UPDATE: Gambling-esque Loot Boxes in Video Games Face Regulatory Measures & Studies from Governments like Hawaii and Private Companies like Apple, but are they Actually Harmful?

Casino Watch Focus has reported on the newly covered, gambling type video game items known as loot boxes. The boxes are purchasable in a video game and they provide random loot, or in game merchandise, much like a slot machine. This system of microtransactions came to light because EA pushed the envelope so far in their new Disney licensed Star Wars video game, that the only way to truly progress in the game or have the tools to win was to buy these loot boxes and gamble on the items you would get. The system is designed for the player to buy boxes, open them and chase after the best loot. Players pushed back, mainstream media picked up the issue, Disney had to get involve and make EA pull the gambling system from the game and legislators started looking into the issue. Hawaii legislators came out very strongly against the idea of exposing children to such psychologically manipulative, gambling type systems and called the game a Star Wars themed online casino. Its no surprise that a few weeks later and Hawaii legislators are now drafting legislation and working with other states and the industry itself to regulate the issue.   Gaming publication Kotaku reports:

A Hawaii in which games with microtransactions are illegal for minors to purchase is one that state legislator Chris Lee is now hoping to realize. He says that prohibiting the sale of games with loot boxes is a “no-brainer,” and along with a dozen other politicians, he says, he’s thinking of how to put legal controls around video game microtransactions. 

Over the course of a few months, Lee had been hearing from local teachers about kids who struggled with the temptation to spend beyond their means in game microtransactions. Lee cited one conversation about a kid who, he heard, had stolen their parents’ credit card to pay for their gaming habit. He says several families reached out about spending thousands of dollars on microtransactions.

“Gambling has been illegal especially for minors and young adults because they are psychologically vulnerable,” he told me, adding that kids “often don’t have the cognitive maturity to make appropriate decisions when exposed to these kinds of exploitative mechanisms.” 

“There’s no transparency at the outset of what they’re getting into,” he said. “That’s something I think is a real concern.” Now, Lee is working to prevent the sale of games containing loot boxes to gamers under 21 in Hawaii. He also wants games to disclose up-front whether they have “gambling-based mechanics” and to publicize the odds of winning various items in loot boxes.

Apple Inc. certainly agrees with Lee that the odds of winning various items need to be disclosed to gamers. Falling in line with what other foreign governments like China Korea, Apple is now requiring game companies to publicize the odds. Venture Beats explains:

Apple quietly updated its rules for developers yesterday with a new version of its App Store Review Guidelines, and it now requires that developers disclose the odds of getting cool loot in the loot boxes for free-to-play games.

Loot boxes have become a big monetization opportunity in free-to-play games, but they’re also controversial, as Electronic Arts’ discovered with tying loot crate purchases to unlocking desirable characters like Darth Vader in Star Wars: Battlefront II. Gamers revolted, and EA backed off. Government officials also started to step in to say that loot crates should be regulated, as they can be perceived as ripping off consumers or even as gambling.

Apple is clearly trying to get ahead of any regulatory problem by requiring that developers now disclose proper information.

But those in the gaming industry don’t believe loot boxes are gambling. Not only have individual companies gone on record to say they are perfectly fine, the ESRB, the self-regulated industry body who labels games by age range, came out and said they didn’t believe they were gambling and they certainly haven’t proposed any regulatory measures to help protect consumers against the predatory nature of microtransactions. Those fighting against loot boxes aren’t simply looking at antidotal evidence either. The UK’s Gambling Commission just released a report with rather shocking evidence of children as young as 11 being preyed upon and possibly lead into gambling addiction. Dr. Mark Griffiths, Professor of Behavioral Addiction at Nottingham Trent University explains:

Last week, the Gambling Commission’s annual report found that children as young as 11 years of age are “skin gambling” online – paying money for the chance to win in-game virtual items. But this, while alarming, is just the tip of the iceberg.

It’s the terrifying phenomenon of “loot boxes” that are the most worrying and potentially dangerous aspect of e-gaming for children right now. “Loot boxes” are everywhere – they are otherwise known as crates, chests, cases, bundles, and card packs.

In FIFA Ultimate Team, for example, players can purchase gold, silver or bronze card packs, either using in-game currency or real money, in the hope of getting their hands on top talent to improve their teams. But there’s no guarantee of landing A-listers like Ronaldo or Messi – the cards won’t all be star players and will more likely be less valuable collectables.

The issue is that the buying of crates or loot boxes is a form of gambling because players, often children, are being asked to buy something of financial value that could end up being of lower financial value than the amount they paid. 

The good thing is parents are now hearing about things like “skin gambling” and “loot boxes” but children also need to be educated about these activities as much as drinking, drugs or the risks of underage sex. Parents need to get to grips with what is going on in their children’s worlds.

For more information on the dangers of gambling, please visit CASINO WATCH & CASINO WATCH FOUNDATION

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