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Time to Clamp Down on Loot Boxes: Regulating Video Game Gambling | Vanderbilt Journal of Entertainment & Technology Law

Most people think of video games as being a complex, challenging, and creative source of entertainment that has become a major part of the entertainment industry over the past decade. However, this growth, which has led to major breakthroughs in video game technology, has brought with it the unforeseen evil of loot boxes.

Loot boxes are digital grab bags that players have to buy with real currency in the hopes of acquiring a unique in-game item or cosmetic feature that otherwise would not be available for the user by playing the game. The major concern with loot boxes is that an individual is not informed of their actual chances of winning and must continuously spend real money until they acquire the item. This creates a casino-like atmosphere that has a predominately negative effect on teenagers since they comprise the majority of gamers.

While Belgium and the Netherlands have already taken action to curb underage gambling via loot boxes in video games, the United States has fallen behind. However, in May 2019, Senator Josh Hawley of Missouri introduced an ambitious bill that aims to regulate certain pay-to-win micro-transactions and sales of loot boxes in video games. The Protecting Children from Abusive Gaming Act is the first of its kind in the United States. The Act aims to prohibit video game companies from selling loot boxes to children under the age of 18 and makes it unlawful for minor-oriented games to include pay-to-win mechanics. Under the Act, if a video game developer is found to be unlawfully including these features in games targeted to minors, it would be financially penalized. While the bill has received bipartisan support, some are skeptical whether it will have any success even if it makes its way through Congress.

An outright ban of loot boxes would be a bold step in the right direction and could help to curb gambling addiction; however, an outright ban of loot boxes is also likely to have a negative effect on the industry and consumers in the long run. Such a ban is likely to lead to increased costs for the consumer as video game developers have become reliant on loot box revenue to fund development for growing consumer demands. While regulation is likely to bring new challenges to the video game industry, the potential benefits of either an outright ban or industry-wide regulation greatly outweigh any expected financial loss.

— Vahagn Gharagyozyan

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