On 23rd September, the UK government launched its call for evidence on video game loot boxes. The call came in response to the Department for Digital, Culture, Media & Sport (DCMS) Select Committee’s report on Immersive Addictive Technologies, which highlighted the impact of loot boxes on in-game spending and gambling-like behaviour.
Just days later, video game publisher Electronic Arts released the latest iteration of its ever-popular FIFA series. Despite the increased scrutiny surrounding loot boxes, FIFA 21 includes the hugely popular Ultimate Team (FUT) game mode, which has been a feature of the series since FIFA 09. With players allowed to make real money purchases on a game mode that is essentially a lucky dip, many are calling for current law to be amended. Regulating loot boxes in games such as FIFA under UK gambling laws would limit the gambling-related harm they cause, among both adults and children.
What are loot boxes?
A loot box is a kind of in-game purchase or ‘micro-transaction’ where players do not know what is in a box until they have bought it. These might be ‘skins’ used to customise characters or weapons, or they might speed up progress within the game. While they can be given to players during gameplay as a reward for levelling up, for example, they can also be bought directly, with real-world funds or in-game currency.
Dr David Zendle, a video game effects expert and lecturer at the University of York, told the House of Lords Gambling Committee:
“They are part of a new form of making money from games. In the 1990s and early 2000s, the games industry made money by you handing over some cash in exchange for a product. Over the past 10 years, they have realised that you can use games as a platform to sell other things, such as a skin to make your character look different, an item to make your character more powerful, or a boost, in games such as “Candy Crush”. The strategy of using your game not as a product but as a platform is massively lucrative. The “Candy Crush” franchise, one of many in a cosmology of games, is estimated to make over $1 billion a year through this kind of microtransaction. We are talking huge amounts of money.”
While loot boxes are a relatively new development in video games, those who have purchased collectables like Panini’s Premier League stickers or Pokémon cards will be all too familiar with the feeling of purchasing a pack without knowing its contents and hoping for a desirable reward.
Loot boxes were initially employed as a monetisation tactic to underpin free-to-play PC and mobile games, such as FarmVille. Today, these micro-transactions are also prevalent in console gaming, where players already pay a considerable amount for the base game. Their use in 2017’s Star Wars Battlefront 2 drew much scrutiny from players and government officials alike in the US and across Europe. Battlefront 2, another EA title, allowed players to buy loot boxes with real money. These loot boxes contained items that affected gameplay, therefore providing a competitive advantage to people willing to spend more money.
After sixth months of backlash, EA scrapped the microtransactions altogether. Here’s the statement they released:
“Crates no longer include Star Cards and cannot be purchased. Crates are earned by logging in daily, completing Milestones, and through timed challenges. Inside of these crates, you’ll find Credits or cosmetic items, such as emotes or victory poses, but nothing that impacts gameplay.”
While controversial, these microtransactions are clearly lucrative – the video games industry is projected to generate $50 billion by 2022, according to market research firm Juniper.
EA Net Revenue from Ultimate Team
FY 2020: $1.49bn
FY 2019: $1.37bn
FY 2018: $1.18bn
FY 2017: $775m
FY 2016: $660m
FY 2015: $587m
— Daniel Ahmad (@ZhugeEX) May 20, 2020
Why do players want loot boxes?
The contents of loot boxes may affect progress through the game or simply be designed to convey status. In FIFA, for example, your team won’t be full of star players when you begin the game mode, but FUT provides ways to improve it. You can earn FUT coins and digital packs filled with players and consumable items for completing in-game objectives and playing offline and online game modes such as Squad Battles and Division Rivals, respectively.
You can use these coins to buy more packs from the store or bid on players on the FUT transfer market. If you want to buy packs without having to earn them via gameplay, FIFA allows players to purchase FIFA points with real money.
In FUT, players can assemble their own squad of stars by buying or earning packs of mystery players. The contents of these packs, or loot boxes, are determined by chance and are only revealed once they are acquired, either with FIFA coins earned via gameplay, or FIFA points which can be purchased. This is otherwise known as a ‘microtransaction’.
Do loot boxes provide a competitive advantage in multiplayer games?
Speaking to Compare.bet, London-based gamer Pardeep Jheeta said:
“It can give you a competitive advantage in the sense that you have a slightly higher chance of getting better players, depending on how many packs you’ve opened. It doesn’t necessarily make someone better at playing the actual game. [For example] me with an 85-rated [FIFA Ultimate] team, could beat someone who has a 90-rated team just because I understand the playstyle better.”
Troy Aidoo, co-founder of Streamcast, echoed these sentiments, telling Compare.bet that the alternative isn’t particularly attractive either.
“I think it [loot boxes] gets you the team you need a lot faster. You do need the best players to compete at a tournament level or even just play your friends at a local level. The thing with FIFA, especially for FUT is that there are two options – play the game a lot, or take on some level of risk by buying randomised packs. Neither of these are healthy options.”
Should loot boxes be considered gambling?
While microtransactions are generally bothersome —they see players spend more money on a game they already paid for— the random nature of loot boxes sets them apart and creates a cause for serious concern.
Paying for an item, such as a FUT pack, without knowing its contents means gamers are taking a risk in the hope of a desired result. The parallels to gambling has drawn the ire of players for some time, but as loot boxes become more prevalent, government officials have rallied to have them regulated under UK gambling law.
In July, The House of Lords Gambling Committee said video game loot boxes should be classified as “games of chance”.
‘If a product looks like gambling and feels like gambling, it should be regulated as gambling,’ their report says.
Legally classifying loot boxes as “games of chance” would bring them under the 2005 Gambling Act, which bans the sale of gambling products to people under the age of 18.
The links between loot boxes and gambling go well beyond the element of chance, extending to the way they’re designed and appear on player’s screens. Loot boxes are made to seem exciting. They are flashy, dramatic and have eye-catching sounds and visuals. In some cases, such as NBA 2K’s MyTeam mode, interfaces are even explicitly modelled on casino games, such as slot machines.
Speaking to Compare.bet, Mark Johnson, games developer and Lecturer in Digital Cultures at University of Sydney, said:
“In essence, you are wagering money for uncertain outcomes, and this is very compelling for many people for various reasons. It gives a sense that just one more purchase might lead to the item you desire, and it’s inherently exciting and thrilling to engage with any kind of potential unpredictable reward. Games using loot boxes also generally put a lot of effort into making the process of opening them exciting – lots of graphics, sounds, congratulations, and so forth – which are what we call “juicy” game design elements that can often get people coming back.”
Last year’s DCMS committee report found that “random delivery of loot box rewards is akin to conventional gambling products and designed to exploit potent psychological mechanisms associated with the development and maintenance of gambling-like behaviours”.
When asked by a member of Parliament if the publisher had any “ethical qualms” about loot boxes, Kerry Hopkins, vice president of legal and government affairs at EA, responded by comparing loot boxes to Kinder Eggs. Hopkins said the company prefers the term “surprise mechanics” and argued that the use of loot boxes in games is “quite ethical and quite fun [and] enjoyable to people.”
When asked for his thoughts on EA’s response, Johnson said:
“This is a pretty ridiculous claim. The attempt to transform the discourse with the “surprise mechanics” idea is really transparent and actually insulting to games that genuinely surprise the player without demanding money from them first; and the Kinder Egg comparison is misleading, as the odds of getting those items cannot be altered after production like the virtual contents of a digital loot box can. They also guaranteed to contain something of value – i.e. a nice treat for someone to eat – whereas many loot boxes have no guarantee of containing anything of value whatsoever. They are also different from many collectable card games and the like because in most cases, you can trade away cards or toys you don’t want, whereas many games with loot boxes do not allow trading, leaving you stuck with unwanted items and unable to get rid of them for something you do actually want.”
EA has long argued that loot boxes should not be considered gambling as they have “no monetary value”.
However, the 2019 DCMS committee report also found evidence that loot box winnings can be exchanged for money. Third-party websites selling FIFA coins, gaming accounts and rare items are commonplace. One such example sees third party site U7buy list Brazilian legend Ronaldo’s 94-rated ‘icon’ card at a whopping £1383.85. Opening this card in a FUT pack is clearly a lucrative prospect, but is highly unlikely. If you were to buy a ‘Premium Gold Jumbo’ pack for 300 FIFA points (£2.37 if three purchases of 100 points are made), there’s only a 6.1% chance that you would get a Gold 85+ player, let alone an elusive icon card, which are often rated 90 or above.
While FIFA has published rules warning players against participating in ‘FUT Coin distribution’, there is no guarantee that doing so will result in any action against offending accounts. Compare.bet purchased 150,000 FUT coins via third-party site MMOGA, worth £20.28, which only resulted in a reminder of the rules of play from the FIFA team.
Why are real-money loot boxes problematic?
If real-money loot boxes are considered gambling, then their current unregulated state is a huge cause for concern. They can be addictive and costly, yet have no mechanisms for player protection. Even more concerning, is that there are little to no safeguards in place for children.
FIFA, for example, is a PEGI-3 rated game, yet is essentially promoting gambling to children, seen here instructing how to use FIFA Points to buy packs in an ad for FIFA 21 featured in Smyths Toys catalogue. In a statement to Eurogamer, EA said it had undertaken an immediate review of all future media placements, and admitted the FIFA Points advert shouldn’t have appeared in the toy magazine in the first place.
“…We’re aware that advertising for FIFA Points has appeared in environments it shouldn’t have. We have been working diligently with Smyths to ensure this advertisement is not distributed in any remaining copies of their 2020 catalogue. We have also undertaken an immediate review of all future media placements and are working to ensure each of our marketing efforts better reflects the responsibility we take for the experience of our younger players.”
EA’s conduct here is alarming, especially when you consider the latest figures from the Gambling Commission, which show 55,000 children aged 11-16 years old are classified as problem gamblers.
In January, NHS mental health director Claire Murdoch called on game publishers to ban loot boxes from their products:
“Young people’s health is at stake, and although the NHS is stepping up with these new, innovative services available to families through our Long Term Plan, we cannot do this alone, so other parts of society must do what they can to limit risks and safeguard children’s wellbeing.”
Successfully combatting loot box gambling around the world
The UK Government need only look to neighbouring country Belgium for an example of how to solve this issue. In May 2018, the Belgian Gaming Commission declared that loot boxes should be regulated under gambling law. Game developers such as EA and Blizzard pulled loot boxes from their games in those countries. FUT players in Belgium can still buy packs, but only with FUT coins earned via gameplay.
The Dutch gaming authority came to the same conclusion just a few months before Belgium did, finding that “Loot boxes are similar to gambling games such as slot machines and roulette in terms of design and mechanisms,” Video game publishers were instructed to make changes in order to comply with Dutch law.
The Federal Department for Media Harmful to Young Persons (BPjM) announced in July 2020 that it may consider requiring games with loot boxes to be rated at a higher rating level under a new Youth Protection Act that is expected to be passed and in enforcement in early 2021.
In November 2019, China’s General Administration of Press and Publication banned the sale of loot boxes to users under eight years of age and restricted their sale under-18s, enforcing a maximum monthly spending limit ranging from 200 renminbi to 400 renminbi.
A class-action lawsuit was filed against EA in California in August 2020 over their Ultimate Team loot boxes in FIFA and Madden NFL games. The EA case seeks a jury trial to decide if the Ultimate Team loot boxes are considered gambling mechanisms under California law, and seek US$5 million in damages.
What should happen next?
In April, PEGI added warning labels to indicate if a game has loot boxes and other random paid-for items. However, further action needs to be taken to safeguard children and adult problem gamblers.
Clare Murdoch has called on gaming companies to:
- Ban sales of games with loot boxes that encourage children to gamble
- Introduce fair and realistic spending limits to prevent people from spending thousands in games
- Make clear to users what percentage chance they have of obtaining the items they want before they purchase loot boxes
- Support parents by increasing their awareness on the risks of in-game spending
Mark Johnson furthers Murdoch’s suggestion of transparency surrounding loot boxes, telling Compare.bet:
“Research on this kind of gamblified game system is only just beginning, but it seems likely that telling people what the odds of success are, or limiting purchases, or similar techniques, might prove effective.”
The House of Lords Gambling Committee’s July 2020 state of gambling report concluded that “Ministers should make regulations under section 6(6) of the Gambling Act 2005 specifying that loot boxes and any other similar games are games of chance, without waiting for the Government’s wider review of the Gambling Act.
In an email to Compare.bet, Michael Collon OBE, the Clerk of the Select Committee on the Social and Economic Impact of the Gambling Industry, said:
“Ministers already have the power to do this without delay. We are still awaiting the Government’s response to the report, and very much hope that they will agree [with] this recommendation and take the necessary action.”