Loot boxes and gambling: conflicts in Brazil and around the world

If you have the habit of playing online, or know someone who does, there is a considerable chance you have heard of the so-called “loot boxes” – or “loot crates” – present in some games. The purpose of this text is to present an overview of this topic, explaining why loot boxes are such a criticized practice lately, as well as the reasons for them being confronted in several countries and potentially in conflict with the laws in force in Brazil.

What are loot boxes?

To specify the concept of loot box, it is interesting to start with the idea of microtransactions in electronic games. Microtransactions are essentially functionalities added to electronic games – mostly in those involving some kind of competitive interaction between players via the Internet – that allow the exchange of real money for credits in a specific game. These credits can later be used by the player to acquire something inside the game – be it a character, an equipment, an aesthetic item, or many others.

Example of loot box being opened, in the game Overwatch

Microtransactions in electronic games have been widely criticized, especially in competitive games, since they can often give players who are willing to spend more money on games an unfair advantage – a practice popularly known as “pay to win “.

Loot boxes, in turn, are basically a subcategory of microtransactions. As in other microtransactions, there is the exchange of real money for credits in a specific game. There is, however, the difference that these credits are not used directly for the player to acquire something specific and determined within the game. Instead, it pays for a “surprise” item – unknown to the player – just like on a slot machine.

Loot box buying options, also in Overwatch

What is, after all, the problem with the loot boxes model?

The main problem revolves around the purchase of only a chance of someone winning what is wanted inside the game. This, coupled with excessively low odds of winning the desired item, corroborates that players potentially spend increasingly high amounts on these video games, and can easily exceed the amount paid for the game as a whole in search of, for example, a single character.

Recently, due to the consumer revolt over some games, where the implementation of loot boxes was exceptionally harmful to players, a more active discussion about this practice was started. Many advocate the need to regulate loot boxes as gambling, stating that this practice constitutes true “digital casinos”, and therefore should be subject to the same treatment as “real” casinos.

This would imply, among other things, in awareness campaigns about the risks involved with loot boxes, which would encourage players to be moderate with their bets. This business model, after all, knowingly generates a willingness in consumers to continue spending money on the service until the desired item is achieved – the famous push for “just one more round”.

As a clear consequence of the risk of loot boxes, we can mention the reports that frequently circulate by news vehicles, exposing cases of people who compulsively spent thousands of dollars on digital games in an attempt to obtain advantages over other players.

Another factor that intensifies the problem is that games that use the loot boxes model often have children and teenagers as a significant portion of their active players. The recognition of loot boxes as gambling would therefore, in a large part of the world, involve regulation to prevent their access not only to the games in which they are implemented, but also to prevent the advertising campaigns of such games from reaching this audience. IRIS has already held an event dedicated exclusively to the discussion about the protection of children and teenagers in the digital environment, click here to have access to the full recording (in Portuguese)!

The reception of loot boxes around the world: criticism and legal barriers

The seriousness of the discussion on this subject is evidenced by the fact that, in some countries, authorities have already issued the opinion that loot boxes are illegal. In Belgium, for example, the Belgian Games Commission has already declared its aversion to the model, and the country’s minister of justice, Koen Geens, added: “mixing gambling and video games, especially for the younger ones, is dangerous to health mental health of children”.

Additionally, in Japan, since 2012, there is a law prohibiting games that use the business model known as “kompu gacha”, which is nothing more than a model of loot boxes more exacerbated. Games that use kompu gacha often strongly encourage the investment of small amounts of money to obtain random items, promising that when (and if) players can complete their collection of items, they will get a “grand prize.”

As a final example, in China, in May 2017, a regulation also came into force obliging companies responsible for games that provide loot boxes services to discriminate, factually and effectively, all the probabilities involved with the service. In other words, the Chinese government has forced these companies to be transparent about the chances of players winning each type of prize with loot boxes.

Loot boxes as gambling: what it means for Brazil

The need for discussion about the nature of loot boxes in Brazil is intensified for a simple reason: in our country, unlike the ones mentioned earlier in this text, gambling is not only heavily regulated – it is banned in its entirety.

In fact, PLS 186/2014, which aims to legalize gambling in Brazil, is being processed in Brazil, but, regardless of the outcome of this legislative process, it can not be ignored that the lack of dialogue about the reality of loot boxes represents a major problem for the country. After all, even with the approval of the bill – and although it includes forecasts for so-called “online casinos” – not regulating loot boxes means ignoring a serious gap in our legal system. This, as already stated above, is even more serious when we remember that a significant portion of those affected by these market practices are minors.

Thus, it is clear the importance of placing the topic on the country’s agenda, just as it is happening around the world. If the consensus is that, in fact, the practice of loot boxes is harmful, a definitive positioning on the subject, made by a country as populous and relevant in the international scenario as Brazil, represents a strong incentive for companies responsible for the production of these games to reconsider their market practices. In this sense, it is worth remembering that Brazil was ranked by Newzoo as the 13th largest market for digital games in the world in 2017.

In summary, one can say that the recent intensification of the use of loot boxes in digital games represented a legal shock in the international scenario for a number of reasons. Some responses to this phenomenon have already occurred around the world, but the actuality of the theme requires more discussion to be held about it, so that the practice is completely inhibited or, if not, at least applied consciously and in a way that is not harmful to the players.

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The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of the Institute for Research on Internet and Society.