Loot boxes in video games: Cool rewards or gambling trap?

Items found in a US$1 (S$1.35) loot box from EA's Star Wars Battlefront II game with five items that range in game play value. For example, the Yoda item allows a player to access one of Yoda's abilities in-game, while the Darth Vader one is merely a
Items found in a US$1 (S$1.35) loot box from EA's Star Wars Battlefront II game with five items that range in game play value. For example, the Yoda item allows a player to access one of Yoda's abilities in-game, while the Darth Vader one is merely a model. PHOTO: GAMESEC

Authorities assessing video games with gambling-like features following uproar over latest Star Wars game

The Force has not been with the video game industry - it has come under scrutiny by regulators across the world for gambling-like mechanics in several games called loot boxes. The Singapore authorities are also looking into the matter.

The scrutiny came after harsh global public criticism of the latest game in the Star Wars franchise, Battlefront II, that publisher Electronic Arts released on Nov 17.

Several foreign legislators, such as those from Australia, Belgium, Britain and Hawaii, have taken issue with the loot boxes found in the game and other titles.

Singapore's National Council on Problem Gambling (NCPG) told The Sunday Times it is aware of such features in video games and is monitoring the situation.

With many loot boxes, a type of video game micro-transaction, gamers pay real money to directly or indirectly buy goodie bags. Opening them gives players random in-game rewards.

The odds of getting rare items can be low and a loot box can be worth the equivalent of a few dollars in real cash.

  • RESPONSES ELSEWHERE

  • What other countries and states are doing about loot boxes.

    BELGIUM

    The Belgian Gambling Commission was among the first government authorities to call out the gambling mechanisms behind loot boxes. In a Nov 15 report, it said it would investigate if loot boxes fall under gambling, and if so, is prepared to have them banned across Europe.

    If the commission decides that such loot boxes do constitute gambling, game publishers would have to secure a special permit to sell their games in Belgium and within the European Union.

    HAWAII

    Hawaii state politician Chris Lee addressed loot boxes on Nov 22, calling for legalisation to halt the "spread of predatory practices in online gaming, and the significant financial consequences it can have on families".

    He had particularly harsh words for Star Wars Battlefront II, calling it a "Star Wars-themed online casino designed to lure kids into spending money".

    "It's a trap," he said, referencing a famous line said in the third Star Wars movie.

    AUSTRALIA

    The Australian Communications and Media Authority, which oversees the country's Interactive Gambling Act that deals with online gambling websites, told game website Kotaku in a report on Nov 24 that while loot boxes do not technically fall under the Act, the agency is monitoring the use of loot boxes and the use of other similar in-game mechanics that have gambling-like characteristics.

    This follows a reply from a strategic analyst in the Australian state of Victoria's commission for gambling and liquor regulation.

    Such loot boxes do fall under state gambling laws in Victoria, said the analyst, Mr Jarrod Wolfe, in an e-mail reply to a student, which was subsequently made public.

    The state commission is working with inter-state and international counterparts to update their legislation, he added.

    BRITAIN

    The British Gambling Commission's executive director Tim Miller said on Nov 24 that items from loot boxes used in a game and which cannot be cashed out are "unlikely to be caught as a licensable gambling activity". The commission's legal powers would not allow it to step in, too.

    However, he said that when a product cannot be defined as gambling but could cause harm to children, "parents will undoubtedly expect proper protections to be put in place by those that create, sell and regulate those products".

    "We have a long track record in keeping children safe, and we are keen to share our experiences and expertise with others that have a similar responsibility," he added.

    CHINA

    Legislation for loot boxes kicked in earlier this May, where game publishers are required to disclose the exact odds of receiving items from loot boxes.

    This led to many big-name developers - such as Blizzard, Valve and Riot - revealing the chances of getting particularly rare items in such loot boxes for the first time.

    China's Ministry of Culture said this was to ensure that the games are fairer for players.

 
 

In the case of the Star Wars game, there were random loot box items that helped players get better at the game. So those gunning for specific items could spend a fortune on the boxes if luck was not on their side.

The Belgium authorities were among the first to weigh in on the matter following public concerns. The nation's gaming commission said it was looking into whether loot boxes can be considered a form of gambling in a Nov 15 report. It highlighted two shooter games: Star Wars Battlefront II and Activision Blizzard's Overwatch.

Referring to loot boxes, Hawaii state politician Chris Lee on Nov 22 called for legalisation to halt the "spread of predatory practices in online gaming and the significant financial consequences it can have on families".

He also called Star Wars Battlefront II a "Star Wars-themed online casino designed to lure kids into spending money".

"It's a trap," the legislator said, referencing a famous line said in the third Star Wars movie.

In Singapore, loot boxes currently do not fall under the Remote Gambling Act, a spokesman for the Ministry of Home Affairs told The Sunday Times.

"The Act does not cover computer games which do not, as part of the game design, enable players to receive money or money's worth, consequent to the outcome of that game," he said.

However, it is understood that the ministry is aware of developments overseas and is assessing the situation. Similarly, the NCPG said it is "aware of gambling elements built into games and has been monitoring the situation".

Following the public uproar globally, Electronic Arts temporarily pulled paid loot boxes from its Star Wars game, ahead of the launch of a new Star Wars film, The Last Jedi, on Thursday.

REGULATIONS

Singapore's Remote Gambling Act, passed three years ago, targets obvious online gambling games such as online lottery or poker, where players have a chance to recoup their winnings in real cash.

Loot box mechanisms, while having elements of chance and items of value, usually do not allow users to cash out. So, they are most likely exempt from the Act, said lawyer Adrian Kwong, managing director of ConsigClear, which has a strong focus in video gaming and entertainment law.

Still, "it is also worth noting that the Act is expressly intended to prevent the games engendering crime and social order issues in Singapore, as well as help protect the young and vulnerable", said Mr Kwong.

"If complaints are received that the young are being exploited, for example by overspending on loot boxes or becoming addicted... the authorities may consider a particular game as objectionable."

Not being able to cash out from the game company directly is also why existing physical trading card games are not considered gambling, even though they follow a similar mechanism - buying card packs for a chance to get a rare card. Players can also buy the cards they want directly from the secondary market or from other players.

In many video games, players cannot buy specific loot box rewards with real or virtual cash, and rely on luck to get them from the boxes.

FEARS OF ABUSE

Loot boxes are not a new phenomenon - they first appeared in games from the mid-2000s onward, such as in soccer video games and online titles.

The boxes were also often used in "free-to-play" games, like mobile titles, where the game itself is free to download and play, and players can buy more game play options - like items, characters or content - with real cash.

Said Mr Christopher Natsuume, creative director of local game studio Boomzap: "The downside, of course, is that (the loot box) creates a tremendous incentive for developers to design games that will, eventually, require that players spend money. This can create abusive and exploitative designs, which prey on those who don't fully understand the economic mechanics, like children."

Loot boxes can be money makers. Electronic Arts said in a GamesIndustry.biz March report that a feature in its sports games, which allows players to buy loot boxes with real or virtual cash, made the company US$800 million (S$1 billion) in net revenue annually, a more than 20 per cent year-on-year increase.

The loot box model recently made its way into more big-budget games that have a retail price tag.

Last year, Activision Blizzard's Overwatch had loot boxes. Other publishers followed suit this year, most recently 2K Sport's NBA 2K18 and Warner Bros' Middle-earth: Shadow of War.

This fuelled more criticism from gamers that exploded with Star Wars Battlefront II, which many observers said was because of the huge mainstream appeal of the Star Wars franchise.

Video game experts said that loot boxes can exhibit predatory features which could encourage gambling-like behaviour. Such fears are echoed by parents.

Senior programmer Jeremy Chia, 35, said that while he has started introducing his four-year old son to certain game apps on a tablet, he has to be extra vigilant.

"My son won't know what is gambling in games - he just sees the pretty lights and sounds, and gets conditioned into buying the boxes," he said. "Clicking the buy button is so easy and there is no limit to how much you can spend."

But loot boxes are not all bad, said video game experts. Those that are particularly addictive and problematic tend to give players a game play advantage.

Dr Simon Lui from the Singapore University of Technology and Design said that a bad loot box gives gamers a chance to get items that help them "win" in the game.

"Winning the game is then no longer dependent on gaming skills, but on luck," said the assistant professor for information systems technology and design. But a good loot box may be more fair and only offer decorative items or random items of similar value that do not affect game play, he said.

 


WHERE'S THE LOOT

Wondering which games have loot boxes that can be purchased with real money?

Here are some examples.

BIG-BUDGET GAMES

•Star Wars Battlefront II (paid loot boxes temporarily removed from game)

•Overwatch

•Counter-Strike: Global Offensive

•Middle-earth: Shadow of War

•Call of Duty: WWII

•NBA 2K18

FREE MOBILE GAMES

•Clash Royale

•Star Wars: Galaxy of Heroes

•Fire Emblem Heroes

•Final Fantasy Brave Exvius

•Fate/Grand Order

FREE ONLINE COMPUTER GAMES

•Star Wars: The Old Republic

•Hearthstone (also available for mobile)

•Team Fortress 2

A version of this article appeared in the print edition of The Sunday Times on December 10, 2017, with the headline 'Cool loot or gambling trap?'. Print Edition | Subscribe