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What are the laws surrounding loot boxes and online gambling?

“Loot boxes” are now deemed as online gambling

 

We’ve all heard of loot boxes. Whether it be in the context of praise or controversy they have become a large part of AAA games especially in the past ten years spurring game developers to capitalise on the new system before any type of legislation or laws could be put in place. However, new laws and regulations have been brought into place across the globe deeming the purchasing of loot boxes akin to online gambling. This article attempts to steer through the grey areas of this claim and answer the question – Should loot boxes be deemed as online gambling?

 

The History of Loot Boxes

Loot boxes in video games have had a shorter history than one might believe. The first known instance of loot boxes was the ability to purchase a virtual item inside the 2004 Japanese release of the MMORPG game “Maplestory” named the “Gachapon Ticket” which the user could then redeem at a booth in the game world to receive random in game items dependent on a random number generator.

As many people in Japan would turn to less than legal methods to attain games they could not afford, games such as ZT Online resorted to becoming free-to-play and started implementing loot boxes into the game as a way to ensure revenue from the game with no fear of losing money from people playing pirated copies.

This idea then spurred on the western game developer Valve to become the first western game developer to implement loot boxes as part of their game after following in the footsteps of ZT Online and becoming free-to-play. This proved to be a great strategy as Valve reported an increase of 12 times the player count compared to launch. In the years following the inclusion of loot boxes increased with games such as Lord of The Rings Online and FIFA: Ultimate team moulding the game industry into what we see today.

 

What are the laws surrounding loot boxes and online gambling?

Even though loot boxes have been around since 2004 there was no regulation regarding them until very recently allowing game developers to include loot boxes without any rules or guidelines.

In 2016 the Chinese government released a regulation demanding game developers release the probabilities of their in-game item drops, some of which were shockingly low at 0.1% giving a very slim chance at the rarest items in the game. The very same regulations also banned publishers from selling loot boxes in china. To counteract the giant loss this could cause to their companies, many developers chose to allow players in China the option to purchase in game currency to buy the rare items with loot boxes as free gifts after purchasing in game currency.

Following China’s example, the Belgium Gaming Commission conducted a study of four games that included loot boxes, these games were:

  • Overwatch
  • FIFA 18
  • Counter Strike: Global Offensive
  • Star Wars: Battlefront 2

Out of these games; Overwatch, FIFA 18 and Counter Strike: Global Offensive were deemed to be games of chance and were therefore subject to Belgium’s laws on gambling. Belgium’s Minister of Justice Koen Geens also stated: “It is often children who come into contact with such systems and we cannot allow that”. After this announcement was released valve quickly released a statement stating that they were “happy to engage with the Belgian Gaming Commission and answer any questions they may have”.

 

The Verdict

In conclusion the regulation of loot boxes is a welcome one, systems such as the loot box do fall under gambling in terms of money spent for a chance at a large win and should fall under the same if not similar regulation to ensure the safety of children and others. The reason that this has been going on unchecked and unregulated for so long may be mainly due to the thought of gaming as a past time or a form of escapism. However, with the growing use of games used more as a form of entertainment on streaming services such as twitch and YouTube, naturally there will be calls for change in regulation as we are venturing into the unknown where damage can be caused if regulation is not in place.