Watch your loot boxes! – Recent developments and legal assessment in selected key jurisdictions from a gambling law perspective

Abstract

So called loot boxes are one of the most important monetization methods for many companies in the video gaming, social gaming and social casino gaming industry. After the global skin betting scandal in 2016 and the 2017 loot-box uproar, loot boxes are now under investigation or even subject to legislative measures in several jurisdictions. Since then, numerous regulatory authorities, politicians and other stake holders have issued statements on the matter. From a legal perspective, loot boxes can touch gambling, youth protection, consumer and even financial laws. Characteristic of the 2017 loot-box debate was a black or white view and people taking extreme positions. In particular, gamers and people not familiar with the subject tend to condemn loot boxes as gambling. However, taking a closer look at selected key jurisdictions shows that the application of gambling laws depends on the jurisdiction and on the exact set up of the loot box mechanism. Furthermore, some questions are not conclusively solved yet -not even in those jurisdictions which are regarded as loot-box safe havens. One of these questions is, for instance, the impact of secondary-market trading of loot-box-generated items. This article evaluates the legal situation of loot boxes from a gambling law perspective in selected jurisdictions.

Enabling and Cultivating Wiser Consumption: The Roles of Marketing and Public Policy

“…For example, consider microtransactions, which have recently become an integral part of video game design (Schwiddessen and Karius 2018; McCaffrey 2019). Microtransactions are exchanges of money or virtual currency for digital modifications that can be cosmetic (e.g., a new outfit for a game character) or functional (e.g., unlocking a story arc or a weapon) in nature.…”

“…Microtransactions are exchanges of money or virtual currency for digital modifications that can be cosmetic (e.g., a new outfit for a game character) or functional (e.g., unlocking a story arc or a weapon) in nature. Frequently, they appear as “loot boxes,” where the user receives either a trivial or a rare, highly valuable item without knowing the contents of the box in advance (Schwiddessen and Karius 2018). Although these game modifications generate signaling and practical value for users—allowing users to demonstrate uniqueness to peers or to progress through the game—they also detract from consumers’ positive experiences.…”

“…First, microtransactions can be unwelcome additions to games that consumers have already paid to play. Electronic Arts was compelled to remove microtransactions before the release of their title Star Wars Battlefront II after consumers expressed outrage over the need to “pay to win” on top of the product’s retail price (Schwiddessen and Karius 2018). Second, the unpredictable nature of loot boxes often prompts consumers to engage in repeated buying or extended playing time on tedious tasks in an attempt to secure desirable or necessary items.…”

Predatory monetisation? A categorisation of unfair, misleading, and aggressive monetisation techniques in digital games from the perspective of players

“…One example of this is the so-called 'freemium' model, in which core game content is available for free, and revenue generation takes place entirely through the sale of additional features or advantages during play. Such sales typically take the form of microtransactionsunrestricted in-game payments which players can make at any point to purchase additional game content (Schwiddessen & Karius, 2018). However, microtransaction-based monetisation schemes extend far beyond freemium ecosystems: games such as FIFA, Destiny 2, and Overwatch not only charge a fixed fee to sell players a 'base game', but also additionally charge players for the purchase of extra in-game content.…”

Ethereum Crypto-Games: Mechanics, Prevalence, and Gambling Similarities

“…See https://venturebeat.com/2019/05/03/the-deanbeat-whythe-smart-kids-are-moving-into-blockchain-games/ and https://venturebeat.com/2018/04/05/gamesbeat-summit-2018working-on-the-block-chain-gang/, accessed 05/07/2019.Whilst some analysts find that e.g. loot boxes meet psychological definitions of gambling[7], national regulators differ in their classification[22] [31]. Notably, psychological and legal definitions focus on different aspects; the financial value of winnings in the legal instance, versus the nature of the activity itself in the psychological instance.…”