Are lootboxes gambling? It seems like such a simple question, but it really isn’t simple from a legal or ethical standpoint, and the answer has a pretty big impact. According to the New Zealand Department of Internal Affairs, following reviews, lootboxes do not meet the legal requirements of gambling, thus freeing them from the scrutiny of agencies designed to look more closely into gambling-related issues.
In short, the argument hinges upon the fact that lootbox items cannot be exchanged for cash and thus do not qualify as gambling under the law. That having been said, it’s not an ironclad ruling which cannot be changed; indeed, it’s something likely to be debated extensively as more and more lawmakers turn a critical eye toward the practice. For the moment, though, New Zealand considers them perfectly acceptable and has picked a side in the ongoing battle.
Say you were a legislator concerned about the lootbox/lockbox gambling issues in gaming. How would you actually go about drafting a law that targets predatory monetization without, as some people fear, sliding down a slippery slope into unfettered regulation so that suddenly all video games are illegal but Pong?
Hawaii State Representative Chris Lee, whom you’ll remember from his Reddit post and video on the subject a few weeks ago, has a new video out explaining just that, as his goal and that of other representatives in other states is to craft language that is tailored specifically to blocking the sale of gambleboxes to people under 21 (the legal age for gambling in the US). It’s clear from the video that Lee and the attorneys working on the potential bill actually understand the gacha mechanics and nastier algorithmic targeting tactics that some game studios employ.
How hard is EA trying to salvage its rep hit from the Star Wars Battlefront 2 drama? It’s hard to judge right now. This week, the game will patch up with tweaks for economy and progression, complete with improved end-of-round payouts (something players complained about bitterly when EA tooted its horn about reducing the cost of heroes while simultaneously reducing payouts and not mentioning that part because EA is sneaky like that). The patch will also generate for players more daily credits from arcade mode and daily login freebies (still crates, though). New characters, including Finn and Phasma, debut as well.
Some gamers, however, are not appeased. There’s at least one petition floating around right now trying to convince Disney subsidiary Lucasfilm to revoke EA’s license to pump out Star Wars games because EA has “proven to [its] consumers that [it] honestly [doesn’t] care about the gameplay experience or content” and instead would “rather rush out a game that will try [to] milk as much money out of consumers as possible.” It’s not the most convincingly crafted petition in the world, but it nevertheless has 120,000 signers so far.
Bloggers and journalists throughout the online gaming industry have been talking about monetization a lot lately. It’s not just lockbox/gachapon scandals, or their relationship with gambling, but basic monetization and what we want from it. Games, after all, don’t make themselves; we have to pay for something to make that happen. But some gamers seem to view free-to-play games as a game that should be free, not one to be supported if it earns respect. And on the flipside of that, far too few game studios give off a vibe not of experimenting with monetization but of maximizing profits above all else while barely veiling their greed.
However, outside the MMO world, there is a company that’s been doing it “right” for a long time: Nintendo. The AAA developer/publisher is known for both innovation and hesitance, following in others’ footsteps with great trepidation, trying to figure out the ins and outs while entering the mobile market long after it’s been established. The company recently released a new mobile title, but what’s interesting is that it and the company’s last four games are all different genres with different monetization strategies. Exploring these titles and their relationship to their monetization plans will not only highlight the potential success of the models but hint at why they work and how they can be curbed into models gamers and lawmakers can better accept.
Not everyone in the video game industry is shying away from lockboxes or denouncing them outright. Take-Two Interactive President Karl Slatoff took the side of the ESA by saying that he doesn’t consider lockboxes gambling and that the Red Dead Redemption 2 studio will continue using microtransactions going forward.
“The whole gambling regulator thing, we don’t view that sort of thing as gambling. Our view of it is the same as the ESA statement for the most part,” Slatoff said during a recent confererence. “That’s going to play its course, but in terms of the consumer and the noise you hear in the market right now, it’s all about content […] You can’t force the consumer to do anything. You try to do your best to create the best experience you possibly can to drive engagement. And driving engagement creates value in entertainment. That’s just how it’s always been and always will be.”
As the conversation over lockboxes continues to ramp up, a story of one teen who got caught up in online gambling and spent over $10,000 on video game microtransactions is drawing the attention of many — as is this scathing piece at Polygon taking EA’s poor apologies over Star Wars Battlefront 2 to task.
It looks as though the rebels may have defeated the empire — or at least struck a mighty blow to give the latter pause.
CNBC is reporting that the fallout from EA’s Star Wars Battlefront II and its lockboxes has done serious damage to the company’s bottom line. EA’s stock price dove 8.5% following the uproar over Battlefront’s egregious lockboxes, the resulting decision to (temporarily) remove them from the business model, and weaker than expected sales. This means that $3.1 billion of shareholder value has now vanished. That’s no small potatoes.
Wall Street Analyst Doug Creutz said that this may be the catalyst that sets some serious changes in motion for the video game industry: “We think the time has come for the industry to collectively establish a set of standards for MTX implementation, both to repair damaged player perceptions and avoid the threat of regulation.”
A group of “industry leaders and experts” have apparently formed what they’re calling National Committee for Games Policy (NCGP) – a “coalition to fight the lootcrate gambling crisis.”
“We made this decision in response to the current crisis regarding the expansion of loot crate economies and concerns about unregulated online gambling, but also as an acceptance of a long in coming decision that we knew would eventually become necessary,” the press release says. “Games are not represented or understood in the modern political and judicial world, and that needs to change.”
Setting itself apart from developer-oriented groups, NCGP says it intends to form a think tank and provide guidance to policy makers “where video games, politics, and law intersect.” It also declares its intent to form “the video game industry’s first, and de facto, self regulatory organization” that seems to have its sights set on defending devs from their employers.
While you were eating turkey and buying loot this past weekend, the lockbox saga was trundling onward.
The UK Gambling Commission has formally stated that it does not believe lootboxes and lockboxes should be classified as gambling – yet. “A key factor in deciding if that line has been crossed is whether in-game items acquired ‘via a game of chance’ can be considered money or money’s worth,” says the commission. “In practical terms this means that where in-game items obtained via loot boxes are confined for use within the game and cannot be cashed out it is unlikely to be caught as a licensable gambling activity. In those cases our legal powers would not allow us to step in.”
That said, the commission further notes that even if certain “activities” like lockboxes fail to meet the legal definition of gambling, it has a responsibility to parents and children.
“We are concerned with the growth in examples where the line between video gaming and gambling is becoming increasingly blurred. Where it does meet the definition of gambling it is our job to ensure that children are protected and we have lots of rules in place, like age verification requirements, to do that.”
The controversy over lockboxes and their legal status continues to draw more attention from governments, with Australia now weighing in on the issue. Not the whole country, mind you, but the Victorian Commission for Gambling and Liquor Regulation (VCGLR), which wrote a letter stating that lockboxes were considered gambling under the country’s laws.
While the VCGLR doesn’t typically oversee video games, its opinion does carry weight in the government and could prompt action on the proliferation of lockboxes in online games. The problem? The government body says that it’s very hard to regulate and that “there are a lot of variables at play.”
“What occurs with ‘loot boxes’ does constitute gambling by the definition of the Victorian Legislation,” wrote VCGLR Strategic Analyst Jarrod Wolfe. “Unfortunately where the complexity arises is in jurisdiction and our powers to investigate. Legislation has not moved as quick as the technology; at both State and Federal level we are not necessarily equipped to determine the legality of these practices in lieu of the fact the entities responsible are overseas.”
Late yesterday I read these words Google-translated from Belgian news site VTM
: “The Minister of Justice wants to prohibit purchases in video games if you don’t know exactly what you’re purchasing.” Yes, he means lootboxes, or what MMO players usually call lockboxes. These words stem from the growing controversy of lockboxes in video games. Gamers might argue that pay-to-win boxes are the real problem, but to an outsider, there really isn’t a way to distinguish pay-to-win from other lootboxes, and so here we are.
Because Star Wars: Battlefront II was the target of the latest lockbox controversy, I wondered what it would mean for EA’s Star Wars: The Old Republic, which has long been criticized for it’s handling of lockboxes and cash shop. The simple answer is that it probably will not affect the game much at all because as I understand it, SWTOR follows most of the existing gambling regulations for Belgium. BioWare or Electronic Arts would just have to file for an online gambling license.
Is this just the beginning, though? What if other European countries follow suit and started calling lockboxes and lootboxes gambling?
Capping off the Great Star Wars Battlefront II Fiasco of November, Belgium’s Gambling Commission and the Dutch Gaming Authority both began investigating lootboxes/lockboxes to determine whether they constitute gambling and necessitate appropriate regulation. Now, the former has issued its ruling, and unlike the gaming-industry bodies ESRB and PEGI, it didn’t add to the BS smokescreen.
Indeed, the Belgian Kanspel Committee has indeed ruled that the practice is a serious problem. “The mixing of money and addiction is gambling,” it declares. Belgian Minister of Justice Koen Greens told VTM that he aims to have gambling mechanics stricken from games entirely, banned outright, throughout Europe. “But that takes time.”
The US state of Hawaii has joined in the fray too, as state representatives have lambasted EA’s “predatory behavior,” calling the game a “Star Wars-themed online casino, designed to lure kids into spending money.” Is it just one state? Maybe not.
KeyBanc Capital Markets financial analyst Evan Wingren, who surely makes more money than you do, wants you to know that he’s a gamer too! And he assures you that you’re paying too little for games! In fact, KeyBanc Capital Markets financial analyst Evan Wingren says the real problem with the whole Star Wars Battlefront 2 monetization fiasco – the one that apparently worried Disney enough into making EA turn off microtransactions – is actually the big scary powerful gaming press, some dudes on Reddit, and their “popular press narrative.”
“This saga has been a perfect storm for overreaction as it involves EA, Star Wars, Reddit, and certain purist gaming journalists/outlets who dislike microtransactions,” KeyBanc Capital Markets financial analyst Evan Wingren insists. “Quantitative analysis shows that video game publishers are actually charging gamers at a relatively inexpensive rate, and should probably raise prices.” Indeed, KeyBanc Capital Markets financial analyst Evan Wingren estimates that you’re paying only 40 cents an hour for the average video game, compared to 60 cents for TV and 80 cents for a movie rental! Shit, guys, I’m going to go write EA a check right now.
Most often, MMO Mechanics
articles focus on the gameplay mechanics that both make the MMO genre unique and those that diversify MMOs from one another, but this time I’m focusing on the mechanics that drive profit for the modern development studio and will discuss the lootbox phenomenon. Although the lootbox is by no means a new topic in the world of online gaming, the purchasing method has been under fire more than ever recently and has seldom faced the same scrutiny from the playerbase and wider media before now.
Recently it has been ArenaNet under fire for the particular way randomisation factors into purchasing Guild Wars 2 mount adoption licence skins. A unique combination of a highly requested and anticipated extension of a likewise highly requested and successful new game feature and the employment of lootbox mechanics has caused quite a stir in the game community, despite the fact that Guild Wars 2’s Black Lion Chests already employ RNG lootbox mechanics. In this article, I’m going to discuss why the skins were such an issue in the first place, evaluate ArenaNet’s response to the player outrage the skins caused, and ponder on the reasons why studios rely on lootbox mechanics in the first place.