Are Loot Boxes Gambling? Washington State Demands an Answer

Posted on: January 28, 2018, 02:00h. 

Last updated on: January 27, 2018, 06:48h.

Casino.org Staff Writer Read More

Expertise: Commercial Gaming.

Washington State Senator Kevin Ranker (D) has charged the State Gambling Commission with answering once and for all the question of whether a loot box constitutes gambling, and whether the microtransactions of modern video-gaming are predatory towards children.

A loot box is broadly defined as consumable in-game “chest” that offer the player randomized chances to win more virtual items or skills. They have existed for some time, typically as a device to monetize mobile “freemium” social games, while acting as a “compulsion loop” that keeps players engaged and financially invested in the game.

Their addictive qualities and the element of chance have led to comparisons with slot machines, but it’s their sudden proliferation among major video game releases that have concerned politicians and regulators, while at the same time driving avid gamers up the wall.

The Loot Box Controversy

Recent games like Middle Earth: Shadow of War and Star Wars Battlefront 2 employ loot boxes that require users to make microtransactions, despite the fact they have already forked out $60 to buy the game.

Meanwhile, regulators are concerned that the distinction between gaming and gambling has become blurred and that children will not be able to tell the difference.

With no “stake” involved, loot boxes certainly can’t be classed as gambling by any traditional definition, so is it time to change that definition?

“What the bill says is, ‘Industry, state: sit down to figure out the best way to regulate this,’” Ranker told the News Tribune. “It is unacceptable to be targeting our children with predatory gambling masked in a game with dancing bunnies or something.”

Bunnies aside, Ranker is specifically asking the gambling regulator whether a loot box can be considered gambling under Washington State law, but also whether such mechanics belong in video games at all. And, if they do, should minors be permitted access to these games, and should game developers be more transparent in disclosing the odds of winning?

Ranker’s bill proposes the gambling commission conduct a study that will offer recommendations to lawmakers on how best to build a framework to regulate games that involve loot boxes.

ESRB Weighs in and Cops Out  

In October, the video games industry self-regulator, the Entertainment Software Rating Board (ESRB), said it would not give games that employed loot-box mechanics an “adults only” rating because it did not consider them to be gambling on the grounds that “while there’s an element of chance in these mechanics, the player is always guaranteed to receive in-game content, even if the player unfortunately receives something they don’t want.”

However, since then, jurisdictions from Hawaii, to the UK, to Belgium have vowed to delve deeper into the issue and tighten the rules.

Washington pulls no punches when it comes to gambling regulation. It is the only state in the US where residents can, theoretically at least, be prosecuted for gambling online.

It is also the home of the Valve Corporation, developers of Counter Strike: Global Offensive and by extension, albeit inadvertently, the billion-dollar clandestine skins gambling industry that sprang up around the game in 2015.

In late 2016, Washington threatened Valve with criminal prosecution unless it moved to dismantle the skin gamble industry.