Is Loot Box pushing video games on the edge of gambling?20 May 2019
Several countries have recently expressed opinions on the use of loot boxes and of items acquired by micro-transaction purchases within video games, in an attempt to determine to what extent these represent, in fact, a form of gambling.
In case loot boxes would be qualified as gambling, developers would either have to hold an appropriate license obtained in accordance with local regulations, or remove these elements all together from video games.
What is a loot box?
Loot box is a box that may be “opened” by gamers in order to receive a random selection of virtual items that may be used within the game. These items range from simple options of character customisation (such as skins) to benefits that have a major impact in the game (such as weapons or temporary or permanent enhancements of the respective character’s abilities, new characters, additional lives or even virtual money).
The use of such boxes is not new, their role is to enhance the gaming experience and to offer various alternatives to the standard game. In principle, the practice of developers is to target players that do not have time to naturally progress in the game. Thus, such players end up purchasing these loot boxes with the hope that the boxes will contain the item which will help them to progress faster in the game. Usually, players have the possibility to obtain loot boxes as a reward for achieving certain targets within the game or to purchase them, either by paying an amount of money or by way of a virtual currency purchased within the game.
What is the connection between loot box and gambling: you never know what you pay for, everything is chance
Irrespective of the manner in which a loot box is obtained, players do not know the item comprised in the respective box, everything is about chance. Usually, however, the possibility to obtain a rare item is minimal, the players being required to open as many loot boxes as possible to find the desired item/ element.
For example, a player may obtain, by simply achieving the targets within the game, a loot box that unlocks an important ability which helps him/her to progress in the game, while another player may pay for a loot box that contains only a cosmetic item for his/her character, being, in this way, determined to pay for a new box.
Controversies and approaches in the global gaming
As of 2017, many states, including Belgium, Netherlands, Sweden, Germany, France, Australia and the United States of America, initiated investigations in order to determine if loot box represents, in fact, a gambling activity.
Such investigations started in the context of the launch, by major companies within this field, of certain important games which contained loot boxes and which targeted a wide range of recipients, is also often played by minors.
During 2018, the Belgian gaming commission concluded that a combination between the payment of an amount of money and the random character of loot boxes triggers the necessity of qualifying most of the loot boxes as gambling and, therefore, that they should be removed from video games. On the other hand, the Netherlands gaming commission deemed that such a qualification should be made only in case the goods are transferable outside the game, having, therefore, being assigned a market value, in the real world.
An opposite approach is that of Great Britain which, despite the claims submitted over time, decided that loot boxes do not represent gambling. Thus, Great Britain considers that developers should not obtain licenses in order to use loot boxes within video games. A similar approach is also embraced by France which, despite expressing its concerns regarding the fact that loot boxes may be dangerous, especially for minors, who are introduced, in this manner, in a world similar to the one of gambling, has nevertheless concluded that no measures or restrictions should be imposed on the use of loot boxes.
There are, however, states that already have specific legislation regulating loot boxes and the conditions in which they may be used within video games. For example, as of May 2017, China has adopted legal provisions stating the conditions that must be fulfilled by loot boxes in order not to be considered gambling, amongst which: gamers not to be able to purchase them with money or developers to make available information regarding the items and services provided within loot boxes and the likelihood for the player to win the desired item.
Loot boxes in Romania: where we stand and what to expect next
The video game industry is one of the largest in the media and entertainment worldwide sector and is constantly growing, including at national level. However, in Romania, no discussions or investigations are being carried out in relation to loot boxes.
The gambling legislation comprises specific provisions referring to activities that may constitute gambling, as well as the manner of authorisation thereof.
According to such legislation, gambling represents an activity that cumulatively meets the following criteria: it involves the award of material gains, usually financial, as a result of the organiser publicly granting a potential gain and the participant accepting the offer, with a direct or hidden participation fee, the gains being awarded based on a regulation approved by the National Gambling Office (in Romanian: Oficiul Național pentru Jocuri de Noroc), by randomly selecting the results of the events that are subject to the game, regardless of the manner in which they occur.
Gambling may include, inter alia, lottery games, betting activities, poker games, slot machine games, video games and may be played both in a traditional manner, in certain specialised rooms, as well as via online platforms. Irrespective of the type of gambling, the operator shall obtain a license for organising and operating the respective game and a permit for operating such game.
In the context where the national legislation does not comprise any explicit reference to loot boxes, the question arises whether loot boxes can be qualified as gambling and, therefore, whether they should comply with the relevant legislation or be removed from video games.
In lack of specific regulations, we may assess this aspect only from the perspective of the three criteria that characterise any form of gambling.
In this respect, we may consider that two of the criteria, the one regarding the participation fee and the one regarding the award of the gain by the random selection of the results would be fulfilled, taking into consideration that the player must pay an amount of money in order to receive a loot box the content of which is not known and is randomly determined.
The only condition that appears to be questionable is the one regarding the award of material gains. In this respect, it should be determined to what extent the random item received by the user when opening the loot box may be deemed as a material gain.
In principle, the item contained in a loot box, regardless of the type thereof, is used by the player in a closed circuit, within the video game. Thus, usually, the player does not have the possibility to change or sell the respective item outside the game for an amount of money or for other goods. In this context, we may consider that the respective gain is not a material one, given that no value in the real world can be assigned to such gain. However, in case the players could sell the items in exchange of an amount of money, of cryptocurrencies or could replace them with other objects in a market organised by the game developers which could be extracted outside the game, we may deem that the players obtain a material gain.
There are certain interpretations according to which the third condition of gambling may be fulfilled by the simple exchange between the players, within the video games, of the items contained by the loot boxes, such exchange giving value to the item in the real world and, therefore, becoming a material gain. However, such interpretation is quite restrictive, considering that the item contained by the loot box remains, at all times, within the game and, thus, has or acquires only a virtual value, and not a value in the real world.
The issue of loot boxes within video games is becoming more important, the states assessing more and more carefully the line between them and gambling, especially since video games have a wide range of recipients, including vulnerable categories, such as minors. However, even if certain states have already reached a conclusion in relation thereto, by prohibiting loot boxes or by excluding them from the category of gambling, in Romania such an assessment is still expected and the current legislation does not allow a clear qualification of loot boxes, regardless of their type.
Taking into consideration the controversies and the approaches at the international level, it is difficult to foresee if Romania will soon take steps to clarify the regime of loot boxes in the context of gambling. Any such steps could lead to a balanced conclusion only to the extent that the Romanian regulator will take into account the economical, technical and conceptual realities both in the field of gambling, as well as in the field of video games.
Pending the undertaking of such steps, video games developers may, however, identify a number of solutions for implementing loot boxes so as to avoid the risks of their qualification as gambling, even in case of a strict interpretation.