eSports Loot Boxes Not Gambling, Say European Regulators

eSports Loot Boxes Not Gambling, Say European Regulators

Members of the Gaming Regulators’ European Forum (GREF) have found that in-game purchases like loot boxes do not require regulation as gambling activities, despite agreeing they could be defined as just that.

Belgium has already banned loot boxes that cost real money from being available in video games in the country, but gambling regulators from 19 other European countries have responded to concerns by publishing a year-long study on video game features that resemble gambling.

The GREF report agreed that loot boxes could be construed as gambling in some jurisdictions "because the loot-boxes mechanism relies on chance" - purchasers of loot boxes in games do not know what is inside, and can therefore end up with a product worth less than the value of their payment - but concluded that they do not yet trigger implementation of gambling regulation.

Instead, GREF suggested gaming companies combat the blurring of lines between eSports gambling and eSports gaming by offering more consumer information about in-game purchases.

No 'Chance' If Loot Box Content Revealed

"The video game industry and the social gaming industry are encouraged to provide, and the consumer protection organizations to advocate for, more accurate information being displayed to consumers (e.g. specify the scope of the 'in-game purchases' label, disclosure of the content of loot-boxes and of the drop rates)," GREF said.

"Better consumer information would give players more certainty on in-game purchases as well as more flexibility in the playing of the game. This would include the possibility to acquire the same content in different ways by direct sale of in-game items included in loot-boxes, and providing for exchangeability of in-game items and enabling refunds."

It also called for national authorities responsible for consumer protection, health, education as well as digital and financial regulation to remain actively involved in discussion, and encouraged consumer protection to make recommendations.

"For example," it said. "The communication before the purchase of the loot-box content and the probabilities of obtaining a particular virtual item."

The report added: "GREF members will continue to develop their close cooperation and exchange of information on issues relating to loot boxes and skin gambling, where these trigger gambling regulatory concerns.

"However, it is recognized that whether these activities ultimately trigger the implementation of gambling regulation, would depend on each national gambling definition."

Rocket League Already Replacing Loot Boxes

Rocket League replacing secret loot boxes with transparent Blueprints

In-line with the suggestions made by the GREF report, the producers of video game Rocket League, Psyonix, this week announced it would replace loot boxes with a new feature it calls 'Blueprints'

Currently loot boxes drop at the end of matches in Rocket League and then have to be unlocked with keys players need to buy with real money. Blueprints will do the same thing, but will show gamers what is on offer before they decide whether or not to buy it.

It will be launched in December, and follows a move made in Fortnite by Epic Games in January. In their bid to increase transparency, they too now allow gamers to see what is inside their paid-for 'Loot Llamas' before they buy them.

The contents of free loot llamas are still a surprise, but those that are paid for by Fortnite's currency V-Bucks, are see-through, showing gamers what they are getting.

Parents Need Loot-Box Awareness

GREF members also stated that greater awareness from parents was needed and that further dialogue was required to create solutions to the issue of loot boxes, which it says “expose and acclimatise,” teenagers to gambling.

“Regarding minors, [GREF members highlight] awareness of parents, including the incentive for use of parental control in a systematic way; as well as the need to maintain a frank and productive dialogue with sector organisations to agree on more protective solutions, particularly amongst young people,” the report said.

"The dialogue between children and parents is difficult given the difference of their knowledge in the digital and gaming field. Parents only know that their children go to platforms to play, but may be unaware of the platform’s capabilities, whereby children can spend money, and even in some cases, be exposed to gambling or gambling-like products."

Suggestions on what protective solutions could be introduce include gaming time-limits, spend-limits, game interrupters, and only allowing children's accounts if they are linked to an adult's account.

What Makes Loot Boxes Like Gambling?

The element of chance involved in purchasing loot boxes in video games is what experts say makes that transaction like gambling.

Game producers like the randomness of the content of loot boxes, because that factor tends to increase spending and engagement rates.

The GREF report explains, "children’s cerebral development makes them unable to control gambling features in games. Those features are also considered to expose and acclimatise them to gambling. The lever of the experimental dimension in loot-boxes is to win something.

"One will always receives something with loot-boxes, but if one gets an item, he/she already has or doesn’t desire, it will be considered as a loss. Therefore, one could be induced to spend more to chase a win."

If real money was not required to buy loot boxes, they would be considered less akin to gambling, and more like part of a game, but the fact that real money is used to buy them within a game is what makes them potentially harmful to minors.