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Ian Griffiths, Blogger

February 15, 2018

22 Min Read

I keep wanting to write about Loot Boxes when the drama surrounding them has subsided but things keep cropping up. We now have proposed legislation in Hawaii with potentially more states to follow. We’re also seeing legislators from different countries asking regulators to consider whether loot boxes constitute gambling.

I’m going to talk about what loot boxes and how I see them, not as the evil tool of manipulation but a fun, common and generally well-accepted part of games without which many popular titles today would not exist.

What Is A Loot Box?

While I probably don’t need to write this first section I just wanted to clarify what I’m talking about. A loot box is a system that delivers a random reward in a game, typically this is given through a themed item such as a locked chest at the end of a dungeon. Loot boxes give rewards that are purposefully unknown to the player. They are typically found in titles that focus on a large inventory of in-game items or units.

In the most recent context, we’re talking about paid loot boxes. That is loot boxes that can be bought directly or indirectly with real-world money and contain in-game items or resources, whether merely cosmetic or gameplay influencing.


Wow, Loot!

Loot has a long history in games and as a system and mechanic, it is probably most well-known for its prevalence in RPGs.

Many genres employ loot as a core part of the experience. Notable titles include the actions RTS, Diablo 3 where practically every enemy is a loot box and Borderlands 2, an FPS where guns and their stats are generated at random. More recently with online shooters like Destiny 2 use loot as a strong extrinsic motivator to drive the replayability of the core loop. With such popular and successful titles using random drops as a core feature, it seems, players really do love loot.


Randomness in Games

A lot of people take issue with the issue of not knowing the exact outcome for something like a loot box but it’s worth pointing out that randomness actually forms a key part of many game systems.

When we look at board games like monopoly we can see that randomness is a key mechanic, if you always knew how many spaces you would go forward you would have a very predictable and boring game. Randomness is a very powerful tool in the designer’s arsenal because unlike known systems the outcome can’t be known or at least easily guessed. The thing about randomness is that it can help keep games fun for longer because there’s always an un-learnable element in the experience that prohibits complete mastery.

Really though, what is a Loot box?

While it’s simple to understand the notion of a loot box it’s surprisingly simple to use the same underlying mechanics in a way to abstract the experience that we wouldn’t then easily identify as a loot box.

Let’s imagine a Roguelike, say FTL (To clarify FTL is a paid game, and it’s amazing) and consider adding a ‘pay-to-continue’ option when your ship is destroyed, a bit like an old arcade game. Now, given that the content is randomly generated – did you just buy a Loot box? Think about it, you just paid for an unknown outcome, it would be sold to you complete with the knowledge that what is coming is unknown, that’s exactly what happens when you buy a Loot box.

You might say, but you buy gameplay. It’s a solid point but I would counter that, if the item you bought has some gameplay effect, you also just bought gameplay.

What about Pokémon Go? You can buy a ‘loot booster’, called ‘Incense’ that will attract rarer Pokémon. Catching randomly appearing Pokémon is a core part of the game but be under no illusion, with incense you’ve paid to switch out lower quality loot rolls for higher quality ones, that’s the same as buying loot boxes.

What if, instead of buying a loot box, you buy an extra Loot box slot. You can open more loot boxes through gameplay now. Is that the same as buying a loot box? Or is it abstracted enough to not be?

In fact, if we think about it a bit at a higher level isn’t buying games just like buying loot? I know that Daniel Cook wrote a humorous tongue in cheek article about ‘Coercive Pay-2-Play Techniques’ where he covered this - http://www.lostgarden.com/2013/07/coercive-pay-2-play-techniques.html

Think how much money you’ve put into games that you didn’t actually enjoy. You had no way of knowing whether you were going to enjoy it before you bought it and with refund systems you generally can’t get your money back.

It’s not too difficult to draw a line between purposefully paying for an intentional good or product versus paying for one that is intentionally random. However, there’s a strange and fuzzy line at which people tend to say you’re no longer buying randomness whether through intentional blindness or some form of abstraction, I’m uncomfortable with the idea that so many other similar executions get a pass while Loot boxes don’t. 

Are Loot Boxes Gambling?

Let me start off by saying, I’m not a lawyer! I can’t give legal advice as to what is and isn’t gambling. I’m just going to try and explain my interpretation of what’s going on here. Also, with so many different legal systems around the world, I doubt any one person could easily answer the legal question alone.

The recent controversy surrounding EA’s Star Wars Battlefront 2 had a lot of consumers going to their representatives to complain about loot boxes in digital games. A representative in Belgium seems to want to ban them, a representative in Hawaii wants them restricted to over 21s. However, as they have done the most in-depth look to date, let’s look at what the British gambling commission thinks - http://www.gamblingcommission.gov.uk/news-action-and-statistics/news/2017/Loot-boxes-within-video-games.aspx

The British Gambling Commission suggests that because the item received isn’t money, or isn’t equivalent to money, it’s not gambling under British law.

Of course, that doesn’t mean that’s what consumers think. Now it’s easy to see why people draw parallels between Loot boxes and Gambling. In both, you spend money and you have a random chance to ‘win’ something. One general implementation difference is that loot boxes almost always pay out something whereas what we might think of as a Bet can pay out nothing. That’s not to say a Loot box couldn’t be empty or that gambling couldn’t pay out non-zero amounts.

I think we need to consider the relevance of why so many are saying loot boxes are the same as gambling; it’s because we are looking to conflate it with something that is considered potentially damaging and hence restricted by law. Gambling is considered to be problematic by many because its addictive properties have a negative impact on some people’s lives. While loot boxes generally aren’t legally considered gambling we could try and draw a parallel based on whether they are addictive in the same way as gambling.


Are Loot Boxes Addictive?

First, I think it’s important to consider whether games addictive? In an article on the Psychology Today website by Stephanie A. Sarkis Ph.D., titled “Internet Gaming Disorder in DSM-5” - https://www.psychologytoday.com/blog/here-there-and-everywhere/201407/internet-gaming-disorder-in-dsm-5

Sarkis reports that the Diagnostic and Statistical Manual of Mental Disorders lists Internet Gaming Disorder (IGD) as a “Condition for Further Study” referencing the DSM-5 (APA 2013). Basically, there’s not enough evidence to be considered to be proven a condition, it may turn out to be one, it may not. The article lists 10 criteria of which 5 must be met to diagnose someone with the disorder. This leads me to an article on the New Scientist website, by Inga Vesper titled “Gaming addiction probably isn’t a real condition, study suggests” - https://www.newscientist.com/article/2151515-gaming-addiction-probably-isnt-a-real-condition-study-suggests/

The article references a survey conducted by Netta Weinstein at Cardiff University where 2,316 participants who regularly game online self-reported on their lifestyle and gaming. Of the participants, just three of them matched four of the criteria for IGD but crucially, didn’t feel ongoing distress which is a requirement for diagnosis. As a survey, it has its weaknesses but with little other information, it’s far superior to the anecdote that so many commentators have been referring to. Currently, the evidence in favour of the existence of an Internet Gaming Disorder is weak, it might exist but only in a small number of cases.

The question was are Loot boxes addictive, though whether games are addictive is relevant to that. Well, let’s look back at the potential comparison, gambling.

Gambling is largely thought to be addictive, particularly for a set group of people. As I’m not a psychologist I can’t speak much in the way of how we classify addiction beyond saying that people are diagnosed as having a gambling addiction. There’s definitely a group of people who are vulnerable to the pulls of gambling and even risk their entire livelihoods in its pursuit. A large number of people go bankrupt because of gambling debt, it’s a very serious issue.

As I’ve said above, on the face of it, it would be easy to say that there are parallels between loot boxes and gambling. We’ve seen that there’s not enough clinical evidence to say that IGD exists, it’s almost certain that there’s not been enough study into Loot Boxes. What I would ask is, where are the parallels with the problematic outcomes? Gambling debt is an unfortunately common reason for bankruptcy. We can easily point to bankruptcy a major problem which also tends to lead to further personal and social problems for those involved.

Pathological gambling is damaging because it negatively impacts peoples’ lives. One easily identified impact is serious financial harm; usually where people go into bankruptcy because of gambling debts. One test we could consider for whether loot boxes are harmful is to see if they are behind a lot of bankruptcies. I really couldn’t find any cases of loot boxes being responsible for serious financial harm though it’s possible that it’s just not recorded in this way. To be clear though, I’m not saying that problem cases don’t exist, just that I hadn’t found any cases that have led to bankruptcy. Also, I’m not saying that you have to go bankrupt to have a problem with loot boxes. I certainly don’t want to trivialise or minimise the impacts that people might have with their spending.


Are They Suitable For Children?

I’ve seen a lot of comments about, but this is damaging to children. I think it’s very important to disconnect the issue of whether adults should be free to express their agency and what is suitable for children. It’s quite easy to get caught up in a ‘but think of the children’ mentality. At the same time, it’s also easy to dismiss concerns of what might affect children by sarcastically saying ‘but think of the children’. In any case, I want to take this issue seriously.

There have been a number of issues with children spending money in free-to-play games on their parent’s or guardian’s accounts. So many in fact that multiple lawsuits were brought against platform holders. Those lawsuits have resulted in a number of changes, from sensible ones like requiring passcodes to handle in-app purchases unless expressly altered through to more peculiar ones such as saying labelling virtual store buttons for free-to-play games with ‘get’ rather than ‘free’.

The problem with age limiting the purchase of paid loot boxes is that it surely misses the point. If we’re worried that young people are being taught about gambling, shown here as a random pay-out in a game of chance loot box, then whether it was paid or not is irrelevant. You can’t get the desired impact by just banning loot boxes, you’d also have to banish the likes of Pokémon where random creatures pop out of the grass and players have the potential to keep them. What is the difference between buying a loot box and playing a game whose main contention is an abstracted version of opening loot boxes?

Frankly, parents have got to step up and do more. An iPad isn’t a babysitting device, you don’t get to ignore your kids because they’re busy playing Mario Run. With a vast array of parental controls, it’s easier than ever to avoid your children from making any purchases or keep an eye on it. On my devices, I turn in-app purchases off so none can be made which very much solves the problem. It’s not a big deal to keep an eye on how much your children are playing games and lockout spending on a device.

I think the issue of whether loot boxes are suitable for children should be up to the parent. It’s not an acceptable excuse for parents to say they don’t know the content of a game because that’s precisely their responsibility. Just a modicum of interest from parents would also help reduce instances where people let their children play games like GTA and other unsuitable titles.

Legislation in games

So before tackling Loot box regulation, I want to touch on what it would entail. We all remember Jack Thompson and others trying to restrict violence in games but I want to look at more recent issues.

Chris Lee, a Hawaii state legislator has argued for and been involved in introducing a bill which would clamp down on loot boxes. Lee has stated that he wants to bring an end to ‘pay-to-win’ in games which is far more troubling as it suggests a desire for legislative creep beyond loot boxes.

There are lots of games that have ‘pay-to-win’ or at least positive power reinforcement as main mechanics in a way that benefit rather than hurt the game. In Clash Royale, you are matched with players based on your ‘Trophies’, they act as a matchmaking score or rank – the number that depicts your relative performance in multiplayer matches. By matching on Trophies on a performance score rather than what access they have to power they manage to keep the game fair because the game’s focus is finding a good opponent where both players have a good chance of winning. It’s a bit like a handicap score in golf. Facing an opponent who is more powerful is not automatically an unfair competition because skill comes into it. This isn’t bad game design, it’s levelling the playing field to keep things fun.

In a game where you can earn or buy more power, as an opponent you would have no idea which had been done so, why would it matter? It wouldn’t. Even if you could buy a power advantage that couldn’t be earned, isn’t that the right of the creator to create such a system? Why do we have legislators rushing to try and impinge on the free expression of creating games? As long as every player is informed I really don’t see any consumer protection issues.

AR Game Restrictions

Milwaukee County actually tried to restrict augmented reality games. In Mallory Locklear’s article for Engadget, from July 2017 “First Amendment suit halts US anti-'Pokémon Go' law” - https://www.engadget.com/2017/07/21/first-amendment-suit-halts-anti-pokemon-go-law/

Locklear reports that the county wanted developers to get permits to design their games to be used in the county’s parks. The county went so far as to argue that games like Texas Rope ‘Em don’t have First Amendment Rights. So remember, when you call for regulation, this is the kind of attitude you’re potentially roping in to restrict your games.


Star Wars Battlefront 2, A Case Against Legislation

In the case of Star Wars Battlefront 2, a lot of consumers were angered about the inclusion of loot boxes. They complained to the company, media and regulators and EA removed micro-transactions. As for all the claims of outrageous grind times to earn the content it really didn’t end up being that bad. As a fan of the first Star Wars Battlefront reboot, I certainly remember it taking an age to unlock content in the game.

This is a classic case of the market working as it should without the need for regulation – consumers complained, the company changed and they’re unlikely to put loot boxes in their competitive shooters in future, and given what they’ve seen neither are many other developers.


Loot Box Legislation

The notion that you can clamp down on virtual loot boxes based on them having an unknown pay-out the reinforces notions of gambling without also restricting the variety of toys and games on the market from LOL Surprise! to Magic the Gathering seems highly inconsistent, bordering on absurd.

Ben Cousins tweeted an image of what is currently allowed by law with regards to children’s toys as loot boxes - https://twitter.com/BenjaminCousins/status/934398966426427392

This video by CookieSwirlC on Youtube, “LOL Surprise Baby Dolls in Blind Bag – Do They Cry, or Color Change in Water ?” - https://www.youtube.com/watch?v=rI2HtAU2KOs has racked up almost 13.4 million views and is all about the latest and very popular real-world loot boxes, LOL Surprise! Note how the person opening them calls the random contents surprises and how excited they are, there's very little notion of addiction or any concern around the random components. These toys, unlike most loot boxes, seem to be squarely aimed at children.

How on earth can we talk about restricting in-game loot boxes without covering the vast amount of loot box toys which are specifically aimed at children? I can see no reason for why games should be a special case, particularly when there are so many more protections against children spending in games compared to shops. As for adults, I fail to see why we need special protections, particularly with so little evidence of any harm.

With regards to the difference between randomness in games and loot boxes, I just find the line too fuzzy. When most people can’t really draw a distinct definition between a loot box, a boosted chance and a game where randomness is part of the experience based on the levels of abstraction employed, I fail to see how they could be adequately legislated against. How can you be sure you restrict loot boxes without banning loot as a concept, or even randomness as a mechanic in games?

I think we’re in serious danger of allowing the uninformed to restrict the games we love. People think that everyone is behind banning loot boxes but they’re not, as evidenced by both the amount of money they make and that they’ve been enjoyed without issue for years. The kind of people who enjoy games with loot boxes probably aren’t even aware of the current discussions going on and won’t have an appropriate voice in the conversation.


Hawaii’s Proposed Bills

The bills introduced in Hawaii trouble me for some of the reasons I mentioned above. First, requiring that someone is 21 is a difficult thing to do, it requires additional checks which add friction to the experience and a lot of red tape to the process of running a business. This is of course, by design. The legislators involved seemed to have no concern about loot boxes before EA’s Star Wars Battlefront 2 loot boxes and Chris Lee even outrageously labelled the game “Star Wars Themed Online Casino, designed to lure kids into spending money”. I completely disagree with this idea though I did appreciate his little “It’s a trap” quip. Again, as most platforms require credit cards and have numerous parental controls and restrictions to disable purchases it's easy to protect children from IAPs and SWBF2 isn’t even really aimed at ‘kids’, in Europe it was rated PEGI 16.

Second, the notion that publishers and developers should have to provide a warning label for when there is NO evidence of harm or addiction is absurd. We don’t even have warnings on products that ARE demonstrably dangerous! My car didn’t come with a big bright red warning sticker saying – ‘Warning, driving may lead to serious injury or death for yourself or others’. My alcohol doesn’t have big red warning stickers saying ‘Warning, may lead to injury, death, serious long-term health and social issues. My chocolate bar doesn’t come with a label saying ‘Warning, may contribute to diabetes and other serious health issues. Why should a product that has no demonstrable harm be required to show any such label? Why are games a special case?

With regards to informing people that loot boxes exist in games and requiring that developers provide drop rates, I take no issue, I’m as much for informed consumers as I am for informed lawmakers. There’s also a requirement that game developers make the code available to regulators, while I appreciate that this is trying to ensure that regulators would be able to audit the data it would be more burden on business and there would be a considerable cost to the taxpayer to actually go through and check the code. Given how many games use loot boxes, there’s going to be a long wait. And while the legislation says it won’t publicly disclose proprietary information, what protection is there against it? What are the penalties for the state doing so?


To me this legislation coming from parties who, in my opinion, have not done enough investigation into the issue and are making unvalidated claims. Not to mention they haven’t engaged with many of the people who would be affected, instead, cherry picking those that backup their argument. Make no mistake, this is rushed legislation and hence this is bad legislation. I hope that it is fought at every stage and eventually stopped.


What should we do then?

The most obvious evidence of the harm that loot boxes might cause are not showing up in the way we would expect them too. While this doesn't prove that there’s no harm, it does indicate that the issue is either not particularly widespread or notably acute. Again, I’m not saying this to diminish the issue merely point out that prevalence and severity need to be taken into consideration when considering the balance when approaching it.

My personal feeling is that loot boxes should remain available to players and they’re absolutely fine as a core mechanic in games from Pokémon Go through to Magic the Gathering.

I’m fully in favour of disclosing drop-rates or something equivalent as I believe they build trust with the player. I believe that an informed player is a happy player and in my experience, it’s had no negative impact on the spending experience.

With regards to age-restrictions, I’m not against sensible ones. In the UK you have to be 16 to play the national lottery so that seems like a sensible cut-off. Platforms can easily pass through the age of player to the developers or publishers, or at least identify if they are 18 or over. Anything else, like requiring people to register with a developer would be onerous and only serve to hurt both developers and players. I’m very much against legislators creating regulation to clamp down on things that they just don’t like.

If the state wants to legislate against personal liberty it has to show evidence of harm, something that it nor anyone has done with regard to loot boxes. Otherwise, it’s just another case of regulating based on moral panic, something which has never ended well.


In Closing

The free-to-play audience has had loot boxes for many years and seem perfectly happy to use them. The power of free-to-play has brought a considerable new audience to games. From Activision Blizzard’s latest results - http://investor.activision.com/releasedetail.cfm?ReleaseID=1056935 we can see that King has 290 million monthly active users, that’s more than Activision’s 55 million or Blizzard’s 40 million MAU.

These players don’t tend to visit gaming news networks, most are probably unaware of the potential harsh legislation that could easily kill off many of their favourite games. Do we want to kill off games that are primarily enjoyed on the merits of their fun and accessible gameplay because console gamers decided they didn't want loot boxes in Star Wars, an issue that was swiftly resolved? Do we really want to take away games from these players without a voice in the debate? I don’t think so and that’s why I will continue to argue against a knee-jerk reaction without evidence in favour of a sensible approach towards loot boxes.


Edit: Removed [It’s such a compelling and fun part of games that it spawned one of the earlier memes, w00t! A shortening of wow, loot that exclaims the enjoyment of finding something special or rare.] as this isn't accurate. Thanks to Jess, @floofyscorp on Twitter for  pointing this out!

This post/blog and comments represent my own personal opinions and do not represent those of my employers or associates, past or present. This post is for informational purposes only, it is not advice of any sort. This post is presented on an as-is basis and I make no claims as to its accuracy, suitability or completeness. I will not be liable for any negative consequences arising from interaction with, or use of the information provided.

I am not responsible for the content of external links contained in this post/blog, you visit them at your own risk.

For disclosure, I worked at Electronic Arts and I own Electronic Arts Shares. I have not been asked to write this by anyone and I am not being rewarded or compensated for doing so. I do not represent Electronic Arts or speak for them in any way.

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