What are loot boxes and skin betting in video games?

What are Loot Boxes

There has been lots of controversies going on with the loot boxes since last year with the release of video games like  Star Wars Battlefront II. The debate roared on, with politicians even beginning to enter the fray. Belgium’s Minister of Justice called the mix of gaming and gambling ‘dangerous’ after Belgium’s Gaming Commission opened an investigation .

Hawaii State Representative Chris Lee announced action to address ‘predatory practices at Electronic Arts and other companies’, saying of Battlefront II that ‘we shouldn’t allow Star Wars to encourage kids to gamble’. A French senator penned a letter to the gambling authority in response to the game, saying that it could be seen as gambling.

It’s not just the state of Hawaii that are investigating loot boxes. In email correspondence with a local university student, the Victorian Commission for Gambling and Liquor Regulation (VCGLR) has revealed that, yes, loot boxes constitute a form of gambling – at least in Victoria.

The correspondence kicked off by way of a student who reached out to the VCGLR, the independent regulator for the gambling and liquor industries in Victoria. They’re the body that issues licenses for bartenders, proof of age cards, and generally regulate venues where alcohol and/or gambling will happen. Video games isn’t typically one of those industries. But with all the recent controversy around Battlefront 2, and loot boxes in general, the student got in touch and asked: do loot boxes constitute gambling? The VCGLR analyst noted that the regulator could potentially work with other Australian bodies to keep a closer eye on gambling elements in video games.

Other reports have followed of so-called “skin betting” where children as young as 11 have used third-party websites to attempt to trade the in-game items for real-world cash.

But what are loot boxes?

What are loot boxes

Loot boxes are virtual in-game items that can be bought with real-life money by registering your bank account details to your gaming platform of choice. Purchasing loot boxes will reward you with a randomised selection of in-game content, which can range from cosmetic-only content, like new outfits for a player’s character, to game-changing content like more powerful weapons and items.

Some of these rewards may be rare, useful and much-sought after, while others may be incredibly common and useless. You could end up spending AU$10 and get exactly what you’re after, or spend AU$1,000 and have nothing worthwhile. In some games, these rewards can be traded or sold for in-game currency, while in others you’re stuck with them.

For certain games such as Counter-Strike: Global Offense (CS:GO), there are external real-world marketplace sites like Loot Market , where players can sell their unwanted virtual goods, with some items going for as much as AU$1,206. Overwatch is another popular video game that features loot boxes.

Loot boxes- Are they a form of gambling?

Online sites like Loot Market let players sell their in-game content for real-life money. This ‘feature’ popped up in video games as early as 2007, but has been popularised with the success of 2016’s release Overwatch. Loot boxes appear in free-to-play games as well as full-priced games.

Currently, there’s no age restriction or warning on video games featuring loot box microtransactions. Star Wars Battlefront II currently has a PEGI age rating of 16 on its box, but there’s no warning anywhere on the box mentioning its inclusion of loot boxes.

Loot market

While loot boxes are currently regulated under gambling law in some Asian countries, there’s no such regulation in much of the Western world. As well as being seen as an anti-consumer practice when included in full-priced games, they’re debatably a form of unregulated gambling- although not yet legally considered as such.

Concern is growing in Australia and other countries that such features are normalising gambling behaviours for game users, including children. The Victorian Commission for Gambling and Liquor Regulation has reportedly confirmed that it is “aware of the issue of loot boxes” and is in the process of assessing their legal status and the potential dangers they pose.

Due to the nature of Star Wars Battlefront II’s loot boxes, which were criticised for giving players who paid an advantage due to the sheer amount of time it’d take to earn the weapons, the game has ended up being something of a scapegoat. It was also heavily criticised for its decision to allow players to pay to unlock characters, such as Luke Skywalker, Princess Leia, Darth Vader, and Chewbacca, whereas doing so through in-game progression could take days.

The Skin Betting

Skin Betting

Skin betting is less well-known but still a form of video game gambling. It involves players attempting to gamble in-game weapons, costumes or characters (known as skins) either for real-world cash or for other, more powerful, skins. Third-party websites exist to feed the demand, which can quickly spiral into a habit. Because of these unlicensed skin betting sites, the safeguards that exist are not being applied and there are examples of really young people, 11 and 12-year-olds, who are getting involved in skin betting, not realising that it’s gambling. At one level they are running up bills perhaps on their parents’ Paypal account or credit card, but the wider effect is the introduction and normalisation of this kind of gambling among children and young people.

Damage done by loot boxes

Damage done by Loot Boxes

Although Star Wars Battlefront II is certainly the worst recent example of loot boxes, it’s by no means the root of the problem. While it’s understandable to use it as a scapegoat, it’s important to take a look at the damage that loot boxes can cause as a whole.

It should be obvious to most just by reading a description of the monetisation method that loot boxes could certainly be classified as a form of gambling, by it’s the way that they’re ingrained in video games that really causes harm.

In-app purchases, better known as microtransactions, have long been the go-to monetisation method of mobile games, with the feature finding its way to console and PC games in more recent years.

Online video games with any form of in-app purchases, including loot boxes, obviously want to encourage players to spend as much as possible. Whether it rewards players with a gameplay advantage or a shiny new outfit that will make other players jealous, the effect is the same.

Players that already have low impulse control or addictive natures are mostly at risk here, with the carrot dangled in front of them at every given opportunity. Though the majority of players may be able to avoid purchasing the predatory loot boxes, the more vulnerable will have more difficulty in doing so.

In WWII game even has players open their purchased loot boxes in front of other active players after they drop from the sky onto the beaches of Normandy, which encourages them to purchase content themselves when they see someone earn a rare reward.

Future of loot boxes

Future of loot boxes

The psychology at play here is why games with ‘cosmetic-only’ rewards, like the far less criticised Overwatch, should not be exempt from the criticism that Star Wars Battlefront II is facing – even when the loot can be obtained without paying. Other games that include loot boxes are FIFA 17, Forza Motorsport 7, Middle-earth: Shadow of War, Gears of War 4 and Halo 5: Guardians. Even more games include microtransactions, which often let you pay real-world money for in-game currency.

Though defenders will claim the video game industry needs the profits of loot boxes to remain sustainable due to increased budgets, but certainly it should not allow unethical practices for the sake of profitability. If the industry really does have a profitability problem, a better solution should be found, like a less damaging monetisation model  like in-game advertisements, lower budgets, or the rise of video game prices.

Being a gamer yourself, you’ll have to wait a bit as some legislative action may be on the way, though that can take time. If you’re a parent who doesn’t want your kid spending money on in-game items, you can check to see if games have microtransactions or loot boxes.

You can also make sure that no payment method, such as a debit or credit card, are attached to consoles or accounts that they’re using. As for publishers and developers, they’re likely watching what’s happening with Star Wars Battlefront II with alert. EA has put a pause on microtransactions and removed some of the most rare prizes from loot boxes in a hope to calm fans, and that could have a big impact on how the next wave of AAA games implement them.


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