GamingLawPills #22: Loot boxes reviewed in by the US FTC and in Australia

GamingLawPills No. 22 brings news on the concept of loot boxes and the increasing attention of authorities in Australia and by the US Federal Trade Commission (FTC).

Loot Boxes in Australia

The Australian Senate Environment and Communications References Committee advised the Australian Government to undertake a comprehensive review of loot boxes within video games. The report published by Australian Authorities noted that loot boxes are “not a homogeneous entity” and there are many different iterations of the mechanic.

However, a range of stakeholders, including regulatory agencies and academics, referred to the committee that loot boxes should be assessed on a case-by-case basis. In this respect, it should be considered that there are a number of types of loot boxes available in video games. Loot boxes may be cathegorised on the basis of the method of acquisition such as:

• Game-play: loot boxes are awarded to players as a result of game-play for achievements, milestones and challenges completed;
• Game-play with purchasable items: loot boxes are provided to players during game-play, but players must purchase/obtain an item to open the loot box;
• Purchase: players buy a loot box and will open it to obtain the items within.

Therefore, according to the report, any regulation should consider this complexity and

“definitive statements regarding the operation and effect of loot boxes in general are difficult“.

Based on the contents of the report, this review should be aimed at:

1. identifying any regulatory or policy gaps which may exist in Australia’s regulatory frameworks;
2. examining the adequacy of the video games regulations as it relates to loot boxes;
3. considering if existing consumer protection frameworks adequately address issues unique to loot boxes;
4. researching into the potential for gambling-related harms to be experienced as a result of interaction with loot boxes; and
5. ensuring that Australia’s approach to the issue is consistent with international counterparts.

The report conceded that other governments around the world are currently dealing with the definition of loot boxes, although, a common approach has not still been reached.

US Federal Trade Commission (FTC) investigation over loot boxes

The US Federal Trade Commission (“FTC“) announced it is investigating loot boxes’ mechanic that can allow players to spend real money on randomized goods.

The pledge was in response to an official request by US Democratic Senators, who assumed that loot boxes were now “endemic” in the video games industry and “present in everything from casual smart phone games to the newest, high budget releases.“.

Loot box regulation is a hot topic in a variety of regions. It seems though there is some misinformation and confusion as to their mechanic, also because in the majority of cases players are not obliged to purchase loot boxes to win the game. They can achieve any milestone or goal through game-play, as it has always been in any videogame.

I am Vincenzo Giuffrè, you can drop me a line @ vincenzo.giuffre@dlapiper.com and read the previous issues of GamingLawPills here. Also don’t forget to try Prisca, our GDPR chatbot described HERE and stay tuned and register to our newsletter!