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Purpose of Review Loot boxes are gambling-like monetisation mechanics in video games that are purchased for opportunities to obtain randomised in-game rewards. Gambling regulation is increasingly being informed by insights from public health. Despite conceptual similarities between loot boxes and gambling, there is much less international consensus on loot box regulation. Various approaches to regulating loot boxes are reviewed via a public health framework that highlights various trade-offs between individual liberties and harm prevention. Recent Findings Many countries have considered regulation, but as yet only a few countries have taken tangible actions. Existing regulatory approaches vary greatly. More restrictively, Belgium has effectively ‘banned’ paid loot boxes and prohibits their sale to both children and adults. In contrast, more liberally, China only requires disclosure of the probabilities of obtain- ing potential rewards to provide transparency and perhaps help players to make more informed purchasing decisions. Most other countries (e.g., the UK) have adopted a ‘wait-and-watch’ approach by neither regulating loot box sales nor providing any dedicated consumer protection response. Industry self-regulation has also been adopted, although this appears to elicit lower rates of compliance than comparable national legal regulation. Summary Many potential public health approaches to loot box regulation, such as expenditure limits or harm-reducing modifications to loot box design (e.g., fairer reward structures), deserve further attention. The compliance and clinical benefits of existing interventions (including varying degrees of regulation, as adopted by different countries, and industry self-regulation) should be further assessed. The current international variation in loot box regulation presents opportunities to compare the merits of different approaches over time. Keywords Loot boxes · Video gaming regulation · Online gambling · Consumer protection · Interactive entertainment law · Video games · Public health Introduction ‘Loot boxes’ are gambling-like monetisation mechan- ics in video games that players can engage with to obtain This article is part of the Topical Collection on Gambling randomised rewards, which can provide cosmetic changes * Leon Y. Xiao •• • or gameplay advantages [1 , 2 ]. All loot boxes involve firstname.lastname@example.org ‘randomisation’ when deciding which rewards to provide 1 to players. However, depending on (i) whether or not the Center for Digital Play, IT University of Copenhagen, Rued player pays real-world money to become eligible to engage Langgaards Vej 7, Copenhagen 2300, Denmark 2 with the loot boxes and (ii) whether or not the rewards that School of Law, Queen Mary University of London, Mile End the players receive can be transferred to other players in Road, London E1 4NS, UK 3 exchange for real-world money  (the latter being a par- The Honourable Society of Lincoln’s Inn, Lincoln’s Inn, ticularly important distinction for regulatory purposes at London WC2A 3TL, UK 4 present), loot boxes have been divided into four catego- School of Psychological Science, University of Bristol, 12a •• ries by Nielsen and Grabarczyk [4 ], as summarised in Priory Road, Bristol BS8 1TU, UK Vol.:(0123456789) 1 3 164 Current Addiction Reports (2022) 9:163–178 Table 1. The existing academic literature and regulatory second categories of loot boxes that do not require purchase scrutiny have focused on so-called paid loot boxes (i.e., the appear less obviously harmful, although they might in con- shaded third and fourth categories described in Table 1) that trast lead to the player overspending time (in order to ‘grind’ the player spends fiat currency to purchase because these or repeatedly complete largely identical in-game tasks to might lead to the player overspending real-world money and achieve or receive something with only a small chance of thereby suffering potential financial harms [5 ]. The first and happening [6, 7]), rather than overspending money, and •• •• • Table 1 Nielsen and Grabarczyk [4 ]’s loot box categorization framework [4 ] (adapted from Xiao [5 ] and Xiao et al. ) 1 3 Current Addiction Reports (2022) 9:163–178 165 potentially lead to or exacerbate the World Health Organi- industry’s commercial interests, generally deem loot boxes zation’s (WHO’s) so-called gaming disorder or problematic to be suitable for implementation in children’s games and, engagement with video gaming as a form of behavioural by implication, suitable for children to purchase (e.g., the addiction. The degree of the ‘problematic-ness’ and level of Entertainment Software Rating Board (ESRB) in North potential harm for each category of loot boxes, as perceived America and Pan European Game Information (PEGI) in by the authors and generally understood by the literature, Europe, neither of which requires a minimum age rating are outlined in ascending order in Table 1. Hereinafter, this for games containing loot boxes as of May 2022, although article discusses paid loot boxes only and refers to them as imposing this would be within their self-regulatory powers loot boxes, unless otherwise specified, following colloquial ; this should be contrasted with how mere depiction of norms and the existing literature . tobacco, alcohol and illegal drug use would generally render This article introduces loot boxes’ current prevalence in the game to be deemed as suitable only for older adolescents, video games and discusses why loot box regulation could be, e.g., ‘PEGI 16’ or suitable for players aged 16 and above and should be, conceptualised as a public health issue that ). Indeed, 58% of the highest-grossing UK iPhone games can be approached in many different ways. Then, existing deemed suitable for children aged 12 + contained loot boxes self-regulatory approaches from the video game industry, in 2019 [23 ], meaning that children are regularly exposed to and the legal regulatory frameworks for loot boxes in various loot boxes and can readily purchase them. The UK Gambling example jurisdictions, are summarised. Finally, both existing Commission found that 23% of young people aged between and potential loot box harm minimisation measures are con- 11 and 16 have paid real-world money to purchase loot boxes sidered in the context of the Nuffield public health interven- [31(p. 39)]; in contrast, only 7% have ever participated in tion ladder [12(pp. 41–42, paras 3.37–3.38)], with respect traditional online gambling [31(p. 33)]. to how they balance inherent trade-offs between individual liberties and harm prevention. Conceptual Similarities with Gambling Prevalence and Deemed Suitability to Children Purchasing loot boxes is conceptually similar to gambling both structurally and psychologically because the player vol- Loot boxes are presently frequently implemented in video untarily spends real-world money to engage in a randomised games, particularly on mobile phone platforms: in 2019, process whose results could be desirable or, more often, amongst the highest-grossing video games, 59% on the undesirable, given that most potential loot box rewards are Apple iPhone platform contained loot boxes in the UK, often contextually worthless to the player (either because as did 36% on the PC Steam platform [23 ]. Loot boxes they already have a duplicate copy or because they are remain an evolving issue as the prevalence rate was found already in possession of some other superior or effectively to have increased to 77% for UK iPhone games when it equivalent in-game item) [2 , 32]. Through purchasing loot was re-assessed in 2021 using a comparable sample : boxes, players potentially either ‘gain’ by obtaining a valu- this appears to be due to multiple reasons including (i) a able and wanted item or ‘lose’ by obtaining a non-valuable greater number of popular games starting to implement loot and unwanted item . This is even more evident in rela- boxes; (ii) difficulties with identifying well-hidden loot box tion to loot boxes that provide rewards possessing real-world implementations with complex purchasing procedures; and monetary value that the player can subsequently sell on the (iii) semantic and definitional ambiguities with what game secondary market, because many non-valuable rewards are mechanic exactly constitutes a loot box [25 ]. The preva- worth far less than the cost of purchasing the loot box, com- lence rate also differs across countries: 91% of the 100 high- pared to the potential large ‘jackpot’ wins from valuable est-grossing iPhone games contained loot boxes in China rewards , similar to the incentive structure of lottery tick- in 2020 , suggesting that the loot box situation might ets . Certain particularly rare and highly sought-after be different across countries and cultures and that future loot box content is worth hundreds, and potentially over research should include the perspectives of non-Western one thousand, euros on the secondary market . Indeed, countries and players [see 27]. opening ‘rare’ rewards from loot boxes elicits physiologi- Although some members of the public, e.g., some parents cal responses similar to participating in certain traditional [see 28], consider loot boxes to be unsuitable for children, gambling activities . One adult player reportedly spent game companies and self-regulatory video game age rat- over US$10,000 on loot boxes in one game over a 2-year ing systems, which are financially supported by the industry period , and four children spent ‘nearly £550 in 3 weeks’ and therefore arguably conflicted from acting against the of their father’s money without permission and still failed to obtain the rare item that they were hoping for . The debate on that issue is not addressed herein [8, 9] and has been addressed in other articles in Current Addiction Reports [e.g., 10]. 1 3 166 Current Addiction Reports (2022) 9:163–178 the UK Gambling Commission ) and 2.8% (by YouGov Differing Interpretations of the Loot Box ‘Harm’ Evidence Base: Allusions to Longstanding Debates on behalf of GambleAware) [64(p. 2)]. This suggests that ‘harm prevalence’ data may be subject to a range of meth- on the Evidence Base of Gambling Harms odological issues affecting their accuracy and validity that researchers are not fully aware of and cannot account for. Importantly, loot box expenditure has been found to be posi- tively correlated with self-reported problem gambling sever- More recently, Muggleton et al., relying instead on more objective transaction data from a high street bank, sug- ity in many cross-sectional studies across various Western countries, including the USA , Spain , Denmark  gested that even the higher, previously identified problem gambling prevalence rates (i.e., ~ 3.0%) have underestimated and Australia , amongst both adult and adolescent player samples . Reviews and meta-analyses of these studies the extent of gambling-related harms and, importantly, failed •• to reflect the widespread associations between gambling have been conducted elsewhere [42 ]; [43–45]. However, the causal direction (if any) of this positive correlation is and various harms even amongst less engaged (supposedly, non-problem) gambling participants . For loot boxes, not known , and there is debate as to how the current evidence base should be interpreted. McCaffrey has argued this suggests that the prevalence of loot box ‘harms’ might have been underestimated by prior studies and that research that, presently, there is insufficient evidence to demonstrate that loot boxes cause widespread harm and that regulatory collaborations with the industry using players’ actual (and, therefore, more objective) loot box spending data could pro- intervention is therefore not yet justified [47, 48]. In contrast, Drummond et al. have argued that there is already sufficient vide important insights . However, in yet another strik- ing parallel with gambling research, the video game industry evidence demonstrating the potential harms of loot boxes (particularly, similarities with traditional gambling and the has hitherto been unwilling to share their data, similarly to how the gambling industry has been unwilling to share data involvement of real-world money) and that loot boxes should therefore immediately be regulated more stringently [2 , 3]. with independent researchers . These diverging perspectives have similarly been present in the longer-standing debate in gambling. Collins et al. have Loot Boxes and Gambling Both Show a Trend Toward Pre‑emptive Industry ‘Self‑Regulation’ argued that existing harm reduction methods have been successful (as evidenced by stable or flat prevalence rates The video game industry has adopted certain pre-emptive of problem gambling), and that further regulation would unnecessarily reduce the (safe) enjoyment of gambling as a self-regulation purportedly to enhance transparency and reduce harms ahead of potential impending legal regulation. leisure activity by many people [49(p. 994)]. The gambling industry also echoes this interpretation [e.g., 50], perhaps For example, some companies have committed to making probability disclosures detailing the player’s likelihood of unsurprisingly given its commercial interests. In contrast, other researchers have argued that the problem gambling obtaining different randomised rewards voluntarily outside of Mainland China (where, uniquely, disclosures are required prevalence rate fails to reflect the full extent of the potential harms of gambling and that non- ‘problem gamblers’ would by law ). Major app stores, such as the Google Play Store and the Apple App Store, also require probability dis- also potentially suffer harms, which is why a population- based public health harm minimisation approach might be closures globally [69, 70]. In addition, the two major self- regulatory age rating systems of North America and Europe, required to reduce the risk of harm amongst all gamblers [51–56]. the ESRB and PEGI, have introduced an ‘in-game purchases (includes random items)’ content descriptor to label and sig- The conflicting interpretations, in both the loot box and the gambling contexts, arguably arise partially from the nify the inclusion of loot boxes in a video game [71, 72]. However, this self-regulatory measure has been criticised as methodological weaknesses of a majority of the evidence base, which relied on retrospective self-reported data. Such being insufficiently detailed to truly inform potential custom- ers about the risks involved with loot boxes , and there data, derived either from a representative panel (such as a prevalence survey ) or from online convenience sam- is no evidence of these labels providing any tangible benefit. Loot box-related industry self-regulation mirrors many ples , might lack reliability due to the participants’ responses being intentionally dishonest (due to a desire attempts by the traditional gambling industry to self-regulate (seemingly in conflict with its own financial interests) argu- to hide one’s participation in gambling due to perceived stigma ) or unintentionally inaccurate (due to memory ably in order to fend off stronger (and likely more effec- tive) interventions from regulators and policymakers . recall issues ; inconsistent interpretation of questions ; or incorrect estimations and calculations of expen- For example, the gambling industry has, for a long time, directed funds towards non-restrictive interventions, such ditures ). To illustrate, in the UK, gambling preva- lence studies have, in the 12 months prior to May 2022, as warning messages or education programmes about the risks of gambling, which do nothing to alter the properties recorded rates of problem gambling as varied as 0.2% (by 1 3 Current Addiction Reports (2022) 9:163–178 167 and availability of potentially harmful products . In the options that interfere less with the players’ ability and choice UK, the industry has agreed to partial restrictions around to purchase loot boxes and the companies’ commercial inter- advertising in professional sports (e.g., ‘whistle-to-whistle’ ests are available. The Nuffield public health intervention ban): however, this has not effectively reduced sports watch- ladder [12(pp. 41–42, paras 3.37–3.38)] is a tool that helps ers’ frequent exposure to gambling marketing via logos and to illustrate the acceptability of various measures on each website addresses shown on, for example, shirts and pitch- ‘rung’ by identifying, comparatively, how intrusive on per- side billboards in soccer . Research has additionally sonal liberty each measure may be; how much justification critiqued the inadequacies of the main gambling warning may be required before they are adopted; and whether they message used by the UK industry from 2014 to 2021 (‘When are proportionate responses for achieving regulatory aims the Fun Stops, Stop’) [76, 77], and also its lack of effect (as shown in the first column of Table 2). on influencing gambling behaviour . Many gambling The lowest rung of ‘do nothing’ or simply ‘monitor the researchers have therefore advocated for stronger interven- situation’ is technically a public health approach. This has tions, akin to the graphic health warnings or restrictions on the advantage of not restricting choice and does not remove availability adopted in tobacco contexts , but uptake of any of the potential (e.g., economic) benefits of the product. these approaches has been slow. Such an approach is likely appropriate when the potential for harm is deemed to be low or little information is available as to whether the product is, on balance, more harmful or ben- What Does Taking a Public Health Approach eficial to society. However, generally, the second lowest rung Mean? of ‘provide information’ is likely a superior approach when compared to ‘do nothing’, because ‘provide information’ Within the discourse surrounding loot box regulation, there can guide choice towards better alternatives and provides is substantial support for banning the mechanic entirely : the same freedom of choice as ‘do nothing’. Many inter- for example, as advocated for by academics [e.g., 81(p. 40)], mediary approaches rest between the lower, non-restrictive gambling-related charities and other NGOs (non-govern- rungs and the highest, most restrictive rung of ‘eliminate mental organisations) [e.g., 82], and, indeed, members of choice’. Several different approaches might also be used in the legislature [e.g., 83(p. 115, para. 446)]. However, ban- relation to one subject matter simultaneously: for example, ning the product is only one potential approach amongst the UK public health approach to obesity works at multiple a spectrum of different approaches of varying degrees of levels, e.g., by providing information on nutrition (in super- restrictiveness. An indiscriminate ban is one of the most markets) and calories (in restaurants), whilst also restricting extreme approaches and is not strongly supported by the choice via new policies on the marketing and promotion evidence from, and the experience of, other public health of unhealthy foods (especially to children). Similarly, many domains given significant potential negative consequences approaches have been implemented in relation to tobacco: thereof. For example, the US ban on alcohol during the Pro- in addition to what has already been done in many Western hibition era (1920–1933) was not successful: consumption countries (e.g., age limits on purchasing the product (‘elimi- and alcohol-related harm was likely reduced, but demand nate choice’); restrictions on advertising (‘guide choice’); remained and caused the industry to shift towards a higher and warning messages on packaging (‘provide informa- risk illegal industry supplied by organised crime, thus incur- tion’)), many tobacco researchers have been advocating for ring ‘unacceptable social and economic [costs]’ that led to greater uptake of e-cigarettes and other generally less harm- support for the eventual repeal of the ban . ful combustion-less tobacco alternatives [89, 90]. More sus- To ban or heavily regulate loot boxes as gambling is but tainable improvements to health may arise not from simply one potential regulatory approach that has dominated the banning the existing product (without providing alternatives discourse. Notably, in contrast, most countries have seem- and ignoring potential negative consequences thereof), but ingly decided not to regulate collectible card packs and by inventing, promoting and disseminating healthier alterna- other similarly gambling-like products (e.g., blind boxes) tives to the original product. , even though these products likely contravene existing These examples from other public health domains have gambling laws  and would constitute the most seem- been highlighted because, although loot boxes share strong ingly harmful fourth category of loot boxes (per Table 1) similarities with gambling (which itself is now seen as a had these been virtual, rather than physical, products . public health issue [51–56]), there are also major differences Many video game players have identified this uncomfort- between loot boxes and gambling. Importantly, there are able incongruence between many countries’ strong desire to potential public health interventions for loot boxes that are regulate and ban loot boxes and regulatory inaction in rela- not possible in traditional gambling contexts. Commercial tion to other gambling-like products as deserving of some gambling relies on individuals losing money to be profitable, further consideration [88 ]. Indeed, a wider range of other and since a majority of gamblers spend very little money on 1 3 168 Current Addiction Reports (2022) 9:163–178 1 3 Table 2 Mapping loot box harm minimisation measures (non-exhaustive) onto the Nuffield public health intervention ladder [12(pp. 41–42, paras 3.37–3.38)] Range of intervention options Examples of specific measures As adopted by or as recommended by… Eliminate choice Prohibit the sale and, by extension, the purchase of loot boxes to all Belgium, which has effectively ‘banned’ the sale and purchase of both Regulate in such a way as to entirely eliminate choice, for example, players the third and fourth categories of loot boxes through applying existing through compulsory isolation of patients with infectious diseases Or less restrictively, prohibit the sale and, by extension, the purchase gambling law  of loot boxes to underage players Technically, Denmark , the UK  and many other countries through applying existing gambling law in relation to the fourth category of loot boxes, although this regulatory position has seemingly not been enforced in practice Restrict choice Maximum spending limits on loot boxes: i.e., that a player is only China, which only permits underage players to spend a certain amount Regulate in such a way as to restrict the options available to people allowed to spend up to a predetermined sum during a specified of money in online video games per month  with the aim of protecting them, for example, removing unhealthy period [115, 116 ] China, which also only permits underage players to play online video ingredients from foods, or unhealthy foods from shops or restaurants Less directly, maximum gameplay time limits: i.e., that a player is games on specific days during specific time periods [120, 121] only allowed to spend up to a predetermined length of time on video games during a specified period, which might dissuade purchase of loot boxes given that less time can be spent on enjoying their content Prohibit the implementation of specific types of loot boxes deemed to Japan, which prohibits the implementation of kompu gacha, which is be particularly problematic a type of loot boxes that provide a particularly valuable extra reward only after the player collects all other ‘regular’ potential rewards from the loot box (i.e., after the player spends a substantial sum of money) [98(pp. 314–315)] Guide choice through disincentives Institute an extra tax that is payable by players when purchasing loot None Fiscal and other disincentives can be put in place to influence people boxes, above and beyond usual sales taxes (if any) not to pursue certain activities, for example through taxes on Require video game companies to obtain and pay for a specific (non- cigarettes, or by discouraging the use of cars in inner cities through gambling) licence in order to sell loot boxes, which represents a cost charging schemes or limitations of parking spaces that is likely to be shifted onto the player-consumers Guide choices through incentives Require video game companies to provide players with the choice to None Regulations can be offered that guide choices by fiscal and other [posi- obtain all potential loot box rewards through direct purchase or some tive] incentives, for example, offering tax-breaks for the purchase of other form of non-randomised monetisation method at a price that bicycles that are used as a means of travelling to work would, on average, be lower than had the player attempted to obtain those rewards through purchasing loot boxes. (That it is generally cheaper to obtain the rewards through direct purchase should also be required to be prominently disclosed because ‘incentive’ in this con- text is difficult to control given that the randomisation could mean that some players might still be tempted to purchase loot boxes for a chance at obtaining all potential rewards even more cheaply.) Provide discretionary grants and tax relief to video game companies Not yet, but governmental funding is already available for the video based on their implementation of more ethical loot boxes or their game industry in many countries: these could be redirected, withheld decision not to implement loot boxes at all. These financial benefits and awarded on a basis that focuses on social responsibility in relation may also be shifted onto the player-consumers and make more ethi- to loot boxes, rather than on, e.g., the employment of citizens belong- cally designed video games more widely available ing to certain countries  Guide choices through changing the default policy Require video game companies to offer potential loot box rewards None For example, in a restaurant, instead of providing chips as a standard through direct purchase or some other form of non-randomised mon- side dish (with healthier options available), menus could be changed etisation method at a reasonable and comparable price by default, to provide a more healthy option as standard (with chips as an option such that the player must undertake extra effort in order to find available) the alternative option of attempting to obtain the rewards through purchasing loot boxes Current Addiction Reports (2022) 9:163–178 169 1 3 Table 2 (continued) Range of intervention options Examples of specific measures As adopted by or as recommended by… Enable choice Require video game companies to provide players with the choice of Some video games (e.g., Brawl Stars (Supercell, 2017)) currently offer Enable individuals to change their behaviours, for example, by offering either (a) purchasing loot boxes or (b) obtaining all potential loot box the option to purchase some potential loot box rewards directly, but participation in an NHS ‘stop smoking’ programme, building cycle rewards through direct purchase or some other form of non-ran- this is often confined to opportunities that are time-limited and do lanes, or providing free fruit in schools domised monetisation method at a reasonable and comparable price not include all possible rewards [22(p. 43)]. This option should be provided for all items on demand Promote ethical game design measures that are likely to minimise A variety of measures are available, some of which have been partially •• potential loot box harms: (i) encourage video game companies to implemented by certain video game companies [93 , 118, 119]. adopt them and (ii) encourage players to play and only spend money Promotion programmes directed at companies and players have not on games adopting them been forthcoming Provide information Require the expected, average real-world monetary cost of obtaining The UK advertising regulator attempted to require this , but has Inform and educate the public, for example as part of campaigns to potential rewards to be calculated and published by companies for since decided not to do so following consultation citing difficulties that encourage people to walk more or eat five portions of fruit and the player’s benefit companies would face in calculating this value given the complexity vegetables per day of in-game economies [123(pp. 9–10)] (which were arguably inten- tionally designed by companies to be that way and so the companies should be liable for any costs-related consequences thereof) Require probability disclosures as to the likelihood of obtaining poten- China by law  tial rewards to be published Nearly all other countries by industry self-regulation  Do nothing or simply monitor the current situation Continue to allow loot boxes to be sold without intervening In practice, the current position in Denmark, the UK and many other countries, given that existing gambling laws have not been enforced as interpreted and therefore no actions has been taken against the fourth category of loot boxes 170 Current Addiction Reports (2022) 9:163–178 the activity, gambling profits are driven by a small percent- not provided with the highest level of consumer protec- age of high-spending gamblers incurring high losses (so- tion uniformly, meaning that some players are more fre- called whales in land-based gambling environments) [91(p. quently exposed to potential harms than others, which does 21)]. The term ‘whales’ has also been used as a term for not appear to be ideal . Cerulli-Harms et al.’s report high-spending loot box purchasers, and this small minority commissioned by the Committee on the Internal Market of players have been identified as effectively financing the and Consumer Protection of the European Parliament has video game containing the loot boxes (for the benefits of not argued that divergent regulation would also lead to increased only the operating company but also many non-paying play- compliance costs for companies (which might more unfairly ers) . However, other loot box business models that rely affect smaller, newer companies, thus making it harder for on more players paying a reasonable amount of money (and them to compete with more established companies ) and no players spending extreme amounts) may also be com- is contrary to the principles of the European Single Market •• mercially viable [93 ]. . Finally, public health has a ‘precautionary principle’ However, it should also be noted that, conversely, com- stating that the lack of scientific certainty cannot justify panies’ economic interests and players’ freedoms are less regulatory inactivity when potential harms are significant. restricted in the UK than in Belgium. In addition, there This principle has already been cited by the loot box lit- are also benefits to this divergent regulatory environment: erature  and by policymakers [94(p. 29)] to argue in specifically, data can be collected from multiple countries favour of regulating loot boxes, despite the absence of a as to the pros and cons of different public health-based strong evidence base. Given that this principle has already approaches, which can then be compared with each other been invoked in relation to loot boxes, it is important that and with data on industry self-regulation and also with stakeholders are aware of the full spectrum of approaches perspectives on other potential regulatory approaches that that could be used in a public health approach to regulating have been suggested but not as yet trialled. Multiple national loot boxes. In particular, the negative consequences of both policy experiments are effectively being conducted across an overly lenient and an overly restrictive approach should the world: taking advantage of this opportunity would facili- be recognised. Indeed, a non-restrictive or less restrictive tate the improvement of existing policies and the adoption approach might be more appropriate at present when regula- of better policies in all countries. To assist in visualising tion is imposed based on the precautionary principle. and comparing the array of harm minimisation measures that have either been adopted or proposed in relation to loot boxes (either as (i) industry self-regulation or (ii) national A Public Health Framework Comparing legal regulation), these are non-exhaustively mapped onto Industry Self‑Regulation, Existing the Nue ffi ld public health intervention ladder [ 12(pp. 41–42, National Approaches, and Other Potential paras 3.37–3.38)], as shown in Table 2; some (iii) additional Approaches approaches that have not previously been suggested are also summarised therein. The perceived urgency of the loot box regulation issue and the divergent interpretations of the emerging evidence base Industry Self‑Regulation on potential loot box harms have meant that various coun- tries (including those that are otherwise ideologically quite As mentioned under “Loot Boxes and Gambling Both aligned, e.g., Western European countries) have taken very Show a Trend Toward Pre-emptive Industry ‘Self-Regula- different policy approaches, as previously comprehensively tion’” section, the video game industry self-regulates loot collated by the legal literature [95–98]. Players, including boxes through mandating probability disclosures. However, children, in different countries are therefore provided with importantly, the motivations for the industry to self-regulate varying degrees of consumer protection: players in Belgium should be viewed with an appropriate degree of scepticism (where all paid loot boxes have effectively been ‘banned’ because established research from traditional addictive ) are provided with the highest degree of protection, domains, such as gambling, alcohol and tobacco, have all whilst players in the UK are provided with no dedicated suggested that, when their industries have purported to act loot box consumer protection measures (because, although in socially responsible ways, those self-regulatory efforts paid loot boxes that contain rewards that can be transferred have in fact been self-interested and suboptimal and have to other players and therefore possess real-world monetary therefore failed to maximally advance the public interest value technically contravene gambling law according to the [101–103]. Indeed, industry self-regulation might not have national gambling regulator , no enforcement actions been adopted by companies for purely altruistic purposes have been taken against known illegal implementations (e.g., improve public welfare at the cost of its own commer- [5 , 85]). Players from different countries are therefore cial profits) and may instead have been adopted to placate 1 3 Current Addiction Reports (2022) 9:163–178 171 public concern, dissuade stricter legal regulation, and main- to enter the Chinese game’s settings menu and chat with tain control over whether and how much the product is regu- the customer support bot in English in order to access the lated . disclosure . Further, the effectiveness of probability dis- This cynical view is justified in relation to the self-reg- closures at reducing overspending and harm is unproven and ulation of loot boxes. The Apple App Store requires loot doubtful, even when they are easily accessible and have been box probability disclosures for all video games on the plat- seen by the player: only a small minority of Chinese players form. However, when the 100 highest-grossing UK iPhone (16.4%) self-reported spending less money after seeing loot •• games were examined in 2021, only 64.0% of those games box probability disclosures [93 , 105]. Thus, it is important containing loot boxes actually complied with industry self- not to treat the adoption of only one consumer protection regulation and disclosed probabilities . Additionally, measure as a ‘solution,’ given that the measure might not many UK probability disclosures were found to have been be complied with fully and that the measure itself might implemented using methods that were difficult for players to not effectively reduce harm even if it has been effectively •• access (e.g., requiring multiple buttons to be pressed before adopted [93 ]. the disclosure is shown) . Despite this unsatisfactory In other countries, although a consumer protection law level of compliance (which is likely reflected also in other approach to loot box regulation (e.g., using the Unfair Com- countries adopting industry self-regulation), the industry’s mercial Practices Directive 2005 and national implemen- adoption of probability disclosure self-regulation has been tations thereof in the European Union and the UK [106, widely promoted: however, this measure’s effectiveness 107 , 108, 109]) and other approaches might be tenable, (particularly in relation to children) is not even known, the focus has been to apply gambling law to regulate loot and research from other risk communication domains and boxes in light of the apparent similarity and relationship self-reported evidence would suggest that it is unlikely to between loot boxes and gambling, and the ease and prompt- •• reduce loot box spending on a broad scale [93 , 105]. This ness with which existing gambling law could be applied to perfunctory and unsatisfactory state of affairs is reminis- immediately address the issue . This assessment has cent of similarly suboptimal information disclosure-based already been completed by the national gambling regula- industry self-regulation in gambling  and other addictive tors of many countries, inter alia, the UK , the Neth- domains, e.g., tobacco . erlands  (which has since been found to be incorrect [19, 20]), Belgium , France , and Denmark . Existing National Approaches The national gambling regulators would attempt to fit vari- ous implementations of loot boxes within the pre-existing In contrast to how probability disclosures have been required national gambling law framework, meaning that the legal in other countries through industry self-regulation, China definitions of ‘gambling’ differ from the common sense has imposed this measure by law . A direct comparison understanding of gambling. National gambling laws also of the loot box probability disclosure rates amongst the 100 differ across countries: specifically, the various legal ele- highest-grossing iPhone games in China and in the UK has ments that must be satisfied for a product to constitute gam- been conducted: the compliance rate with Chinese law was bling are not the same [5 , 22]. This means that different 95.6% in 2020 , which was significantly higher than the national regulators may easily arrive at different conclu- compliance rate with UK industry self-regulation at 64.0% sions as to whether a specific type of loot box legally con- in 2021 . This demonstrates that legal regulation appears stitutes gambling under the national laws of any particular to have been more effective at ensuring compliance than country. This also means that the conclusion reached by industry self-regulation (cultural differences between the any one national regulator (one way or the other) is not two countries as to companies’ willingness to comply with necessarily reflective of, or relevant to, the decision that law and regulation notwithstanding) . However, Chinese a different country’s regulator might arrive at . The law gave discretion to companies as to how they can comply: decision-making processes are separate and based solely any disclosure, however difficult for the player to access, is on how that country’s gambling law was originally drafted. deemed compliant . For this reason, many disclosures Finally, national gambling regulators generally cannot in China were also found to have been published by video change the law (from how it was originally drafted by the game companies using methods that were not prominent and legislature) or make new laws: they merely pronounce an difficult for players to access: even though companies could interpretation; express a desire to enforce that interpreta- have displayed the probability disclosure on the in-game tion; and potentially take enforcement actions against prod- page where loot boxes could be purchased, so that play- ucts that are deemed to be contravening the law (with the ers can easily view them and perhaps make more informed proviso that the regulators’ interpretation of the law might purchasing decisions, only 5.5% of games containing loot be legally wrong and therefore remains challengeable in boxes did so . In one extreme example, the player had court by video game companies, as has been successfully 1 3 172 Current Addiction Reports (2022) 9:163–178 done by Electronic Arts against the Dutch gambling regula- affected by the Belgian ban. The effectiveness of Belgium’s tor’s previously published interpretation [19, 20]). blanket ‘ban’ of loot boxes remains to be assessed, although Briefly put, Belgium, due to the distinctiveness of its this measure appears to have not perfectly achieved the elim- national gambling law, has deemed the third and fourth ination of paid loot boxes from that market . categories of loot boxes (as described in Table 1; both of which require payment of real-world money to engage in a Other Potential Approaches process that provides randomised rewards) to legally con- stitute gambling  and therefore effectively ‘banned’ all Many regulatory measures that may be taken in relation implementations of the product from the country [22, 100]. to loot boxes are presented on Table 2. Notably, many are In contrast, most other countries (e.g., the UK , France phrased as an intervention that can be imposed on players. , and Denmark ) concluded that only loot boxes This framing seemingly places the burden on individuals to that both require payment of real-world money to purchase change their loot box purchasing behaviour, which perhaps is and provide players with rewards that can be transferred to inequitable because it is the video game companies that are other players in exchange for real-world money (i.e., only providing a potentially harmful product, so it is their behav- the fourth category of loot boxes per Table 1) legally con- iour that policy should aim to influence. A public health stitute gambling. Notably, although the countries adopting approach to gambling regulation has recognised the impor- this latter position agreed as to which category of loot boxes tance of moving past the ‘blame-the-victim’ framing that is legally constitute gambling under their laws, the national inappropriately preoccupied with the gamblers’ individual regulators’ enforcement actions have differed in relation to responsibility . Therefore, the loot box regulatory meas- the same games that arguably contravene the gambling laws ures could also be rephrased as interventions against video of multiple countries. Indeed, only the Dutch gambling regu- game companies, e.g., prohibiting the ‘sale’ of loot boxes lator was known to have enforced the law [16–18], whilst by companies, instead of prohibiting the ‘purchase’ of loot the regulators of many other countries have chosen not to boxes by players, or restricting the amount of money that act despite having issued compliance advice suggesting that ‘companies are allowed to receive’ from each player, rather such loot boxes would be illegal [e.g., 15]. However, a recent than limiting the amount of money ‘players are allowed to Dutch judicial decision overruled the Dutch gambling regu- spend.’ This would more accurately reflect that the policies lator’s interpretation of the law  and instead effectively are aimed at targeting the product availability that companies affirmed the legality of the fourth category of loot boxes in provide, rather than restricting players’ ability to purchase, the Netherlands . although practically the two might be identical. The respon- Accordingly, no country, besides Belgium, is actively sibility should rest with the companies to do less harm, regulating loot boxes using gambling law at present. Some rather than for players to protect themselves, and the fram- companies quickly sought to comply with Belgian law by ing of any regulation should more accurately reflect with changing the design of the national version of the game, whom that onus lies. specifically removing the possibility of purchasing loot In addition, there are other potential ways of minimis- boxes with real-world money [111, 112]. Doing so allowed ing loot box harms that emulate examples from public these games to continue to be available to Belgian players: health issues other than gambling. For example, promoting importantly, the games were not banned, and only the loot the use of e-cigarettes in smoking is a way of reformulat- box monetisation method was. These corporate actions also ing the delivery of nicotine in a way that is fundamentally suggest that (i) it is possible to rapidly remove the loot box less harmful than combustible tobacco [89, 90]. Similarly, functionality if required to do so and (ii) these games were less harmful and fairer loot boxes could be implemented by still deemed to be commercially sound even without the loot increasing the likelihood of obtaining the rarest rewards; box revenue stream. This might be due to these games being limiting how many different loot boxes may be offered able to generate revenue through the sale of the software or within a single game and how many different potential other non-randomised in-game product offerings, or because rewards may be obtainable from a single type of loot box; maintaining strong brand awareness amongst the player base and not providing players with useless (or significantly •• in Belgium was deemed as being worth the loss in revenue devalued) duplicate rewards [93 ]. Importantly, such design and operating costs. However, in contrast, other compa- changes are plausible because of one fundamental difference nies instead removed their games from the Belgian market between loot boxes and traditional gambling: gambling pro- entirely , rather than to only remove the loot box fea- viders profit only when gamblers lose money and so harm to ture, likely because it was no longer commercially viable to gambling participants is inherent to the profitability of that operate those games. This shows that some genres of video industry; however, loot box providers profit from each loot games (so-called gacha games ) whose monetisation box sale regardless of whether the video game player has •• models rely heavily on loot boxes were likely more severely ‘won’ a valuable reward or not [93 ] and so profitability 1 3 Current Addiction Reports (2022) 9:163–178 173 is not dependent on the player ‘losing’ money and harm one of many different potential approaches. A whole range is not inherent to the loot box monetisation model. Video of harm minimisation measures of varying levels of restric- game companies’ commercial interests might be negatively tiveness are available to both policymakers and video game affected by the adoption of the aforementioned measures, companies. A broader public health perspective allows the as players would now only need to buy fewer loot boxes loot box issue to be viewed more holistically: specifically, before becoming satisfied with their rewards. However, the by comparing the pros and cons of different approaches business model would still in theory be potentially profit- and by balancing the interests of different groups of play - able (and previously non-spending players may now be more ers (e.g., on one hand, those who benefit from having con- willing to spend small amounts of money on the game as tinued access to cheaper entertainment due to loot boxes the chance of obtaining a valuable item would be higher, and who appreciate this more flexible monetisation model thereby unlocking a new source of revenue for video game [88 ] and, on the other hand, those who may be in need of companies). Similar design changes would be impossible consumer protection from potential financial harms) and the for traditional gambling as the industry would be rendered commercial interests of video game companies. Intrusive •• unprofitable (the house edge would be lost) [93 ]. Such measures might be more immediately effective at reducing design-based approaches are, in the authors’ opinion, the harm but may lead to negative consequences, whilst less best regulatory proposal at present because it balances the intrusive measure better respect all stakeholders’ interests interests of all stakeholders: the potential harms of loot but might not provide sufficient consumer protection to the boxes would be effectively curtailed, but players and com- most vulnerable players. Existing legal and self-regulatory panies would still gain from the economic benefits of the responses to loot boxes (whose effectiveness should be sub- loot box monetisation model. ject to empirical assessment) must be viewed critically and The video game industry and individual companies not seen as ultimate ‘solutions’ that have successfully and should be encouraged to self-regulate and adopt so-called effectively removed all potential harms from those coun- ethical game design measures (even potentially through tries. Consideration should be given as to which measure granting tax incentives for making more ‘ethical’ games would be the most appropriate for different types of players or placing tax disincentives on loot box purchases) . (e.g., young children, as compared to adults) in different However, any one particular measure on its own should not countries. be deemed as sufficient consumer protection. The effective- ness of self-regulation should be continually monitored, and Funding L.Y.X. is supported by a PhD Fellowship funded by the IT some legal intervention (e.g., banning certain problematic University of Copenhagen (IT-Universitetet i København), which is aspects of loot boxes) might be appropriate, if voluntary publicly funded by the Kingdom of Denmark. measures are shown to be merely performative and ineffec- tive. Similarly, any legal regulatory measures that have been Declarations adopted (e.g., Belgium’s ban on paid loot boxes and Chi- na’s probability disclosure requirements) should also not be Human and Animal Rights and Informed Consent This article does not assumed to be an ultimate and effective ‘solution’ that other contain any studies with human or animal subjects performed by any of the authors. jurisdictions should immediately emulate without question: the differing cultural contexts should be considered. Which Conflict of Interest L.Y.X. was employed by LiveMe, a subsidiary of approach a certain jurisdiction decides to take is a policy Cheetah Mobile (NYSE:CMCM) as an in-house counsel intern from decision for the people of that jurisdiction to make (national July to August 2019 in Beijing, People’s Republic of China. L.Y.X. was loot box research would allow for evidence-informed regu- not involved with the monetisation of video games by Cheetah Mobile lation) . Consumer protection regulation can always be or its subsidiaries. L.Y.X. was the recipient of an AFSG (Academic Forum for the Study of Gambling) Postgraduate Research Support improved upon and must continue to adapt, as loot boxes Grant that was derived from ‘regulatory settlements applied for social- continue to be designed and implemented in newer ways by ly responsible purposes’ received by the UK Gambling Commission video game companies. and administered by Gambling Research Exchange Ontario (GREO) (March 2022). L.Y.X. has accepted conference travel and attendance grants from the Socio-Legal Studies Association (February 2022), the Current Advances in Gambling Research Conference Organising Conclusions Committee with support from Gambling Research Exchange Ontario (GREO) (February 2022) and the International Relations Office of the Conceptual similarities between loot boxes and gambling Jagiellonian University, the Polish National Agency for Academic Ex- change (NAWA; Narodowa Agencja Wymiany Akademickiej) and the and the potential harms of loot boxes have been high- Republic of Poland (Rzeczpospolita Polska) with co-financing from lighted. A public health approach to gambling regulation the European Social Fund of the European Commission of the Euro- can inform a similar approach for loot box regulation. How- pean Union under the Knowledge Education Development Operational ever, attempting to regulate loot boxes as gambling is only Programme (May 2022). L.Y.X. was supported by academic scholar- 1 3 174 Current Addiction Reports (2022) 9:163–178 ships awarded by The Honourable Society of Lincoln’s Inn and The from Nielsen and Grabarczyk’s framework might infringe City Law School, City, University of London. L.L.H. and R.K.L.N. national gambling laws, with specific reference to the differ - declare no conflict of interest. P.W.S.N. is a member of the Adviso- ing approaches of Belgium, the Netherlands, and the UK. ry Board for Safer Gambling – an advisory group of the Gambling 6. Karlsen F. Entrapment and near miss: A comparative analysis Commission in Great Britain, and in 2020 was a special advisor to of psycho-structural elements in gambling games and massively the House of Lords Select Committee Enquiry on the Social and Eco- multiplayer online role-playing games. Int J Ment Health Addict. nomic Impact of the Gambling Industry. 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Current Addiction Reports – Springer Journals
Published: Sep 1, 2022
Keywords: Loot boxes; Video gaming regulation; Online gambling; Consumer protection; Interactive entertainment law; Video games; Public health
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