Video Game Gambling Laws: Overview
Recently, a public debate has been raised in the area of video game gambling laws. The reason lies in loot boxes and how they operate. Loot boxes are a feature in video games that allows randomized prizes to be given out in exchange for real money.
What Are Video Game Gambling Laws?
Now that gambling has been on the rise all over the world, video games are attracting a broader audience. They have become more widely accessible because of technological development.
However, in the case of video games, a major issue has been raised. It concerns the so-called “loot-box mechanics,” which is a tool that allows users to exchange real money for the chance to win random prizes. The debate revolves around the topic of whether, in essence, this is gambling or not.
What Are Loot Boxes
Loot boxes in video games are features that allow you to pay real money in order to receive certain perks, oftentimes awarded on a random basis. Originally, this reward model was used by the creators of free-to-play mobile games. However, later on, it caught the attention of PC and console game developers.
Nowadays, some of the biggest brands in the video gaming industry use the loot box mechanics within their products. Loot boxes allow you to obtain different in-game items, such as skins, objects, and so on. However, how does this model relate to gambling?
What Is the Legislative Debate Behind Loot Boxes?
Loot boxes use the so-called microtransactions to enable players to obtain different perks when playing a video game. This is a common approach within the gaming industry. However, some legislators have argued, that – due to their randomized nature – such microtransactions present a form of gambling.
Unlike online casinos, where strict rules are applied to prevent minors from engaging in betting activities, video and console games do not perform similar types of control. If loot boxes indeed present a form of gambling, this would expose underage and potentially vulnerable players to the unwanted effects of wagering.
Why Do Loot Boxes Matter?
In short, loot boxes have enabled a whole new shift of the video game industry. It concerns the ownership of in-game assets. While, for instance, we cannot say that you own a game if you play it, when you exchange your real money for certain in-game items, you might be considered as their owner.
In other words, you pay to use in-game features as a service. This moves the industry to selling video games not as products but as services. The term „games as a service (GaaS)” has been coined to signify this process.
Are Loot Boxes Gambling?
There has been much debate going on recently as to whether loot boxes present a form of gambling or not. Proponents of the idea that they should be treated as means for wagering claim that because they commonly involve an element of uncertainty, loot boxes resemble luck-based games like the lotto. Further, they go on to argue that, based on this premise, video game players become exposed to the potentially negative effects of gambling.
How Does Legislature Treat Loot Boxes?
The answer to this question largely depends on the particular state. For instance, the European Union has been reluctant to come up with a unified definition. Instead, in 2020, it released a report on Internal Market and Consumer Protection, which said that the matter should be handled at state level by member states.
The reasoning behind this approach stems from the fact that different countries are responsible for their own gambling regulations. The report, however, has warned that, because the matter is strictly individual, a certain fragmentation on the video game market may occur. Problems did not take long to occur.
For instance, Belgium and the Netherlands found that some – though not all – loot boxes are breaching their national gambling laws. Another example is France, where there the stance is quite interesting. The French government has insisted on applying gambling regulations to loot devices that allow you to trade in-box purchased items for real money outside of the game.
In contrast, the US has not hurried to label loot boxes as gambling forms. There are hot debates going on, yet no specific results are expected soon.
Frequently Asked Questions
The topic of video game gambling laws is really vast. There is no one way to approach the issue. On an international level, states largely differ in the way they handle it. To make the video game gambling laws a bit easier to understand, we offer a brief FAQ section below.
1️⃣ How Do Loot Boxes Work?
Nowadays, many big video game companies use the loot box model. These are devices that allow you to purchase in-game randomized perks for real money. Specific video game gambling laws should not be underestimated, though. The random nature of the rewards has raised much debate about whether or not loot boxes are a form of gambling.
2️⃣ Why Are Lawmakers Concerned About Loot Boxes?
As mentioned, loot boxes offer randomized in-game benefits, for which you pay using actual cash. Therefore, some customer protection organizations and legislators have been concerned about whether or not this is a potentially harmful form of gambling. They argue that certain control is needed to protect minors and vulnerable players.
3️⃣ Are Loot Boxes Important in Video Gaming?
As a matter of fact, loot boxes have introduced an entirely new era of video gaming trends. The reason is that they have pushed forward the ”games as a service” approach to selling video games, thus changing the market completely.
4️⃣ Are Video Games Using Loot Boxes Considered Gambling?
There has been an ongoing conversation as to whether or not loot boxes are forms of gambling. Some of the main reasons that cause the debate are based on the randomness of the rewards you get when purchasing a loot box with real money.
5️⃣ What Are the Laws on Loot Boxes?
The regulatory framework on loot boxes widely differs across the world. There is no unified stance internationally, as gambling is largely a matter of domestic regulation. For instance, the European Union lets each member state decide for itself whether or not loot boxes are forms of gambling.