Category Archives: Loot Box (video game gambling)

FTC and Researches Discuss how Loot Boxes can be a Life or Death Situation with Problem Gamblers

Casino Watch Focus has reported on the ongoing concerns from a form of gambling promoted in video games known as loot boxes. Recent debate has focused on whether or not this video game mechanic technically meets the definition of gambling. Some jurisdictions have out right banned them as they meet their definition of gambling completely, and others have ordered more study and review as they may not technical meet their definition of gambling, but they certainly employ the same psychological tricks to suck in young gamers to spend hundreds of dollars. Recently the FTC added state and federal legislators in their concerns over loot boxes and gambling issues, specifically how it they could be a gateway to problem gambling. Forbes reports:

Video games can be a gateway to problem gambling, the Federal Trade Commission was warned Wednesday. The danger comes from a feature that has become embedded in a majority of the most popular video games in recent years: loot boxes, according to experts who spoke in an all-day seminar held by the agency.

A loot box is a virtual box a player can buy in a game with real or pretend money with the potential for getting virtual weapons and other aids to help the chances of winning the game or the ability to customize characters. The payments are made through “microtransactions.” The name can hide the true financial hit on a child or other video game player because while a single loot box can cost 99 cents, repeated purchases or buying a bundles or bundles can go into thousands of dollars over time. For some players the lure of loot boxes is a pathway to problem gambling with young men and boys particularly at risk, cautioned National Association On Problem Gambling Executive Director Keith Whyte. 

Some, especially those video game publishers like EA, who make a significant amount of their profits from gambling-esque loot boxes, tend to trivialize any link to gambling and claim their methods are completely ethical. Most disagree and experts at the panel claim the link shouldn’t be trivialized and the issues are far more serious that people might think. A major online video gaming source, PC Gamer explains what researches claim:

Speaking at a panel during the FTC’s recent workshop on videogame loot boxes, York St. John University research Dr. David Zendle stated unequivocally that loot boxes are connected to problem gambling. As reported by GamesIndustry, Zendle acknowledged that the causal relationship between the two isn’t clear, but said that the connection “is a clear cause for concern” that should not be trivialized.

“Spending money on loot boxes is linked to problem gambling. The more money people spend on loot boxes, the more severe their problem gambling is. This isn’t just my research. This is an effect that has been replicated numerous times across the world by multiple independent labs,” Zendle said. “This is something the games industry does not engage with.”

“This is so important. It’s not something we should trivialize or laugh at or compare to baseball cards. This is life or death.”

Another common deflection is that its not loot boxes that cause problem gambling, its problem gamblers over spending on loot boxes. The researchers address this issue in a very pragmatic way, essentially concluding that it’s completely irrelevant. PC Gamer continues:

The question of whether loot boxes are a gateway into other forms of problem gambling, or if people who have gambling problems to start with are naturally drawn to loot boxes, remains unanswered, and it could work both ways. But in Zendle’s opinion, it doesn’t really matter in any practical sense.

“In either case, it’s a clear cause for concern and not something to be trivialized. In one case, you have a mechanism in games that many children play that is literally causing a state of affairs that is enormously destructive. And if loot boxes do cause problem gambling, we’re looking at an epidemic of problem gambling the scale of which the world has never seen,” he said.

“And if that’s not true—and I’m totally open to that not being true—then you’ve got a system in which game companies are differentially profiting from the most vulnerable of their consumers. Problem gamblers already have enormous issues in their lives. They don’t need to have their money taken away from them through this as well.”

Zendle has authored multiple reports on loot boxes and gambling, and is unambiguous in his findings. In [his] 2018 article “Video game loot boxes are linked to problem gambling: Results of a large-scale survey,” for instance, he concluded, “This research provides empirical evidence of a relationship between loot box use and problem gambling. The relationship seen here was neither small, nor trivial. It was stronger than previously observed relationships between problem gambling and factors like alcohol abuse, drug use, and depression.”

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EA Tries to label Gambling-esques Loot Boxes as ‘Surprise Mechanics’ During UK Parliamentary Investigation

Casino Watch Focus has reported on the ongoing studies and investigations into the latest predatory gaming mechanics known as loot boxes. These are digital boxes that can be purchase with real money in video games and they contain random loot that can be used in game. In some cases these are vary rare items that have value in game. Most of the time, however, they are essentially useless items and kids or other gamers are encouraged to buy another box to get the good prize. It’s effectively a slot machine, along with all the psychological bells and whistles designed to get the player to keep paying to open more boxes.

In some cases, these items have enough value that they can be cashed out or soldmaking them exactly like a slot machine. As a result, they have been investigated and studied vigorously over the past year or so and even when some conclude they aren’t outright gambling, almost all conclude they are predatory, addictive, aimed at exploiting children and some have concluded that they lead to problem gambling & gambling addiction.  

Most recently, the UK Parliament’s Digital Culture, Media, and Sports Committee conducted an investigation and they heavily questioned EA, the company most famously known for its loot box controversies involving key games like Star Wars Battlefield II and FIFA. During the testimony, they attempted to rebrand loot boxes and tried to compare this highly sophisticated and psychologically trapping mechanic to surprise toys, like Kinder Eggs, that you can buy in the store. Screen Rate explains:

Kerry Hopkins, EA’s VP of legal and government affairs, went on record during an oral evidence session with the UK Parliament’s Digital Culture, Media, and Sport Committee as saying that the company doesn’t view its microtransactions as loot boxes, but rather as “surprise mechanics.”

It’s a frankly shocking and blatant disregard of much of the research that has gone into the problem of loot boxes, with Hopkins also likening EA’s loot boxes to “Kinder Eggs, or Hatchimals.” The difference? The latter two haven’t been correlated with gambling addiction in research studies, whereas loot boxes have, even if many more studies need to be done to conclusively link the two. EA’s attempted rebranding of loot boxes in the face of anti-loot box stances in the Netherlands, Belgium, and now in the United States is a clear appeal to keep the practice in place in the face of growing hostility.

With EA, it can be hard to separate the fact from fiction, but in this instance, it’s not difficult at all: loot boxes are loot boxes, not “surprise mechanics.” That the publisher is even attempting to assert they’re anything but what they are is an insult to consumer intelligence everywhere, and shows a blatant disregard for ethical concerns, instead prioritizing money.

This level of false equivocation is beyond concerning. EA pushed back against the Belgian Gaming Commission when it concluded their FIFA loot box cards clearly constituted unregulated gambling. Ultimately, they did remove them from the game in that specific country, but they really don’t see a difference in their gambling mechanic and Hatchimals. Video Game YouTuber YongYea, in a rather spirited, yet extraordinarily well reasoned video, properly outlines why this a dangerous false equivocation:

The only similarity between loot boxes and Kinder Eggs is that both involve opening some kind of container to reveal a random reward. But video game loot boxes go layers deeper than that. First of all, unlike Kinder Eggs, video games usually charge an entry fee, normally $60 for the standard edition. With Kinder Eggs there is no entry fee. You buy one or a couple, you get whatever toy inside and that’s that.

Most of the rewards you get out of loot boxes will be completely useless, with a small chance of getting something truly coveted, and that is by design. [B]ecause loot boxes are digital in nature, its parameters can be controlled and adjusted to the developer’s and publisher’s whim at their convenience. We often see games that tweak the odds post-launch, that introduce new roadblocks, add new coveted items that are easier to get or new modes that are easier to overcome by paying, rather than playing.

Then there is also the fact that with Kinder Eggs, opening a container for the little toy inside [is] pretty much the whole game. There’s not much else to it than that. The entire purpose of Kinder Eggs is to get that toy and maybe collect them. In-game loot boxes, on the other hand, act as this sub system that holds a lot of influence over the game itself. Loot boxes often tend to be implemented in such a way that you pretty much have to buy them in order to access the best possible experience for the game you purchased or downloaded. They essentially act as slot machine tollbooths for the product you already bought. Games will often implement intentional issues and roadblocks so that you will have to pay to mitigate them through the purchase of these randomized rewards.

I should also point out that when you open a Kinder Egg, there are no flashy animations or sound effects that are strictly designed to release these chemicals in your brain that give you that addictive sense of anticipation. With loot boxes, on the other hand, every time you open one you’re presented with this spectacle that is not too dissimilar to what you’ll find in casinos, slot machines specifically. That’s because slot machines and loot boxes are designed with the same purpose in mind, to keep those who are psychologically susceptible to gambling addiction and addictive tendencies coming back so they can be milked dry. This is regardless of their mental or financial health. That’s not a priority for these casinos and companies like EA.

Casinos at least have some kind of system where they keep kids away and what have you. The gaming industry, on the other hand, doesn’t seem to [care] about kids whose minds are still developing, who are more susceptible to addiction than adults are. The gaming industry certainly doesn’t care about susceptible adults or implementing monetization schemes responsibly.

The gaming industry cannot even uphold something as simple as an age restriction. As per the ESRB, on their website you can see that any game with real-life gambling must be considered an adult’s only game. Of course, this classification will prevent that game from being sold on most major platforms. But because loot boxes make them so much money, they’re trying to pretend like loot boxes aren’t gambling. That’s how they get around this and now companies like EA are going as far claiming loot boxes aren’t even loot boxes, but rather surprise mechanics. No EA, Kinder Eggs and loot boxes don’t come anywhere close to being the same thing. That’s like saying getting shot with a BB gun is pretty much the same as getting shot with sniper riffle because both involve pulling a trigger that ejects a projectile. This is false equivocation at its finest and this is a classic move from EA and other major publishers.

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New Federal Legislation to Regulate Predatory Gambling-esque Loot Boxes in Video Games Announced by Mo Sen. Hawley

Casino Watch Focus has reported on the ongoing developments and many efforts by regulatory officials to bring awareness to a new form of gambling aimed at kids and video game players. Loot Boxes are a new gambling type mechanic that has the player pay money to open a mystery box in hopes of winning loot to help them in the video games they are playing. In some cases those items carry real value that can be sold, effectively making them video game slot machines aimed at kids. In other cases, loot boxes are implemented to play on the exact same psychology exhibited when people outright gamble, and regulators and studies agree. A lot of international efforts have been taken, but domestically, the reactions have been mostly to encourage the industry to fairly self regulate and to call for investigations into this gambling-esque video game mechanic that is largely targeting children. However, new federal legislation has now been announced by Missouri Senator Josh Hawley. NBC News Online reports: 

Senator Josh Hawley, R-Mo., is introducing legislation that seeks to ban exploitative video game industry practices that target children like loot boxes and pay-to-win, he announced on Wednesday.

“Social media and video games prey on user addiction, siphoning our kids’ attention from the real world and extracting profits from fostering compulsive habits. No matter this business model’s advantages to the tech industry, one thing is clear: there is no excuse for exploiting children through such practices,” Sen. Hawley said.

“When a game is designed for kids, game developers shouldn’t be allowed to monetize addiction. And when kids play games designed for adults, they should be walled off from compulsive microtransactions. Game developers who knowingly exploit children should face legal consequences.”

There are many strategies for regulating microtransactions and loot boxes. Some places have banned them outright, others have looked at making sure the items cant be sold for cash, thus not being gambling, but a transaction and others have focused on the intent of the loot box or simply the age of those making these purchases. Sen Hawley’s approach is a bit of an amalgam with the emphasis on the age of the player and the legislation utilizes a unique lens, The Children’s Online Privacy Protection Act. An online source explains: 

Called “The Protecting Children from Abusive Games Act,” the bill would specifically seek to protect minors by focusing on games either targeted at, or played by, consumers under the age of 18. Determining what games are targeted at minors would apparently be based upon a number of factors, including the game’s subject matter, visual content, and other indicators similar to those used to determine the applicability of the Children’s Online Privacy Protection Act (COPPA).

For games that meet the bill’s criteria, the legislation would prohibit “several forms of manipulative design.” In particular, the announcement identifies that the legislation would prohibit loot boxes, defined as “microtransactions offering randomized or partially randomized rewards to players.” Further, it would outlaw “pay-to-win” game designs, including both (1) attempting to induce players to spend money to quickly advance through game content that is otherwise available for no additional cost; and (2) manipulating the balance in competitive multiplayer games to give players who purchase additional microtransactions a competitive advantage over other players who do not pay the additional fees.

The proposed legislation would be enforced by the FTC through its authority to curb unfair and deceptive trade practices. In addition, the proposed legislation would empower state attorneys general to file lawsuits against game makers to enforce the act. 

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Tribal Casino Sues Video Gaming Company over Illegal Loot Box Gambling

Casino Watch Focus has reported on the ongoing saga of the new gambling mechanic in video games know as loot boxes. This mechanic works by having players purchase boxes full of mystery items in video games. These boxes often cost real world money and the items coming out of the box can be garden variety or fairly useless in game items all the way to very powerful weapons or items that give players a leg up. There have been may instances where these items hold real world value and some examples exist of those items being sold for real money. So the player puts money in the game, pulls the box open lever, gets a random prize of various value and then the player trades those in for real world money, very possibly at a financial gain. Many would argue that the mechanic described is the same as gambling on a slot machine, and that’s the very foundation of for a tribal casino’s lawsuit is video game manufacture.   An online source explains how such a lawsuit could be brought forth: 

The Quinault Indian Nation has filed a lawsuit against Valve, the makers of Steam, claiming that it is running an unlicensed gambling operation and demanding payment for damages.

Okay, this gets a little complicated so settle in. The Quinault Indian Nation owns and operates a licensed casino in the state of Washington, one that is regulated by the Washington Gaming Commission. Valve is also based in Washington.

In its suit against Valve (via Geekwire), the Quinault Nation alleges that “Valve facilitated illegal, unregulated and unlicensed online gambling” when it launched skins for /Counter-Strike: Global Offensive /(/CS:GO/).

Back in 2013, Valve started releasing skins for weapons in /CS:GO/, these upgrades are purely cosmetic. Players would earn crates by playing /CS:GO /and these crates could then be opened with keys which Valve sold in its store. The keys were the only way to open the crates, and it made Valve a tidy bit of cash.

The Quinault Nation says that “the look, feel, sound and experience [of opening a crate] was basically an online slot machine”, providing YouTube footage of players opening crates to back up its claim.

What’s particularly striking in this case, is that seemingly at every level of the transaction, Value, the company being sued by Quinault Indian Nation, had their hand in guiding the process. An online source explains:

It points to the skin gambling sites that were launching and says Valve did nothing to stop them. “Valve had actual knowledge of the identity of the Valve accounts that gambling websites used to effectuate gambling transactions, and chose not to take any action against them,” the court documents state.

It goes on to claim that “Valve allowed gambling websites to use Valve accounts on Valve’s servers and Valve’s computers to effectuate gambling transactions” and that “Valve also provided technical support to gambling websites and real-money cash out websites, despite those websites violating Valve’s Steam Subscriber Agreement, and would return control of gambling websites’ Valve accounts back to the gambling website after being hijacked or hacked by other third parties.”

Despite simply providing an incredibly clear picture for those legislative and consumer protection bodies looking to best understand just how much these loot boxes are no different from gambling, the tribe also outlines exactly how it hurts not only their business with the State, but how doing so illegally without following state regulation further harms those involved. They conclude: 

The Nation has a contract with the State of Washington that means it must remain compliant with the state’s laws if it wants to operate casinos, and that compliance costs money. It has to “engage in responsible gaming, prevent fraud, prevent illegal gaming, and prevent underage gambling”. The Nation also pays 2% of its earnings in Impact Mitigation Funds, which go to paying support services in area around the casino.

If Valve is a gambling operation, like the Nation claims, then it is an unlicensed one and doesn’t incur any of the costs or the risks that come with a gambling license. The Nation is suing for damages, but also the money Valve obtained through gambling transactions.

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


New Studies Point to Connection between Loot Box Spending and Problem Gambling

Casino Watch Focus has reported on the newest gambling mechanic that has taken over video games aimed at children. Loot Boxes are a gambling reward system where the player pays to acquire mystery boxes that when opened provide random in-game items. These items can be simply cosmetic items like a new outfit for a character like Luke Skywalker to wear in Battle Front II, the Star Wars Game based on the Disney property that EA game developed that brought this issue to the forefront, to actually in game weapons that make you more powerful and thus able to win more. Many have called this mechanic out as simple gambling directed and children and the amount of money people spend on loot boxes chasing a certain item is staggering. Many world leaders and government agencies have either banned their use or have called for studies to enact legislation to properly regulate them. Now two large studies have come forward that provides proof that this mechanic plays on the same psychological principles that turn people into problem gamblers as well. An online source reports: 

Many popular games allow people to pay a small fee to obtain a “loot box” containing random selections of virtual in-game items. New research has found that there is a significant relationship between problematic gambling behaviors and spending money on loot boxes.

The findings, which appear in the journal PLOS One, indicate that people who spend more money on loot boxes are also more likely to be unable to keep their gambling habits in check.

“Loot boxes are extremely widespread. A recent analysis we did showed that they may feature in as many as 63% of mobile games. They’re extremely profitable, too: They’re estimated to have perhaps generated as much as $30 billion in revenue in 2018,” said study author David Zendle of York St. John University.

The societal impact of such finding is troubling to say the least. Various game publishers have made some changes to their loot box systems so that you can’t “cash out” or sell your items for real money, thus avoiding the technical definition of gambling in some jurisdictions. Still, others see the entire mechanic as so psychologically manipulative, that regulation is absolutely necessary, especially when so many games are geared towards children. The article goes on to outline the impact:

The participants all reported regularly playing at least of one of ten popular games that feature loot boxes: Player Unknown’s Battlegrounds, League of Legends, Hearthstone, Overwatch, Counter-Strike: GO, FIFA 18, Rocket League, DOTA 2, Team Fortress 2, and Tom Clancy’s Rainbow Six Siege.

“There is a link between loot box spending and problem gambling. However, we’re not sure if this means that loot boxes literally cause problem gambling, or if it means that people who are already problem gamblers spend significantly more money on loot boxes. In either case, though, it doesn’t look socially beneficial.”

Some researchers have compared loot boxes to a predatory form of psychological ‘entrapment’ where players spend an escalating amount of money because they believe they have invested too much to quit. But longitudinal research is needed to determine whether loot boxes are directly related to the development of gambling problems.

“Researchers have suggested that loot boxes might create a gateway to problem gambling. We still don’t know if this is true,” Zendle remarked. The study, “Loot boxes are again linked to problem gambling: Results of a replication study,
was authored by David Zendle and Paul Cairns. 

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YouTube Creators Under Fire for Underage Gambling Promotion by Sponsoring Loot Boxes

Casino Watch Focus has reported on the ongoing developments over a video game type mechanic known as loot boxes. Player, often children, spend money to gamble at receiving a mystery item from a box. This loot can sometimes be traded or sold for cash. Over 16 countries have either regulated it or called for studies. Most recently the FTC. In England, the House of Commons called loot boxes massive and addictive technology. The use has been primarily seen in video games but the idea has spread to YouTube. Both American and UK YouTubers are under fire for offering the ability for their viewers, mostly. The UK’s Telegraph explains: 

Popular YouTubers have come under fire for promoting controversial games linked to gambling to young viewers. Jake Paul and Brian “RiceGum” Lee, who have 28.5 million subscribers between them, were among those criticised for posting sponsored videos showing them spending money on “loot boxes”.

Loot boxes, which appear in video games, prompt players to spend money in exchange for random in-game purchases. In new promotional videos, both Jake Paul and Brian “RiceGum” Lee clicked on online mystery treasure chests and revealed they had won real life objects including Apple AirPods and trainers worth $1,000.

MysteryBrand, the company behind the promotional videos, offers a real-life version of these boxes that can cost between $3.99 (£3.16) and $1,300 (£1,028) apiece. Each box contains a range of possible pre-selected items but a user has no idea what they will get until they have paid.

MysteryBrand is understood to have paid $100,000 for the videos, which were lambasted by the duo’s viewers as well as YouTubers Ethan Klein, Kavos and PewDiePie.

Given the size of some to these content creators YouTube channels, its somewhat surprising that they wouldn’t vet the loot box concept. Unfortunately, they didn’t with one even saying he didn’t think it’s a big deal at all. YouTube released a statement and pulled at least one of the videos and regulators have called this out as gambling. An online source reports:

YouTube has already pulled Hudson’s promotion from view, with a spokesperson saying: “YouTube believes that creators should be transparent with their audiences if their content includes paid promotion of any kind. Our policies make it clear that YouTube creators are responsible for ensuring their content complies with local laws, regulations and YouTube community guidelines. If content is found to violate these policies, we take action to ensure the integrity of our platform, which can include removing content.”

The activities of MysteryBrand are still being assessed by the Gambling Commission but the children’s commissioner for England has already come out against the service, telling the paper that this amounted to ‘gambling, plain and simple’.

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


FTC and Others Investigating the Dangers of Loot Boxes in Video Games and their Gambling Impact

Casino Watch Focus has reported on the ongoing happenings of loot boxes, a video game mechanic that most view as a form of gambling that prays on children. Various local and international agencies have taken the threat seriously and have started seriously looking into the dangers of loot boxes and their link to gambling. Most recently, 16 countries signed an agreement to study loot boxes as more and more evidence draws links between loot boxes and problem gambling. As an online source reports, the FTC is joining in those that have expressed serious concern with their own investigations:

Federal Trade Commission chairman Joe Simons announced Tuesday that the agency would be investigating the use of micro-transactions, commonly referred to as loot boxes, in video games. According to NBC, there has been growing concern around the use of these loot boxes, which some view as a form of gambling designed to be addictive that is marketed to children.

Earlier this year, Senator Maggie Hassan of New Jersey sent a letter to the Entertainment and Software Ratings Board (ESRB) president to request that she re-evaluate how the board rates games with loot boxes, according to the popular gaming news platform Polygon.

“The prevalence of in-game micro-transactions, often referred to as ‘loot boxes,’ raises several concerns surrounding the use of psychological principles and enticing mechanics that closely mirror those often found in casinos and games of chance,” Hassan wrote in her letter.

Researchers looking into the issue have found signs of addictive behavior and problem gambling among gamers who spend money on loot boxes. One study published in the /Public Library of Science/ which surveyed 7,000 gamers found that “the gambling-like features of loot boxes are specifically responsible for the observed relationship between problem gambling and spending on loot boxes.” They therefore concluded that “there may be good reason to regulate loot boxes in games.”

Across the pond, similar investigations are happening in the UK as the criticisms of look boxes grow, particularly as some of the most popular video games in the industry are adopting these predatory gaming mechanics. The Guardian reports: 

A House of Commons committee has announced plans to investigate the growth of “immersive and addictive technologies”, to advise the government on how to create policy and regulation that can protect the public from the negative effects of digitisation and “gamification”.

It follows a growing campaign against deliberately addictive mechanics in technology and video games, particularly the crossover with gambling represented by “loot boxes” – randomised rewards sold in games for real money.

The links between gaming and gambling is one of the key points to be investigated by the committee, which will ask: “What are the effects of in-game spending, especially on children, and does it need stronger monitoring or regulation?”

Games such as Fifa, Overwatch and Call of Duty have been criticised for the practice, which has led to reports of primary school-age children spending almost £500 on Fifa players and getting into the habit of spending £15 a week on pseudo-gambling. 

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