Loot boxes video game publishers forced to display odds

The major console manufacturers committed to oblige the publishers of their video games to display the percentage of getting loot boxes prizes

Loot boxes shall display odds to gain the approval by the major video game console manufacturers to be on their platforms.

The staff of the Federal Trade Commission examined consumer protection issues related to video game loot boxes at a public workshop on August 7, 2019, in Washington, DC.

The workshop brought together a variety of stakeholders, including industry representatives, consumer advocates, trade associations, academics, and government officials to discuss concerns regarding the marketing and use of loot boxes and other in-game purchases, and the potential behavioral impact of these virtual rewards on young consumers.

The main topics discussed during the workshop have included:

  • A look at the in-game transaction landscape, including the origins and evolution of loot boxes and their role in gameplay and the digital marketplace;
  • A research examining consumer behavior, including child and adolescent behavior, in the context of video games and digital transactions; and
  • A discussion of consumer awareness and education about in-game digital transactions, including the mechanics, marketing, and financial commitments associated with loot boxes.

Panelists analyzed the pros and cons of the classification of certain types of loot boxes as gambling, while at the same time discussing the positive effects of self-regulation imposed by the video game industry. To this extent, the feeling of several commentators was that because of a lack of research, loot boxes and microtransactions are not to be deemed harmful by the US government.

After a brief introduction over the concept of loot boxes, the world’s top three gaming console manufacturers (Sony, Microsoft, and Nintendo) proposed to disclose more information about the odds of obtaining the rare items discoverable on the loot boxes offered through the game.

Michael Warnecke, chief counsel of technology policy for the Entertainment Software Association (ESA), announced that publishers have agreed to implement their policy no later than the end of 2020. And the new policies on disclosing odds may be issued to new games and game updates where loot boxes are utilized, and that console makers were targeting 2020 for implementation.

However, the executive director of the National Council for Problem Gambling (NCPG) Keith Whyte said that this move is potentially more harmful than useful since the majority of video game players do not understand odds and randomness in the most simple dimensions, “especially when you’re talking about dynamic odds“. While some scholars have observed that if a seller provides a list of false probabilities that were more favorable than the actual odds would, in turn, make users more likely to spend money on loot boxes.

This move is not the first time lawmakers in the United States have looked into the matter since:

  1. A bill introduced in Washington state would allow the gambling commission to investigate the effects of loot boxes;
  2. A bill in Minnesota introduced in April 2019 that would ban the sale of video games that contain microtransactions to a minor;
  3. Missouri introduced a bill in May that would outlaw loot boxes entirely in video games played by minors, and in video games “whose developers knowingly allow minor players to engage in microtransactions.”

At a federal level, the discussion has acquired relevance because this is the first time the U.S. government – and not a single state – has acted on a proposal involving loot boxes and microtransactions.

A potential compromise seems to be far to be reached. But the problem of diversity on loot boxes regulation through the world is now in the spotlight, and a solution must be adopted as soon as possible for the benefit of both consumers and industry operators.

On the topic above, you may also find interesting the article How loot boxes deal with regulations and limitations? as part of my series of articles on gaming and gambling law issues, GamingLawPills.

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Vincenzo Giuffré

Lawyer at DLA Piper IPT Italy, Milan| Gambling and Gaming Sector| eSports, Media, Sports and Entertainment | Bocconi University | University of Minnesota - W. Mondale Law School | Visiting Student at National University of Singapore (NUS)

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