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The Battle for Loot Boxes: Are they Gambling?

by Caleb Compton on 03/04/19 05:56:00 pm

The following blog post, unless otherwise noted, was written by a member of Gamasutra’s community.
The thoughts and opinions expressed are those of the writer and not Gamasutra or its parent company.

 

The following is a reproduction, and has been modified for this site. The original article, and many more, can be found at RemptonGames.com


 

Lately in gaming there has been a large amount of talk about gambling as a part of game design, especially regarding underage players. While very few people are fans of loot-boxes in games, some of the most vicious attacks against these tactics have called them “gambling for kids”, and accused them of using these techniques to “hook” children into playing and paying more for the game.

However, this isn’t the first time that these types of accusations have been brought up. Depending on your definition, baseball cards go back as far as the 1860’s, and accusations of gambling have gone back nearly as far. However, in my research I have been unable to find any attempts to ban or make baseball cards (or other forms of trading cards) illegal.

220px-HonusWagnerCard
I will never be worth as much as this card

However, while trading cards seem to have avoided a legal backlash, loot boxes have not been so lucky. According to Eurogamer.net around 15 European gambling regulating agencies are looking at whether loot boxes would be considered gambling.

However, while these regulators do seem concerned with loot boxes themselves, which they say “blur the line between gambling and gaming”, their primary concern actually seems to be around Skin-betting, which was involved in a major scandal around CS:GO a few years back.

That isn’t to say that there has been no issues around loot boxes themselves, however. Already two countries (Belgium and the Netherlands) have declared loot boxes to be gambling and, therefore, illegal.

In today’s article I want to explore this issue, and give my thoughts on whether loot boxes should be considered gambling. To do so I am going to take a look at the legal definitions to determine what is considered gambling, examine some of the specific legal arguments against loot boxes, and finally present my argument on whether or not loot boxes should be considered gambling.

Terms and Conditions may Apply

In the following section I am going to be looking at what is and isn’t considered gambling, and how this definition varies from state to state within the US. I understand that this may not be the most interesting topic for everybody reading, so if you are not interested in these definitions you can skip to the next section, where I will look at some examples and specific cases.

Note: Most of the legal discussion in this article will pertain to the laws of the United States of America, in which I reside. Therefore if you are reading this from abroad it is likely that the specific laws that govern your country are different. That being said, many of the principles are likely to still apply.

2018 Roberts Court
“Yay, legal terms!” – Nine huge nerds

The legal definition of gambling is not universal, as it varies from place to place. However, at least in the US there seem to be a number of similarities among these definitions. According to the article “Gambling Modes and State Gambling Laws: Changes from 1999 to 2011 and Beyond”,  to be considered gambling three criteria must be met.

The first criteria is that something of value must be at risk – basically, there must be a bet. Second, there must exist the opportunity to receive something of value in return, such as a reward or prize. Finally, the third criteria is that there must be an element of chance that determines the outcome, although the amount of chance that is necessary to be considered gambling can vary and is often difficult to nail down.

When deciding whether a particular game has enough “chance” to be considered gambling there is a common test that many states use called the “Dominance factor”. This test states that in a game with an element of skill the element of chance must “dominate”, or have a larger impact on the outcome, than the element of skill. In other words, the outcome must be more than 50% chance to be considered gambling, otherwise it is considered a game of skill.

In addition, around half of states allow “social gambling”, but not “professional gambling”. Generally, this distinction allows gambling in a social context among friends. To be considered legal social gambling in these states the gambling must not be facilitated by anybody who is not an equal betting participant. This means that gambling in a professional casino context is banned, as is having a professional bookie who keeps track of bets and payouts.

DogPokerNight
Whether this rule applies to dogs is still under pending litigation

Finally, some states have specific rules that ban online gambling, while others do not. However, even if a state does not specifically ban online gambling this does not necessarily make it legal – it may still be banned under other laws that are already in place.

Testing the Limits

Before I get start looking at the arguments for and against loot-boxes, I want to examine some other areas that are and are not considered gambling in the US, to get a better idea of how these legal definitions are applied.

First, lets look at some of the most clear-cut examples of gambling out there – classic casino games like slot machines and roulette. These games provide a good benchmark because they clearly fit all three criteria for gambling. You have to place a bet in order to play, if you win there is the possibility of a prize, and the outcome is entirely (or almost entirely) out of your control. These games are gambling, through and through.

However, not all cases are so cut and dry. Lets take the case of Poker, specifically No Limit Texas Hold’em. Is this game considered gambling? Maybe…and maybe not. It really depends on whether you consider it to be a game of luck or a game of skill. The first two criteria are pretty cut and dry – there is a bet, and there is the chance to win a prize. However, measuring luck vs skill  is a very difficult task, and has led to a difference of opinion among state governments.

In around half of states Poker is considered completely illegal, while in around another 20 it is legal to play Poker socially. 5 states allow “cardrooms”, which are like casinos but only host card games such as Poker. Finally, online Poker is currently legal in four states – New Jersey, Delaware, Nevada, and Pennsylvania.

In addition, more evidence is being gathered to show that Poker is a game of skill, which could cause it to become legal in states that rely on the “Dominance factor” to determine whether something is considered gambling or not.

PokerRobot
If it was a game of luck you couldn’t make a robot that wins every time. Argument over.

Unfortunately, this argument doesn’t do much to tell us whether loot boxes are considered gambling, since there is really no argument that player skill can affect the outcome of the game. However, this example does show the amount of complication that can go into determining whether something fits into these definitions.

The Case For Loot Boxes

I, personally do not believe that loot boxes are gambling and therefore should not be illegal. This is because I do not believe that loot boxes fit with the second criteria to be considered gambling – “there must exist a chance to win something of value”.

Although it may seem like an odd use of the term, paying for the loot box could easily be considered to be making a “bet” on the outcome, which would quality for criteria number 1. In addition, the outcome of the loot box is clearly determined randomly, so the third criteria is met. However, I don’t believe that there is enough variance among the possible outcomes to be considered gambling.

This issue all depends on whether you consider the prizes found within the loot boxes to have value or not. If you say that they have no value then buying one certainly cannot be considered gambling, since there is no chance of receiving something “of value” for your bet. In this case it would be considered more of a donation.

battlefrontlootbox
For when you just want to throw extra money at EA for a job well done

However, I believe that these items certainly do have value, even if they are only digital. These days most games, television shows, movies, and music is distributed digitally, so I believe that it would be naive to say that a digital loot box has no value. If we say that these goods do have real, intrinsic value, does this mean that they violate the second criteria?

I would say no, for one reason – there is no way to lose your bet. Buying a loot box is not a gamble, it is a purchase, and every time you buy one you are receiving something of value. Unlike a slot machine or a roulette table, or even Poker, there is no chance that you will completely lose your bet and walk away empty handed.

That being said, not all loot boxes are made equal, and some are much more valuable than others. For those who enjoy loot boxes this is a big part of the appeal – the chance of opening a box and getting that last skin for their collection, a legendary weapon, or some other rare prize. I would still argue that this does not constitute gambling for two reasons.

First, as mentioned above even if you open a box that is not very exciting to you it is still not worth nothing, and there is no chance that you are simply losing money. Second, most of the variation in value between loot boxes is entirely subjective, and varies from individual to individual.

Take the issue of duplicates for example. If you open a loot box and receive an item that you already have, you might feel that particular box was a waste of money. However, this same item might have been very exciting to open if you did not already have one. The difference in value is not intrinsic to the item because it depends on outside factors, such as your current collection.

ApexLegendsSkins
*sigh* Another legendary skin…

 

Similarly lets suppose you open a box in Overwatch and get a skin for a character you don’t play. This particular skin is useless to you, and therefore you might feel like you lost money. However, this doesn’t make the skin an inherently useless item – somebody who does play that character might have been very excited to open that box.

Finally, in most games that contain loot boxes you can trade in duplicate or useless items for in-game currency, so even if you can’t use the item you get some value out of it. Because you are always receiving something of value every time you open a loot box I don’t think it can legally be considered gambling, at least in the US.

Until Next Time!

That is all I have for this week. If you enjoyed this article, check out the rest of the blog and subscribe on Twitter, Youtube, or here on WordPress so you will always know when I post a new article. If you didn’t, let me know what I can do better in the comments down below. And join me next week for a new installment of Game Design in Real Life!


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