Loot boxes are virtual prizes in video games. These prizes are usually determined at random, and they typically consist of in-game items like armor or weapons. They might also include custom changes to your character’s appearance on screen.
Loot boxes became popular during the MMORPG craze in the 2000s. In free-to-play games, loot boxes were a way to monetize such games. You could pay money for them. In fact, even games where you paid real money offered loot boxes to keep revenue flowing for the company without having to sell new editions or expansions.
Why would I write about loot boxes on a blog about gambling? Well, in the 2010s, they became controversial for multiple reasons. And one of those reasons was that people thought they were being used for gambling, and various countries started passing laws regulating these loot boxes.
How Do Loot Boxes Work?
Loot boxes are common in online card games and in shooter games. They’re usually given to you as a reward for gaining a level or finishing a game. You can also sometimes get loot boxes from a promotional event.
You can also buy a loot box with real money or with in-game money. The prices, of course, vary based on which of those two options you’re using.
Game Designers Understand Psychology Better Than We Think
So, they gussy up the awards of these loot boxes with sound effects and visuals that motivate players to want to earn more loot. Think of the psychology behind how a slot machine works, and you’ll have a good idea of what the experience is like.
The prizes range from common to unusual. The rarer the prizes are, the less likely you are to get them. Think of this as being like the odds of hitting a specific jackpot on a slot machine game.
In some games, you can trade items with other players. If you have multiple items of a specific kind, being able to trade with other players in the game has obvious benefits. You can even buy or sell such items in the game.
Asian game developers use an interface that resembles a slot machine for these awards. These are called “gachas.” The “complete gacha” consists of multiple items, only some of which are found in each loot box.
The Origins of Loot Boxes
Video games with random awards are nothing new. It’s the monetization of these prizes that make loot boxes what they are. It’s also what make loot boxes controversial.
Loot boxes as we know them have their origins in Asian video games. Many gamers in certain countries can’t afford to pay real money to play video games, and they often play in internet cafes. Sometimes, they play pirated versions of the games, too.
The designers used the loot boxes to practically guarantee some profit from these games, even under those circumstances.
In Europe and the United States, social games like those designed by Zynga used the equivalent of miniature loot boxes to earn profits from their games. In 2010, real loot boxes were included in a game called Team Fortress 2. You had to buy keys to open these crates of goodies.
When the company made the game free to play, the number of players increased exponentially. The new virtual economy created by the prize systems became robust enough that the company who made Team Fortress 2, Valve, still made plenty of money.
Other multiplayer online roleplaying games, like The Lord of the Rings and Star Trek, soon adopted similar business models. This kind of monetization and prize strategy became common.
Here’s a list of some of the games offering variations of loot boxes:
Slot machines are a prime example of games with a built-in compulsion loop. The idea is to provide a random reinforcement schedule to keep players invested in the game.
BF Skinner did some experiments with rats where they had to pull a lever. When they pulled the lever, they got cheese. Another group of rats had a box with a lever, but they didn’t get cheese.
Naturally, the rats who got cheese were more likely to pull the lever. But a third group of rats only got cheese some of the time. These were the rats making the most lever pulls. Such a box is called a “Skinner box,” and a slot machine is as good an example of a real-world Skinner box as I can imagine.
The obvious argument about loot boxes is that you’re not required to buy these prizes. And, indeed, many gamers never do buy such prizes.
But, as with gambling, some players have lots of money and are willing to spend it. And just like the casino industry, the video game industry calls such gamers “whales.” These whales get addicted to the games and rewards, and they start spending lots of money on them.
Since the psychology behind such games is so much like the psychology behind gambling, people worry about their effect on children. After all, do we really want to raise an entire generation of addicted gamblers who were trained to be so by video games?
Loot boxes are also known to use the in-game items for an activity called “skin gambling.” Gamblers and websites have set up a black market where you can buy and sell the items from these video games.
More importantly, these sites also allow you to use these items to place wagers on esports events or casino games. This is only possible in games where you’re allowed to trade such items.
Gambling Laws and How They’ve Affected Loot Boxes Throughout the World
Gambling laws vary by jurisdiction. But when you have a chance of winning a prize with a real-world value via something random, you’re arguably engaged in gambling. In games where it’s impossible to convert in-game prizes to real-world money, the argument falls apart.
Many Asian countries have already legally regulated and restricted loot boxes. Many Western countries have followed suit or are having discussions about following suit. The easiest analogy to make historically is the similarities with collectible card games and, before those, baseball cards.
Loot Box Regulations Throughout the World
Here are some examples of the kinds of legislation and regulation various countries have put into place regarding loot boxes. This section isn’t meant to be comprehensive.
China passed a law in 2016 requiring game publishers to publicize the probabilities of getting various loot box prizes. Some of the items had probabilities of 0.1%, or 1 in 1000. China also requires game publishers to limit how many loot boxes a gamer can buy in a day. Also, they must improve the odds of getting rare items when a gamer buys multiple loot boxes during a day.
Lottery systems related to loot boxes are banned, and age restrictions apply. You must be at least eight years old to buy loot boxes in China. And if you’re under 18, there are specific legal limits related to how much you can spend monthly on loot boxes.
The United States, on the other hand, has no laws regulating loot boxes, but skin gambling is a legal issue. In fact, court precedents make it clear that gambling online is fine if you’re using virtual currency that has no real money value.
Legally, in-game items are considered to have no real-world value, which also affects the legality of loot boxes. Judges who are more tech-savvy might have a different opinion in future court cases, though.
Hawaiian legislators have taken a strong stance against loot boxes. They have plans to block the sale of specific games with the most egregious examples of loot boxes, and they’ve encouraged legislators from other states to follow suit.
Of course, these legislators also concede that they’d prefer to see the video game industry regulate itself rather than having to legislate protections for consumers.
Proposed regulations include age restrictions for buying games with loot boxes and requiring labeling related to the addictive nature of loot boxes on the packages.
The future of loot boxes in video games is uncertain, although it seems clear that increased legislation throughout the world is likely.
The concerns about loot boxes as they relate to gambling and gambling addiction are serious, and they’re being taken seriously by legislators worldwide.
Michael Stevens has been researching and writing topics involving the gambling industry for well over a decade now and is considered an expert on all things casino and sports betting. Michael has been writing for GamblingSites.org since early 2016. ...
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