Legislating Loot Boxes

How much is Darth Vader worth?  This question has, in a roundabout way, caused some legislators and regulators to look at how video games make their money.  The recently-released video game Star Wars Battlefront II originally had a profit model which locked large portion of the game off behind timed barriers.  One estimate, for example, was that it would take roughly 40 hours to unlock the ability to play as Darth Vader.  This wait could be drastically reduced by purchasing loot boxes, which had a chance of containing in-game currency.  One estimate claimed that, under Battlefront II’s original pricing model, it would take, on average, over 4500 hours to unlock everything.  Conversely, the loot box payout structure would have given the same result for roughly $2100.  Although, as of this writing, the game’s publisher has scrapped this pricing model after a huge backlash, it brought the issue of loot boxes to the attention of the public and legislators.

Essentially, a loot box is a randomized package of in-game items, purchased with real money.  It adds an element of chance, as a player may get a rare item for a small amount of money, or, more likely, may spend more than the actual cost of the game for common items.  The thing that makes loot boxes more worrisome than, say, a pack of baseball cards is the fact that some games are designed entirely around promoting the purchase of loot boxes.  Given that the items contained in loot boxes make the player’s character more powerful, and that the game is a competitive one, not buying loot crates puts players at a serious disadvantage.  Essentially, the game is less fun the less a player spends.

Describing the loot boxes in Battlefront II as “a Star Wars-themed online casino designed to lure kids into spending money,” Hawaiian state legislator Chris Lee has proposed a ban on the sale of video games containing “gambling mechanisms,” or loot boxes, to children under 21.  Moreover, he claims other states are looking into the same thing.  One issue with this plan is that it is a lot harder to verify someone’s age online.  Unless online retailers can ask for and verify ID, then anyone under the age of 21 can just lie about their age.  As almost 75% of game sales are digital downloads, such regulation would be virtually unenforceable.  A more realistic plan would be to just ban loot box sales in Hawaii.  Online retailers already track the states their purchases go to, as several states charge sales tax for online purchases, so holding the sellers of digital games liable for sales in Hawaii would be much more enforceable.

It is unclear what is going to happen in Belgium.  Belgian officials are still looking into whether loot boxes can be considered gambling under existing law, and, if not, whether new regulations should be put into effect.  Complicating matters further, Belgium will likely have to, and is planning on, approaching the European Union to put regulations into effect.  This will at the least slow down regulation, and may stymie it entirely.

So, what’s going to happen?  Legally, probably not much.  It’s uncertain if state legislators have the sort of authority needed to truly regulate the sale of these video games and loot boxes in any meaningful way.   More likely, loot boxes will simply remain standard practice in the video games industry, or they will be forced out, not by governments, but by fans that refuse to purchase them.

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