Loot Boxes and Their Place in the Gambling Industry

Loot-Boxes-Esports

With the news that the Spanish DGOJ has advised the government to introduce changes to the law in Spain to reclassify Loot Boxes as being games of chance, rather than simply an add-on to a computer game, the whole issue surrounding Loot Boxes has been brought into sharp focus once again.

The Spanish government will be undertaking a public consultation over the remainder of 2020 with a view to any potential new regulations surrounding Loot Boxes coming into force over the second half of 2021.

The decision follows similar decisions taken in Belgium and the Netherlands, while the UK could also be set to follow its investigation into Loot Boxes coming to a close on the 22nd November, after an announcement back in July from the House of Lords Gambling Committee.

Loot Box Controversy

Ever since their introduction across a number of top esports games and titles, Loot Boxes have polarised opinion and caused controversy. For those companies that offer them, they are a way for players to develop their teams as well as offering a lucrative secondary form of income for the company following the sale of the original game.

However, they are not universally welcomed by many in the esports industry and beyond. Epic Games CEO Tim Sweeney pulled no punches in his assessment of them when he remarked back in February 2020.

“We should be very reticent of creating an experience where the outcome can be influenced by spending money. Loot boxes play on all the mechanics of gambling, except for the ability to get more money out in the end.

We have to ask ourselves as an industry, what do we want to be when we grow up? Do we want to be Las Vegas, or do we want to be worldwide, highly respected creators of entertainment products customers can trust?”

 

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Underage Gambling

The main point of contention against Loot Boxes is that it offers a way for underage people to gamble. It is this reason which has driven the changes taken against Loot Box systems in games in the European countries already mentioned. It is an argument that is very persuasive, especially when you see how important Loot Boxes have become in some games.

EA for example, who uses Loot Boxes extensively across a wide number of their games, revealed that the company made $993 million in the third quarter of the financial year 2020 from their ‘live services’, the vast majority of which will be Loot Box transactions.

With a significant proportion of that money coming from underage players, it now seems likely that an increasing number of countries will seek to have Loot Boxes redefined as a form of gambling and that will likely have an impact on how they are used going forward.

Is There a Way Forward?

At the moment, EA have taken the decision to not allow customers in Belgium to buy Loot Boxes due to the stance taken by the government. However, if they continue to do that as an increasing number of countries reclassify Loot Boxes as gambling products, that will prove to be an expensive decision.

Similarly, nor can EA simply make Loot Boxes free to players as they would stand to lose a significant amount of revenue should they do that.

Perhaps the most obvious way forward is to only allow the purchase of Loot Boxes to players who are aged 18 or over and can verify that fact (or 21 or over if that is the legal age for gambling in a particular country). There are issues with this too, such as having a gambling product alongside a game played by a high proportion of under 18 players, but it would at least provide some kind of safeguard.

EA certainly does not want Loot Boxes banned, but by the same token, they need to work with governments to find a way that this part of the game can be accessed only by those who are of legal age to gamble. And to perhaps find an alternative option for those underage, which does not punish them by barring them from taking part in what is one of the most popular modes of EA Sports games.

A lot of work still needs to be done on the Loot Box problem, but the good news for gamers is that with common sense on all sides, a way forward can be found.

Ian John

About

A lifelong poker fan, Ian is also well-versed in the world of sports betting, casino gaming, and has written extensively on the online gambling industry. Based in the UK, Ian brings fresh insight into all facets of gaming.

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