not spins on a roulette wheel.

This label does nothing to inform a parent that the game includes gambling mechanics. They have to do their own research to find out if a game is selling cosmetic skins, gameplay enhancements, or loot boxes.

This issue isn’t limited to parents, by the way. Triple J’s Hack program recently ran a story about an adult consumer who spent over $50,000 on loot boxes in a mobile game as a way to cope with some seriously difficult personal circumstances.

Let me be absolutely clear: that behaviour is indicative of a very, very serious gambling addiction, and we are doing nothing about it.

It's time for regulation

There are lots of very easy ways to solve these issues, and I’m going to talk about those in a separate article. One thing is really clear though:

Companies are selling gambling products to anyone they want with no oversight or restrictions. Underage? No worries. Gambling addiction? Don’t ask, don’t tell.

EA is the poster child for the worst use of loot boxes, but they’re not the only ones. Video Game companies are teaching our kids to gamble, and in some cases, that it’s the only way to get ahead. And the ESRB doesn’t get it, or worse, doesn’t care.

One last thing

The ESRB is owned by the Entertainment Software Association. Have a look at the members of the ESA.

These companies pay a membership fee to the ESA, which in turn helps fund the ESRB. Is it really any surprise that the ESRB has been so completely apathetic to the lootbox issue when their paychecks are written by Activision, EA, Nexon, Tencent, Wargaming, and others?

Don’t think so.


Chris Bam Harrison is a UX designer for Tabcorp. This post was edited slightly and republished from his Medium page with his blessing, and the original post can be read in full here.


Comments

    We don't let anyone under 18 gamble, why should there by any difference for lootboxes? Maybe that's the crux of it though, if the ESRB admits that, laws around gaming become active and remove any and all under 18, and potentially gives them a R18+ rating.

    My opinion anyway.

      Yeah my thought exactly. It is pretty black and white.

      The ESRB wont admit that... same with PEGI they are self regulating industry groups and wont cut off a demographic that hard cause their members are greedy.

      ... not unless they are pressured to by government. Which is hilariously funny, cause Australia is legally and regulatory in the best position to do something but with ACCC, ACB, ACMA and State Gambling ignoring the issues cause the laws dont clearly define what is a loot box or who has jurisdiction.

      We have to stop calling it gambling... its consumer explotation.

      The best solution is for the ACCC to step in treat it as a general consumer issue and investigate and make recommendations to parliment for new Microtransaction Act.

        On the other hand, we should stop calling them loot boxes, and start referring to them as gambling boxes.

        Wonder how long the mainstream would take to pick up on it then.

      Agree with this 100%. In Australia, it's extremely tough to gamble without having a valid ID verified so that the company you're gambling with knows you're over 18. I think this sort of system would solve a lot of issues for loot boxes.

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

    Gambling authorities are their to protect that industry and its consumers. Thats why it xant make a decision on this video games industry is not their jurisdiction... even though loot boxes show clear and abusive similarities.

    Cause the arguement exists consumer protection and gambling authorities are arguing over jurisdiction... and its creating 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 well documented Las Vegas and Poker Machine style mechanics used in gambling, undisclosed odds and algorithmic based chance manipulation (with defined patents) 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.

    and at the end of the day... y ou are probably in a better position than I being in the industry. The best way to stop this is if the poker machine manufacturers sursurle them for breach of patent and copyright cause they upband stole their code to put it into mobile games and loot boxes :p

      Really good point about gambling and games being a totally separate industry, and requiring separate oversight/protection. I don't think the bodies that currently regulate gambling would do as effective a job as an organisation that's only responsibility is gambling mechanics in games.

    Sooo.... not that I disagree with what you're saying, Chris, but is Tabcorp at all worried that gambling regulations might toughen across the board if this lootbox thing gets enough steam up?

    You say you spend your time designing gambling products, but don't go into any detail about similarities between what you design and how publishers design lootbox mechanics. Is there a reason for that?

    Finally, as much as I'm trying to treat you with respect on this site, I have to say that I surprised that you take the 'only following orders', 'someone has to do it' approach to your job. How does it feel to know that the results of your efforts have the potential to cause broken homes, criminal behaviour and suicide?

      In answer to your second paragraph, probably this:

      One of us has significant resources dedicated to acting responsibly in our communities.
      One of us has government oversight that ensures objective regulation.
      One of us understands the issues that our industry causes, and openly seeks to combat these issues.

      Gambling exists for fun, there are people who abuse it. Alcohol also exists for recreation, there are people who abuse it to equal extents and with similar results. I'd argue alcohol has more of an impact on the larger community than gambling. Yet people don't point fingers at breweries etc, so why point fingers at the people who make gambling games?

        Yeah, I wouldn't argue about which is worse out of alcohol and gambling, but it seemed disingenuous to say that Tabcorp (and other gambling emporia) 'understand and actively combat' the issues gambling can cause when continuing to design new and more effective gambling products. A bit like tobacco companies protesting that they are 'doing their bit' to combat lung diseases and stuff.

          You make valid points Zambayoshi. I'll answer as honestly I can;

          is Tabcorp at all worried that gambling regulations might toughen across the board if this lootbox thing gets enough steam up?

          Probably. I'm not high enough up the food chain to really say for sure. There's very few people in the company that are even aware of it to begin with.

          You say you spend your time designing gambling products, but don't go into any detail about similarities between what you design and how publishers design lootbox mechanics. Is there a reason for that?

          That's a really good point, actually. I might write something seperate on this topic, as I think there's some really interesting analysis. There's an obvious difference in that our lottery products reward you with money, not 'loot' or goods, but I still think there's a lot to be said for this. Point taken.

          'only following orders', 'someone has to do it' approach to your job.

          Actually, I don't think I do take the 'Someone has to do it' approach. I'm open and honest about what I do because it's relevant to the article and where I'm coming from, but I don't apologise for it or excuse it. I'm proud of the work I do - I help make entertainment products that thousands of Australians enjoy. If you're interested in the topic of ethics in UX/Design, Mike Monteiro is an author you might find really interesting - he talks a lot about the ethical issues designers face.

          I'd be giving you a very different answer if I was working at somewhere like Palantir, but I personally don't have an ethical issue with designing a product that can be misused, as long as there's a conscious effort to avoid it being misused.

          How does it feel to know that the results of your efforts have the potential to cause broken homes, criminal behaviour and suicide?

          Short answer long: my family has had, in the past, really serious, awful circumstances as a result of alcoholism. When it was at it's worst, I blamed everything I could - the people involved, the alcohol companies, drinking culture, etc. Now, as an adult, I have a really clear understanding that while alcohol companies could have done something to stop it, the problem wasn't with them, it was with those people who had an addiction and didn't know how to get help.

          So, to answer your question: most of the time, I feel okay about it, because I think that a lot of the work I do is actually helping avoid gambling addiction. If I'm not here doing what I consider to be ethical, responsible design, then maybe a different designer would be here making worse choices than I am. If I ever feel like I'm part of the problem, I'll stop doing it.

          One last point: I didn't put my articles or this response through Tabcorp's communication or legal teams because I believe if they had a problem with me speaking honestly about my job, I'd rather leave than be censored. Thanks for an honest, open questions.

            That's a really good point, actually. I might write something seperate on this topic, as I think there's some really interesting analysis.

            Thanks for your reply Chris. I'd really be interested in reading something about the mechanics of gambling product design.

        Yet people don't point fingers at breweries

        Oh yeah we did. In fact we did it so hard they practically can't make ads even showing what the point of alcohol is.

      Whether you believe adults have the right to gamble is an entirely different issue.

      Currently, kids are able to bet real money in games like Overwatch for postboxes, in the hope that their lucky number (skin) shows up.

      This coming from a game available on Xbox/Playstation with cartoon artwork. It's literally teaching kids to gamble. To spend their free cash on Live/PSN gift cards to purchase more skins.

      And worst of all, the ESRB is limping that crap in with games which have DLC, like The Witcher 3 and BOTW.

      None of this is okay. People SHOULD be taking a stand here.

        Kids are also allowed to buy any number of different CCGs, or even just the old trading cards (football/basketball) and I would say those theoretically going by this is worse since those cards actually have real world value. So why have those being given a free pass but loot boxes get hammered over?

        I agree some regulation needs to happen in this area, but if you call a loot box gambling then so are CCG's, trading cards and many other things.

          These are clearly gambling. But they can't play the same tricks on the brain which games can, and introduction into video games has brought child gambling to the masses.

          Games developers now have dedicated teams to perfect microtransactions.

          Nice little reminders to nag you the whole time (shiny treasure chests and the like). Enough "freebies" to keep you on the line, like small amounts of match earned points and daily login rewards to keep you invested in the live service.

          Sound and imagery are hand crafted to give you that dopamine rush when you open the lootbox and then hits again (with more sound/imagery) when something special drops.

          And it's always cheaper to buy 3 or 5 or 20 (digital) packs than 1.

          The main defense for VVGs is they all have value - even if you get a pack full of shit/dupe cards you can still sell or trade them to other people/stores.

          To compare against most lootboxes like Overwatch, if you get crap you're just stuck with that crap which has no value and if you get a dupe you're stuck with some in-game currency which basically has no value until you buy more lootboxes (i.e. it just encourages you to gamble some more).

            The main defense for VVGs is they all have value - even if you get a pack full of shit/dupe cards you can still sell or trade them to other people/stores.

            This is pretty much where I fall on the difference - most of the time you can partially or wholly recoup your investment in CCG's.

            Hearthstone does a somewhat good job to try and recreate the recoup mechanic by giving you dust for duplicates, and letting you dust any card you don't want. Not perfect, but it's progress of a kind.

            I also tend to think that TCG/CCG's are much more understood by kids and parents, which make them less predatory/dangerous. Randomised digital purchases don't have the same sort of understanding.

      Every time I date someone I risk creating broken homes, criminal behaviour and suicides.

        Yeah and if you made a literal business out of it you'd be known as a conman hustler.

      I don't think Chris is worried about broader regulation of "mainstream" gambling, because apart from advertising (which I think should be restricted to after hours, and not during sporting events) there isn't much more regulation that can happen. You can only use the Tab app if you are over 18, and there are already restrictions.

      What he's saying is that this should also apply to lootboxes. Either make the games 18+ or (even worse for the gaming companies IMO) make it so that you can't offer paid lootboxes to anyone under 18. That'll pretty much kill the lootbox industry outright, meaning they will have to charge money per item, with no more random chance.

      I would pay for a guaranteed legendary skin in Overwatch, but I will no longer pay for a one in 13 (possibly based on their Chinese odds) chance to get one.

      Gambling isn't going to go away. It existed long before Tabcorp and will exist long after. Either you put someone in charge of it who is HEAVILY regulated and audited or you leave it to back alley hustlers who break people's knees if they miss repayments.

      Tabcorp takes a very serious approach to education and avoiding/helping problem gamblers.

      At the end of the day though, people need to take responsibility for their own actions. Is it solely McDonalds fault if someone eats too many Big Macs and gets fat?

    The last paragraph spells it all out. The ESRB was founded by the industry as a self regulating body after the controversy of the violence in Mortal Kombat. It was the industry's last ditch effort to avoid government regulation.

    What will be interesting is if we get the Australian Classification Board's opinion on the matter as they are a statutory body and removed from shareholders who's best interest is to ignore the issue. We've heard from the QLD and VIC gambling regulators but not the classifications board to my knowledge.

      Totally agree, this could make a major difference between what happens in the US and what happens here. My only concern, really, is if the ACB understands the issue correctly. They managed to solidly screw the pooch on the R18 rating over and over again, so my trust in them coming to a conclusion that protects consumers without punishing adults who choose to participate is flaky at best.

    Brilliant piece. The best I've read here in a long time. Thanks for taking time to tackle what is easily the biggest, and most insidious, issue facing gaming today.

    By your definition of gambling it would also include trading card game packs. I completely agree...one of the common counter arguments about using that definition for loot boxes is people say "but then TCG packs are gambling too". Well, yeah. They are.

      I would say CCG and TCGs are closer to gambling because those have a real money value association with them, you can't cash out with lootboxes typically. If it's CS:GO skins or something similar than definitely, gambling 100%.

      I agree with you that TCG boosters have gambling elements but the detractors (loot boxes included) are quick to point out that "you always get something, whether it's the one you wanted or not"

      The saving grace is that trading cards are physical and as their namesake implies, can be traded with peers for the cards you personally want (though in reality most of these transactions are made with cash). Most loot box/gacha game systems don't allow trading between players.

      Trading card boosters also publish their odds on every box, something the games industry is starting to make steps towards.

      I don't think TCGs should be regulated and restricted as much as formal forms of gambling. It really hasn't been a problem since their conception and some YGO/MTG meta cards can be worth hundreds. Sure you have people unhappy with the system, but it's no different to any other pastime/fandom.

      And this is why there is a discussion around loot boxes right now, because it is not so clear cut. It has gambling elements in its mechanics, but is it any more harmful than blind bag toys, TCGs and chip Tazos?

      Yep, I'd agree they are. I'd also argue they're totally fine.
      Gambling isn't immediately evil, but it has the potential to do a lot of harm if poorly handled.

      Trading card game economic model could die screaming in a hole and no one would care. I used to do magicTG and I always purchased my cards from a secondary seller because that way I could get exactly what I needed without a mess of rubbish I neither wanted not needed.

      I think the biggest differences with TCG's are that:

      1. Speaking purely from my experience as a retail employee, people generally understand the purchase. Even parents who aren't involved in the game understand that buying a pack of Yugioh cards is a gamble, and therefore can make an educated choice for their kids. Similarly, kids generally understand that the odds of a rare Charizard is pretty slim.

      2. TCG's are selling you physical goods, which will generally retain some sort of value through trade. Sure, you didn't get what you wanted, but you might be able to trade it to another player. Digital TCG's don't generally have this, so you can be stuck with a card that has no value. Loot boxes, simlarly, don't let you trade the item.

      I agree that TCG's are built on a gambling mechanic, I think that's pretty cut and dry. But I think, for the most part, people are educated and can make responsible choices around them. I don't think the same can be said for loot boxes (yet)

    We need to stop comparing it to gambling or card games or luck dips or raffle tickets.... Loot Boxes are not goid or evil, but the developers that abuse them are.

    The need to be independently review at a consumer protection level, I think this should go to ACCC to sort out.

    Their marketing, monetisation, undisclosed mechanics, manipulative designs are highly contraversial without a clearly defined legal definition but clearly show signs of abuse ranging from the criminal with dodgey mobile apps to AAA games that have been described as "poker machines for children".

    Consumer protection laws exist to protect consumers and businesses. Gambling laws exist to protect gamblers and the gambling industry.

    A Microtransaction Law would protect the industry and consumers... or this will end soiner or later in a class action suit somewhere.... after all the only reason EA pulled loot boxes from Batlefront was because Disney got afraid by litigation talk.

    "To stake or risk money, or anything of value, on the outcome of something involving chance."

    There is no risk with loot boxes. You're guaranteed to always get something.

    Just because it might not be the something you want doesn't make it gambling.

      Sorry, that's simply incorrect. Gambling isn't simply wagering against the possibility of total loss, it's wagering against the possibility of gaining less than your stake.

      Spending $5 knowing that you'll get either $1 or $10 is still gambling, even though the loss scenario isn't $0. Loot boxes aren't any different.

    Parents of children playing games with micro transactions, loot boxes etc don't understand what their kids are doing or how the game is inducing repeat play. These same parents would not allow their kids to walk into a casino and drop a dollar in the slot. Kids from 9 -10 yrs of age are being exposed to this. Its appalling.

    Stronger regulation is required, as is knowledge being published to the wider community as to the way these game mechanics work.

    People require the ability to make an informed decision as to its merit. Children don't have that ability. In fact many adults don't either. But as an Adult you are responsible for your actions. Kids have no ability to decide.

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