Update, February 16: The Entertainment Software Association has defended the videogame industry's ability to regulate sales of loot boxes.
The Entertainment Software Association say that the videogame industry takes its "reponsibility to consumers very seriously," following criticism from Hawaiian state legislators.
In a statement issued to gamesindustry.biz, a spokesperson from the ESA says that the industry "continually works to create greater awareness and transparency" about the full range of its practices, and that while "some consumers and parents may have questions about how loot boxes work, and ESA has demonstrated a commitement to providing information to guide consumers, especially parents, in their purchase descisions."
Meanwhile, state representative Sean Quinlan says he expects other states to follow the example set by Hawaii in attemting to "curb the proliferation of gambling mechanics in games that are marketed to children."
Update, February 12, 2018: Bills regarding the sale of games featuring loot boxes are now under consideration in the Hawaii state legislature.
Since the loot box controversy exploded around the release of Star Wars: Battlefront II, lawmakers around the world have taken note, and none more so than Hawaii state legislators Sean Quinlan and Chris Lee. They began discussing plans to introduce laws restricting the sale of games featuring loot boxes in the state, and now those bills are being discussed in the Hawaiian state legislature.
House bill 2686 and Senate bill 3024 would restrict retailers from selling games featuring purchases of “a randomized reward” to anyone under the age of 21 in the state. Their definition of retailer includes those who distribute games through “the internet,” though it’s unclear whether that only means online retailers like Amazon or digital distribution stores including Steam and Origin.
In addition to those bills, House bill 2727 and Senate bill 3025 would require game publishers to “prominently disclose and publish to the consumer the probability rates of receiving each type of randomized reward or rewards at the time of purchase,” in addition to clearly labelling games featuring loot box mechanisms both at retail and online.
If these bills are passed, it’s unclear what the penalties would be implemented for publishers failing to observe the laws, or how they would affect the game’s distribution throughout the remainder of the US. Published reports on distribution rates would likely be easily accessible by the rest of the English-speaking world, adding another version of legally-mandated reports already required in China.
Notably, these bills specifically deal with loot box mechanisms rather than asking existing gambling regulators to handle the issue. Deciding whether loot boxes meet the legal definition of gambling has been particularly troublesome spot for those seeking to take action against randomized rewards.
Update, December 6: US state legislators are continuing their efforts to ban the sale of loot boxes, and a new video documents their efforts to draft such a law.
Hawaii state legislators Sean Quinlan and Chris Lee have been garnering quite a bit of enthusiasm for their efforts to end loot box-style purchases in games, and the latter has even started a YouTube series to document the legislative process. The latest video shows Lee and Quinlan discussing with a lawyer about how to draft a law to bring up in the state legislature.
The idea for the team is to ban the sale of games with “gambling mechanisms” to anyone under the age of 21. The law they’re discussing would only target loot box-style purchases, where money goes toward a “percentage chance” of receiving a desired item. Direct purchases of digital items would not be targeted.
Lee - spinning a chair around to rap with the kids - says that while a single state making a law wouldn’t legally prevent a game’s sale through most of the country, the resulting loss in revenue from bans in a handful of states would make publishers reticent to develop those games at all.
Essentially, Lee hopes pressure against loot box systems at a state level would have a snowball effect. A handful of states ban loot boxes, US retailers become reticent to stock those sorts of games, and with a big chunk of one of their largest markets cut off, publishers would then be left with little recourse but to turn to business models worldwide that don’t involve randomized purchases.
If you’re on the cynical side, you might point to Lee’s new YouTube series as an attempt to capitalize on the outrage many young potential voters feel about this singular issue. But both Lee and Quinlan seem legitimately passionate about the topic, and it’s always good for folks to have a reason to be more educated about their political system.
Update, December 1: Hawaiin representative Sean Quinlan hopes the pressure he's helping to put on loot boxes will lead the industry to self-regulate.
In the wake of the Battlefront II loot box controversy, many worldwide governments took notice and rendered opinions on whether these types of microtransactions constitute a form of gambling. Among the few US politicians to take notice were a pair of state legislators from Hawaii, and they’ve put the matter to the state’s attorney general for an official opinion on the legality of loot boxes.
State representative Sean Quinlan spoke to Rolling Stone in a more informal setting than last month’s press conference, and it turns out that Quinlan is a pretty savvy gamer who found out about the controversy firsthand while browsing Reddit. Quinlan is aware of the potential for government overreach in regulating loot boxes, and hopes the outcry results in the industry regulating itself.
“I know they [Electronic Arts] have a fiduciary responsibility to shareholders, but I think they have a responsibility to customers too,” says Quinlan. “So the ESRB could say that if a game has loot crates, it gets a 21-plus rating. I wouldn’t want it to be a federal law. I think that could be a very slippery slope.”
That would be a similar situation to how the US videogame industry formed the ESRB in the first place. In the mid 1990s, with parents and politicians concerned over the impact of videogame violence, the industry was essentially asked to regulate itself or be forced into legal restrictions, leading to the formation of the ESRB.
Quinlan says he grew up playing games and still does in his spare time. Seeing the controversy on Reddit over recent microtransactions, Quinlan says he then “realized just how bad it has gotten. We’ve been on this path for 15 years with day-one DLC, subscription passes, pay-to-win. We as consumers kept accepting that, kept buying those games.” But it wasn’t until fellow representative Chris Lee contacted him over the issue that considered they could make a difference.
How the efforts of Quinlan and Lee will ultimately turn out remains unclear. The UK Gambling Commission have determined that loot boxes do not meet the legal definition of gambling, but the organization is still concerned over the effects these types of microtransaction models have on kids. If this investigation managed to result in legislative action, it would be limited to the state of Hawaii, though that would certainly open the door for further conversations in state governments throughout the US, and at the federal level.
But Quinlan reiterates he’s going to stick with the issue. “As someone who has watched EA develop over the years and consume some of my favorite studios and destroy so many franchises, I don’t think this is going away. And I’m definitely going to stick to this. It’s an important issue for me.”
Original Story, November 22: The loot box system in Star Wars: Battlefront II has ignited a huge conversation about the monetisation practice across the industry. After Belgian regulators declared they did indeed consider loot boxes gambling, US politicians from the state of Hawaii have condemned publishers EA for their “predatory practices” and are investigating legislative options.
Representatives Chris Lee and Sean Quinlan (both Democrats) held a press conference late on November 20 - you can watch highlights in the video above. Lee describes Battlefront II as “a Star Wars-themed online casino, designed to lure kids into spending money.” Referencing Admiral Ackbar, he goes further, saying “it’s a trap.”
Lee says that, to protect those who are “not psychologically and emotionally mature enough to gamble” - particularly children - he will be “looking at legislation this coming year which could prohibit access, or prohibit the sale of these games, to folks who are underage, in order to protect families, as well as prohibiting different kinds of mechanisms in those games.”
The press conference was posted on Reddit, and Lee followed up in a reply to the thread. He says he and his associates have been in touch with their counterparts in “a number of other states who are also considering how to address this issue.” Condemning loot boxes as “explicitly designed to prey upon and exploit human psychology in the same way [as] casino games,” he calls on US citizens to contact their legislators and compel action, so you know what to do if you’re one of the many who are against these systems.
Until now, loot boxes have escaped classification as gambling by national laws because a reward is guaranteed from each purchase - it might just be a crappy grey emote rather than the sweet legendary skin you wanted. This distinction has prevented age ratings agencies such as PEGI and the ESRB from calling loot boxes gambling, and further political action is necessary before they can do so.
Now that the debate has reached American legislators, we might just see that happen, but we’ve yet to see what form Lee and Quinlan’s proposals will take, or how many other states will adopt them. That’s what will decide the future of loot boxes in gaming.