Gaming or Gambling? Borders are getting blurred

More and more jurisdictions have started to investigate if buying random reward in video games (also called loot boxes) is a form of gambling and if this is putting in danger youths and children.

The Australian government investigated around 22 games and found that in almost half (45%) the criteria were very similar to gambling. What was even more concerning is that they were rated as appropriate for adolescents that were under the game to be allowed to gamble. We have asked John Pentin, editor in chief of online casino bonus aggregator Casinobiggestbonus: ‘It looks like the regulators are missing the trick here. They have been rightly very strict with gambling brands in regards to protecting vulnerable individuals and children from gambling, but it looks like some even more dangerous forms of soft-gambling are present in some video-games that are being considered completely safe’.

What is a loot box?

Directly speaking loot box are digital containers that have random rewards and are present in a lot of video games. For example, a loot box might have cosmetic items which might change the appearance of in-game characters or they could increase player’s power (for example it can be a gun that causes more damage, etc.).

The question is: are loot boxes a form of gambling and if so how we can protect children from being exposed?

Let’s clarify something. Not all video games are evil and also games companies are not evil either. The industry needs to support themselves and making money from video games is not evil. It is also quite clear that playing video games that have loot boxes it will probably not going to result in a lot of young people rushing to casinos.

Loot boxes, however, are a potentially inappropriate strategy that could cause potential harm to some individuals. It is therefore crucial that players and parents are fully aware of loot box mechanisms and that more analyses are carried out to find out how far this phenomenon is going.

What is concerning is that the contents of the box is determined by chance: having said that not all loot boxes can be acquired for real money. In some situations, items earned from a loot box can also be ‘cashed out’ using real money cash.

The gambling issue

So the main problem here is that players are spending real cash on what is effectively a game of chance where there are winners and losers. This is very close to being a gambling activity as confirmed by psychologist Mark Griffiths from the Nottingham Trent University, and those are the main reasons:

  • – There is an exchange of money or goods
  • – Unknown event determine the exchange
  • – Winners are gaining at the expense of the losers

It is fair to say that not all loot boxes are meeting Griffiths’ criteria but just below half of those do (45%).

All loot boxes are also operating on a different ratio of reinforcement schedule: this is a technical term that is used to describe the type of reward schedule where people are learning new behaviours and repeating them hoping to get a reward. The strategy is similar in loot boxes as the next time the box is opened, it could be the ‘big win’.

It is proven that young gamers have a higher risk of developing gambling issues if they are exposed to gambling at an early age. Another concerning area is that on some games, players are allowed to cash out their winnings. The possibility of doing so it is by many a legal requirement for gambling activity.

It is difficult to estimate what will be the short and long-term consequences of those mechanisms. In the short term, it is possible that gamers will overspend on loot boxes. In the long-term, it might be that those youngster exposed to gambling at an early age will have more significant risks of developing problem gambling issues.

What can be done about it

Electronic Arts, which is one of the biggest game creators in the world, has confirmed that loot boxes will be removed from their new titles. This is a clear sign that the gaming industry is taking those concerns very seriously. Self-regulation, in this case, would be the quicker solution especially as there are too many different policies across the countries where the games are being sold.

If self-regulation will not work and loot boxes that are similar to gambling will largely remain, regulators might decide to take additional steps in line with their jurisdictions in the matter.