Rocking the Boat: Loot Boxes in Online Digital Games, the Regulatory Challenge, and the EU’s Unfair Commercial Practices Directive

Abstract

The loot box, a feature of online video games, contains randomised virtual items of importance to gameplay. Comparisons are drawn between chance-based loot boxes and the legal and psychological definitions of gambling, leading to concerns that the format may be an unregulated form of quasi-gambling. Globally, several jurisdictions have intervened to control the loot box, some applying national gambling laws, while others have implemented more general rules, an alternative described as “consumer protection”. In 2020, a study commissioned on behalf of the EU Parliament recommended that loot boxes and in-game purchasing systems be regulated from a “consumer protection” perspective. This paper questions firstly whether the debate on product-specific rules for loot box games was conducted in reverse, commencing with a set of potential solutions, while research on harms is still at an early stage. It interrogates the “consumer protection” route, critiquing proposals that borrow from the conceptually and structurally distinct areas of gambling law and consumer protection law, without first resolving the tensions between them. The paper proposes that an alternative paradigm of “player protection” may be the better route towards solving the regulatory puzzle of loot boxes. The paper secondly argues for the EU and its Member States to adopt an interim approach, relying on existing legislation to tackle immediate concerns and facilitate testing of remedial measures, but which leaves the door ajar to alternative options, including regulation under national gambling law frameworks. It examines the UCPD as an immediate solution and considers how the updated UCPD Guidance addresses questions of potentially exploitative game design.

Beneath the label: unsatisfactory compliance with ESRB, PEGI, and IARC industry self-regulation requiring loot box presence warning labels by video game companies

“…It is possible that the label actually came into effect at the ESRB prior to that date on which NBA 2K21 had its rating published (i.e., that the publication date of NBA 2K21's rating may not have been 13 April 2020 and, if so, must therefore be after said date). PEGI's records showed that NBA 2K21 was released on 4 September 2020, i.e., five months after the label announcement date.…”

“…Children and other vulnerable consumers (e.g., people experiencing problem gambling issues) might be at particular risk of harm [10,11] . Many countries are considering imposing legal regulation and a few countries have already taken regulatory actions [12][13][14][15][16] . However, in most countries at present, paid loot boxes are specifically regulated only through industry self-regulation [17] .…”

“…PEGI (Pan-European Game Information) performs a similar function in Europe generally [22] . Recognising the concerns that have been raised about loot boxes, on 13 April 2020, the ESRB and PEGI announced that they will attach an additional textbased warning to the age ratings of video games containing loot boxes [23] . The ESRB uses the 'In-Game Purchases (Includes Random Items)' 'interactive element' [3] (see Fig.…”

Whether loot boxes are gambling is a red herring

“…However, half a decade has passed since this issue first entered mainstream discourse. Preoccupation with the gambling law approach to loot box regulation overlooks the possibility of using other existing laws (e.g., consumer protection law) to regulate loot boxes [7] and the potential harms of videogame monetisation (including those not involving randomisation) more broadly [8] . Frankly, today, it matters little whether loot boxes are 'gambling.'…”

Illegal video game loot boxes with transferable content on Steam: a longitudinal study on their presence and non-compliance with and non-enforcement of gambling law

“…Due to a current lack of regulation, vulnerable consumers (e.g., young people and people experiencing problem gambling issues and psychological distress) might be at particular risk [9,10] . Many countries are considering regulating loot boxes [11] , and some have already sought to do so [8,[12][13][14][15][16] .…”