Blurred Lines and Loot Boxes

Law and Profit

15 representatives from different gambling regulatory bodies met up to discuss and the potential threat that loot boxes could be having on young people today. 14 countries in Europe were in attendance, with the State of Washington also gaining a seat after some high-profile legal battles involving social gaming taking place there this year.

This comes on the back of a recent ruling in Belgium and the Netherlands, where loot boxes are now considered gambling and have been removed from games within those countries. The one exception to this being Electronics Arts (EA) who could face fines for refusing to remove their version of loot boxes, player packs, and are willing to go to court to fight their case. For EA, it’s a fight worth pulling the gloves on for, with 2017 earning them a reported 1.68 billion dollars in revenue derived from micro transactions alone.

Just let that number sink in for a second. That, we all understand right? The unwavering power of the almighty dollar. We’re not talking fixed odds betting machines here people. This is one of the biggest, most profitable industries in the world today and a ruling against it in countries beyond Belgium and the Netherlands is going to have an enormous impact on the revenue that computer games companies can generate. There is simply no way that loot boxes and other forms of micro transactions are going to disappear without putting up one hell of a fight first.

If you have ever wondered how a game like Fortnite can make any profit when it is free to download, then you now have your answer. Games have barely risen in price over the last 10 years because of the lure of in-game purchases, which more than off-set the cost of actually buying the game. In fact, if you make the game cost nothing, there’s a good chance you’ll make even more money because you’ll have a much wider and less exhaustive market to tap into.

Last December the UKGC released a research paper, snappily titled, “Young People and Gambling 2017.” It was the result of growing concerns that had been raised in the media over the influence of advertising present on social media, TV and radio, along with fears that young people were now engaging in gambling, using either their own money or a parent’s account to gamble online. Whilst all of this is worrying, none of it should be as frightening as something we know nothing about. The debate on whether loot boxes constitute gambling or not has been surfacing over the last couple of years and the vast majority of adults who do not play computer games are always going to struggle to take part in an argument they know nothing about.

The paper revealed a number of startling facts about the experiences that young people have with gambling today. 12% of young people aged between 11 and 16 had spent their own money on gambling at some point within the 7 days prior to the survey being taken 80% had seen gambling adverts on TV, 70% on social media and 66% somewhere else on the internet. However, a set of seemingly quieter numbers slipped their way into the report. Numbers that might, on initial reading seem much less consequential than the high percentage of young people who are regularly subjected to gambling advertising. The 11% that had played free gambling style social games and also bet in-game items in computer games was at the time of the paper’s release a concern that was only beginning to bubble up to the surface and now finds itself spilling over.

Skins and Loot Boxes

So, what are skins, what are loot boxes and should we, the ignorant but responsible adults be worried? In all honesty the best person to ask the first two parts of that question are the young people who already know, then it is up to us to listen and try to answer the second part for ourselves.

Skins determine what your in-game presence looks like. From the clothes your character wears, to the weapons and accessories that they carry and the hair style they have. There are even skins that alter your character’s voice, give them funky dance moves and undoubtably there are skins I’ve yet to even consider or Google.

What we’re saying here is that skins, for the most part, hold absolutely no baring on the outcome of a game. But to say they are not important would be a failing on our part. For some young people, that virtual presence is just as important to them as how they look in the real world. They don’t make you quicker, stronger or improve the how much damage your weapons do. They change how you look and the rarer the skin item, the more distinguished your online presence becomes. I apricate that for the pragmatists amongst you, for those of us who prescribe to a form of Spartan utilitarianism, that this will make precisely no sense at all. At least our folks only had to cope with the ear piercings, mullets and the shell suits that we were rocking in the real world, eh?

One of the reasons for this rise in virtual vanity is the rise in popularity of Youtubers and competitive eSports over the last few years. For a lot of young people today being a professional eSports gamer or a YouTuber is the ultimate dream. For every kid who wants to dribble like Messi there’s one who wants to computer game (sorry, I’m verbless here) like Faker on League of Legends or Coldzera on CS GO. If you’ve not heard of PewDiePie, this guy has over 60 million subscribers on YouTube, with a net income of over 12 million dollars and he gets this by talking what sounds, to the ill-informed ear, like utter gibberish whilst playing popular computer games.

If you want to be the best, you need to be recognised as the best. You want to stand out from the crowd when you computer game, you want to get noticed, to become a brand. In the real world, clothes designers allow the rich and famous to stand out from the crowd. In the virtual world, skins along with your skills define who you are online.

To get your hands on skins and other virtual items, like virtual currency, you can open up an in-game loot box, or whatever they happen to be called in your game of choice. Of course, a loot box won’t just open. You need to part with the game’s virtual currency before the loot becomes yours. To make virtual money you level up, and you do that by playing more. The more you play, the more virtual money you can make and the more stuff you can get for your character. But here’s the twist, you can spend real money to buy virtual money to increase how many boxes you can open and how much stuff you can win.

This subtle nuance is where the line really begins to blur. Gaming (playing casino games like blackjack or roulette) is defined in English law, according to the 2005 Gambling Act, as “playing a game of chance for a prize.” This rules out games like chess, which is entirely skills based, relying on no chance at all to win. The opposite to this would be dice or card games. The term “prize” is defined as either money or something of monitory value.

If we take all this into account, then loot boxes are clearly a game of chance because absolutely no skill is required to open the box. However, this wouldn’t be a legislative problem if virtual currency could only be acquired through in-play gaming. In fact, there’s a debate to be had about the skill that would be required to gain that currency to allow you to open that box in the first place. However, it is not the discussion that needs to be on the table when you can spend real money on virtual money to get those loot boxes opened.

Gambling or Trading Cards?

Instead of loot boxes, EA’s Fifa franchise has player packs, where you can win different players for your ultimate team. There are, like skins in loot boxes, some that are rarer than others. You have more chance of getting rarer players if you buy the more expensive player packs, with Fifa now revealing the odds of you getting those rare players so you can decide if it is money well spent or not. EA argue that this is no different to opening a pack of football stickers, which is why the company says they will not comply with the new legislation that been introduced in Belgium and the Netherlands.

Perhaps a better comparison would be Pokémon or Yu-Gi-Oh! Cards. They cost money, you don’t know what will be in the pack before you buy them, there are new ones coming out all the time and you can trade the ones you don’t need on a market place, like eBay or the playground. The thrill of opening the packs is surely the same for those playing card games as it is for those playing Fifa? You use them to build a deck that you then take on other players with. Surely this is no different to what happens when someone plays a game like Fifa Ultimate Team?

Obviously nothing gets to be that straight forward in this discussion. If you play Pokémon you can build a deck and keep it practically unchanged and still remain competitive. In a game like Fifa Ultimate Team, where players of the week come and go every 7 days and big tournaments take place online every 7 days, the demand for new player packs is relentless. And you can’t just want a player, pay the extra and go get them. You still have to open a pack and hope for best. There is no eBay at your disposal and you can’t just borrow your pal’s for weekend’s big competition.

Something similar can be said for loot boxes that contain skins which are only available for a short period of time. Try as they might (and I’m not suggesting that having to “Catch em all” isn’t one of the most ingeniously aggressive sales approaches of the last 20 years) Pokemon still need an advert on TV or social media before they can get into your home. You tend not to play Yu-Gi-Oh with a salesman sitting beside you rhyming off all the latest offers. With loot boxes, the desire to want more stuff is constantly there as you play the game. There is no escaping it, without turning the console off.

The instantaneous nature of mirco-transactions sets them well apart from football stickers and trading cards. If you want more cards for your deck you’re going to have to leave the house or buy them online and wait at least a day for them to arrive. With micro-transactions, if you have the cash, you get the loot, there and then. There’s no time to change your mind, to think rationally, to reconsider what that money could be spent on. With micro-transactions, impulse cannot be regulated in the same way that standard transactions can.

The world of loot boxes and player packs is in a perpetual state of change, with regular upgrades and improvements relentlessly bombarding players who are right in amongst it the moment that they become available. At the end of the day the argument against the comparison between loot boxes and football stickers all boils down to the instantaneous nature of micro-transactions. The vast majority of us give up on a sticker albums as soon as we have that pile of Barry Venison doublers we can’t get rid of because it involves too much bloody effort. The genius of a micro-transaction is that there is no effort.

Like the vast majority of people who gamble online, most young people are not going to end up with an addiction to loot boxes and player packs but does that mean we should sit on our hands and hope that our kids will be fine? We need to stop and contemplate the world that is waiting for the young people we know are spending money on micro-transactions. Casinos and bookies in their back pockets. A spin of the wheel or a flutter on the horses, no more than a tap on a screen. If you are over 30 then you grew up when there was a clear divide between gambling and the home, because you had to leave the house to do it. Just as you had to leave the house to buy your stickers. We know the difference because we’ve lived the difference. We understand the dangers that exist in instantaneous gambling and can recognise the same problems that exist with in-game micro-transactions.

In Belgium and the Netherlands they are banning loot boxes because they don’t want to take any chances. They believe that it is better to be safe than sorry and that to not do something consitiutes a gamble that we, the responsible adults don’t get to take when dealing the mental-health the young people we are supposed to care for.

One thing we can be sure of is that if micro-transactions do disappear computer game companies are going to lose lots of money and in some cases the fabric of the games being played will be lost. Take player packs out of Fifa and many would argue that the game dies along with it. Part of the fun for most Ultimate Team players is building something and then using it to pit your skills against an opponent. If they are removed then the cost of computer games is likely to rise significantly, which could price certain gamers out of the market completely.

Which all means that those 15 regulators who sat around that table last need to decide on what matters more: Profit and playability, or the health, happiness and futures of the young people we care for.