Loot Boxes in Gaming: What Parents need to Know

My kids are mad about gaming so, as the games industry increases its focus on in-game purchases as a revenue source, I’ve had to agree some new rules with them around spending. My focus was initially a budgetary one but it’s hard to ignore the negative news stories about the manipulative monetisation of gaming that targets children and the convergence between the worlds of gaming and gambling. The most controversial in-game purchase today, with links to both gambling and compulsive spending, is a loot box so I took a closer look at this particular purchase and discovered that there are valid reasons to be concerned. 

What is a loot box?

A loot box is a consumable item offered for purchase in a video game or app that contains mystery or randomised content. It could contain any in-game merchandise from cosmetic items, like “skins” which change the appearance of a character or weapon, to functional items that impact gameplay and may allow for faster progress through the game. They are known by different names in different games but whether they are called crates, packs, keys, chests, card bundles, etc. the concept remains the same¹. Figures from the UK Gambling Commission for 2018 show that 31% of young people, aged 11-16, have accessed loot boxes in a video game or app. Loot boxes usually have a small price attached (unless purchased in bulk), but you can buy them any number of times so it is possible to spend hundreds of euros, even in a small game. 

Why should parents be concerned about this particular in-game purchase?

Loot boxes are considered to be a “game of chance” within video games because when you make a purchase you do not know the value or rarity of the items contained. It requires no player skill to access a loot box and the outcome is random so they function similarly to other games of chance, like scratch cards or slot machines, in many ways. Since the end of 2017 Apple have required that mobile apps publish the “odds” of receiving certain types of items in loot boxes before they can be purchased. Google recently announced a similar policy that will take effect from September 1st 2019.  

When children purchase these mystery items they can experience the same emotions that real world gamblers do: reward anticipation, highs and lows depending on the contents received, spending more and more in the hope that they will get a better outcome next time, and so on. Children are likely to believe common gambling myths, e.g. that their luck will have to change if they keep purchasing, and they can end up spending more in an effort to recoup money already spent. In gambling terms they are “chasing their losses” looking for that valuable skin or in-game item that will make their previous spending worthwhile.  

There is an additional concern with some games, e.g. CS:GO, Dota 2, PUBG, that allow for items received from loot boxes to be transferred outside the game via the Steam² platform. These items then become a virtual currency themselves because it is possible to gamble using skins in place of real money or to sell skins for cash on unregulated gambling and trading sites. Gambling with skins is one way for underage gamblers to bet on esports (professional gaming) events and it is easy for tech-savvy children to navigate the steps required to do so. In a 2018 survey³ 27% of UK children, aged 13-18, said that they had heard of skin gambling and 10% of children had gambled with skins. Children surveyed commented that their parents were unaware of their gambling activity. 

Are loot boxes really gambling?  

Opinions vary and there is still much to learn in this area but research studies have shown a significant link exists between loot box spending and problem gambling⁴. One recent study also found that gamers who are drawn to loot boxes bear a closer resemblance to problem gamblers than they do to problem gamers⁵. This is very worrying at a time when gambling rates among children are rising at an alarming rate⁶. 

A number of countries, including China, Japan, Australia, Belgium and the Netherlands have included loot boxes under their gambling legislation. Some of these countries have set rules around their design or availability, while others banned them altogether. This has forced games manufacturers to modify their games for these markets. The US is also considering a complete ban on the sale of loot boxes in games and all games with pay to win purchases⁷ but games manufacturers will lobby hard to avoid this, given how lucrative these purchases are. To date Ireland has chosen not to restrict the sale of loot boxes in games but did sign an international declaration last year, alongside 15 other countries, expressing concern about gambling in video games. 

Advice for parents

•  If you allow your children to buy loot boxes you should agree clear spending limits up front and stick to them. Loot box spending can often be avoided or reduced if you forego cosmetic enhancements and are willing to work through the game more slowly, earning loot boxes as rewards rather than purchasing them. 
•  Talk to your children about games of chance and how they operate. With randomised content at play, past results have no bearing on future results so warn them against chasing their losses. 
•  Monitor spending and watch out for signs of compulsive purchasing because research has found that the more gamers spend on loot boxes the greater their problems with gambling are. 
•  Talk to your children about their gameplay and what they like and dislike. Very few gamers are fans of loot boxes, especially when their progress in the game is linked to their purchases. So you may find that your child is keen to find alternative games that are less dependent on loot boxes and pay to win purchases. 
•  If your child has a Steam account and enjoys watching esports they may have been tempted to trade, sell or gamble with their skins. Caution them against betting with unlicensed operators and talk to them about gambling realities. 
• Loot boxes are just one way in which children are exposed to gambling concepts through gaming today. With problem gambling on the rise it is vital that parents talk to their gamers about gambling risks so that they can develop a healthy relationship with gambling in later life. Problem Gambling Ireland’s Gambling Guide for Gamers provides more information to help parents navigate this area. 

^[1] Examples: packs in FIFA Ultimate Team, crates in Counter Strike:Global Offensive (CS:GO) and PUBG, keys in Rocket League, alpha packs in Tom Clancy’s Rainbow Six Siege, fortune cookies in Animal Crossing, orbs in Fire Emblem Heroes, cards in Heartstone and so on. Fortnite’s loot llamas (Save the World mode) are now transparent, removing the mystery element of the purchase.

^[2] Steam is a video game digital distribution platform owned by Valve.

^[3] Ipsos MORI survey carried out in the UK for Parent Zone in 2018. https://parentzone.org.uk/system/files/attachments/Skin_Gambling_Report_June_2018.pdf

^[4] One recently published article references two such studies:- “Loot boxes are again linked to problem gambling: Results of a replication study”, authored by David Zendle and Paul Cairns. Published March 7, 2019. 

^[5]https://www.sciencedaily.com/releases/2019/05/190501114406.htm?utm_medium=cpc&utm_campaign=ScienceDaily_TMD_1&utm_source=TMD

^[6] The UK Gambling Commission figures for 2018 show that problem gambling amongst children has quadrupled in just two years, with 55,000 UK children now considered to be problem gamblers.

^[7] “The Protecting Children from Abusive Games Act” was proposed by US Senator Josh Hawley this year.