Are loot boxes really gambling-European authorities think so

Over the recent months there has been quite some turmoil regarding various game developers and their provision of the “loot boxes”, a certain feature that lets the gamers win an in-game item or a game skin at a random chance. While loot boxes have been existing for years, only in September 2018 the controversy in opinions started to be seen. The main reason behind this was that previously game developers were limiting loot box items to various skins, things that do not really have an impact on the game result. In other words, if a player wanted to open a loot box in Counter-Strike GO, he might have received a weapon skin worth over $1,000. Obviously, such expensive in-game items could only be unlocked by opening a loot box, and could easily be exchanged for real money. Considering this, many people would regard such activity as a type of the esport betting or some sort of in-game built gambling, even this game skin would not be any better than a default one, it is just rare. In contrast, newer versions of the loot boxes would provide players with the features that can hardly be obtained without paying.

Are loot boxes gambling?
When thinking of gambling, casinos are the first thing that pop in our mind. Let us quickly analyse the difference and similarities shared by the concept of the loot box and casino. It is clear that when claiming a bonus from an online casino and playing some online slot machines or any other game, a player is expecting both the experience and the chance for winning. Quite a different case happens when opening a loot box. A gamer is not really expecting to get any sort of experience as the experience is provided by an actual game. Besides that, a gamer is certainly provided with a payout in a form of an item. In most of the cases, however, the value of the item will be significantly lower than the cost of opening a loot box.

While the technical aspects are quite different, the concept of a loot box does seem to remind us of good old games of chance. First of all, a player has absolutely no impact on the final outcome. Unlike poker, which is often considered a game of skill, both roulette players and loot box openers do not have any impact on the outcome of their bet. Secondly, the math behind loot boxes is rather simple. Imagine it costs 10 candies to place a bet, and you have a chance of winning anywhere between 1 and 1000 candies, would you consider such activity gambling? Most probably.

European authorities fight loot boxes
By now Dutch and Belgian Gambling Authorities have stated that some loot boxes are actually pure gambling and the game developers will be required to apply for the local gambling license in case they want to continue offering loot boxes. Even though games like PUBG, FIFA and DOTA 2 are not actually allowing the players to sell their in-game items and skins for money that can be cashed out, many gamers can still easily find an option to sell their items outside of the game. Most importantly, it became clear that such items carry a value. As a result, Dutch and Belgian authorities might exercise penalties against the game develops as of June 20th 2018 in case these develops fail to either remove the loot boxes or apply for the local regulation. Besides that, the authorities want to make this regulation adopted in other EU member states.

How about US?
Until now the US authorities have been considering loot boxes as a fully legal mechanism that is not related to gambling. However, the main debate in the US has been going on about how such games should be labelled and whether the gamer’s age should be restricted.

The final thought
While it is clear that loot boxes represent a great income stream for the game developers, we also have to understand that the whole experience of opening a loot box is built on excitement and a feeling of getting a large payout. However, unlike casinos that have age restrictions, loot boxes are targeting a vulnerable part of our population – the youngsters. In many cases EU regulations have been much more consumer-friendly than the ones from the US, and it certainly interesting to see how these regulations will develop in the remaining part of the 2018.