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What Are Loot Boxes, and Are They Gambling? |

Are Loot Boxes Gambling? Examining Loot Crate Status, Regulations and History

If you've ever played Call of Duty, Battlefield, Halo 5: Guardians, League of Legends, or FIFA video game series, you know a thing or two about what is a loot box and its effect on the player.

With gambling restrictions, laws, bans, and regulations being in focus more than ever before, loot boxes are seeing a new wave of comments and debates surrounding their legality, (un)fair or deceptive business practices, whether or not they are similar to gambling addiction, and – most importantly – their effect on underage consumers.

As the future of loot boxes in the iGaming industry is currently on shaky legs, in this article, we're asking (and answering!) questions like are loot boxes gambling, will they be banned, who started loot boxes in the first place and what's next for loot boxes. Bear with us -  

What Are Loot Boxes?

Loot boxes, also called loot crates, are mystery boxes purchased through video games, i.e., virtual items in games that do not reveal their content in advance and can be purchased with real-world money or in-game currency. They are also considered an extension of randomised loot drop systems that were popular in earlier versions of video games, commonly used to "give out randomised rewards in massively multiplayer online role-playing games". 

Loot boxes are, essentially, an entertainment portion of the iGaming industry that generates a multi-billion-dollar return. 

History of Loot Boxes: When Did Loot Boxes Start and Who Invented Them?

The whole dilemma on who invented loot boxes could be easily traced back to June 2004, when the first known instance of a loot-box system came about. At the time it was first introduced in the Japanese version of MapleStory, a side-scrolling MMORPG; it was called "Gachapon ticket", with each such ticket rounding at 100 Japanese yen.

Another early example of video games that contained loot crates goes back to 2007 and the Chinese Zhengtu (a free-to-play game ZT Online), powered by the Zhengtu Network. Most players from Asian countries predominantly use PC bangs or Internet cafes to play the game for free as full-cost titles are often too expensive to obtain. For that reason, there are plenty of copyright infringements happening on this market.

The Western region saw a belated appearance of loot boxes, with Team Fortress 2 being the first release in September 2010. This happened at the time when Valve introduced the option of earning random "loot crates" that needed purchased keys to open. Separately, FIFA Ultimate Team Mode was included by the FIFA series from Electronic Arts (EA), allowing players to use digital trading cards to build a team.

The Western region saw a belated appearance of loot boxes, with Team Fortress 2 being the first release in September 2010.

In August 2013, Counter-Strike: Global Offensive added "weapon cases" in an update testifying of yet another packaged game with loot boxes in them. Despite not becoming purchasable until May 2014, following Counter-Strike, Battlefield 4 added "battlepacks" in October 2013. After these two came the Call of Duty: Advanced Warfare release in November 2014. The game contained "supply drops" that included randomised items with different variants of the game's character gear, weapons, and experience points used for character customisation.

It goes without saying that loot boxes development has had a very progressive streak to its expansion. Although loot boxes have not initially been viewed as nothing else but an addition to the already-exciting gameplay, varying mechanics in certain games' loot-box systems have led to a critical review of the practice starting October 2017. This resulted in several developers pulling loot boxes from their games, including titles like Middle-Earth: Shadows of War, Star Wars Battlefront II and Forza Motorsport 7. Heroes of the Storm removed the option of buying loot boxes with real money back in March 2019, as well.

In response to their legislation, countries around the world are changing their attitudes towards whether or not loot boxes are gambling.

Although there are still plenty of games with loot crate mechanics available on the market, countries around the world (and in response to their legislation and gambling regulation) are changing their attitudes towards whether or not loot boxes are gambling and to what extent they should be used.

To this day, there are both random content and real money purchase loot boxes available on the iGaming market, with bans coming and going depending on the country of play.

Loot Box Regulation: Are Loot Boxes Illegal?

The legality of gambling has always been a tricky subject to answer solely because of our collective inability to gather every country's viewpoint on gambling, place it in a single box and apply comprehensive, all-inclusive regulations. The same predicament applies to deciding whether loot boxes are illegal or not.

Depending on a country, there is a, more or less, firm stance applied to the issue. The first European country to ban loot boxes was Belgium back in April 2018, but only after examining four games. Countries like the Netherlands and Sweden have still not marked them illegal. However, they are announcing to investigate their legitimacy (and a further presence in gambling on their territories) in the months to come. Australia is still not banning loot boxes either as they do not fall within Australia's existing definitions of online gambling.

The first European country to ban loot boxes was Belgium back in April 2018, but only after examining four games.

After the 2018 Gambling Regulators European Forum 16 jurisdictions including Austria, France, Czech Republic, Gibraltar, Isle of Man, Ireland, Jersey, Malta, Latvia, Norway, Netherlands, Poland, Spain, Portugal, the United States and the United Kingdom have signed an agreement to inspect the role of loot crates in digital gambling. For the time being and out of all these countries, only Poland issued a statement saying that loot boxes are not gambling.

Conclusively, are loot boxes illegal is a question with many answers, excluding a simple "yes" or "no" out of that equation. Regardless, always remember to gamble responsibly and research gambling terms before you start to be fully clued up.

Loot Boxes Are Gambling: Arguments

Many wonder when did loot boxes start making such a fuss in terms of their gambling nature, and the answer is, essentially, quite simple – the moment both kids and adults have expressed addictive tendencies towards them.

As one Guardian article collects and informs, the House of Commons committee laid out that, "video game loot boxes should be regulated as gambling and children barred from purchasing them" as the "study recognised the correlation between gambling addiction and the tendency to spend more money on loot boxes." The recommendation came as a result of months-long parliamentary hearings with gaming and technology companies. The committee further agreed that "loot boxes are gambling if they are purchased for real money and as such should be regulated as a game of chance under the Gambling Act 2005".

As observed by the Committee, loot boxes are gambling if they are purchased for real money and as such should be regulated as a game of chance under the Gambling Act 2005.

The chair of the committee, Damian Collins, further reflected for Guardian on whether or not loot boxes are gambling by saying: "Loot boxes are particularly lucrative for games companies but come at a high cost, particularly for problem gamblers, while exposing children to potential harm." He then added that it was high time for the Government to explain why loot boxes should be excluded from the Gambling Act when "buying a loot box is playing a game of chance."

Additionally, there is supporting evidence from cognitive psychologists who claim, "that such in-game features are 'designed to exploit potent psychological mechanisms associated with [...] gambling-like behaviours'".

Loot Boxes Are Not Gambling: Arguments

Commenting on the regulation of loot boxes, the House of Commons committee agreed that, "Loot boxes, in-game rewards that offer a randomised selection of items to players who buy or earn them, should not be regulated if they are exclusively earned for in-game success."

Moreover, academics told the Digital, Culture, Media and Sport Committee "there was not yet enough evidence on the psychological effects that gambling-style features in games have on children", going further on to say this is "partly because the industry has not released data it holds on the subject".

Gamers enjoying the benefits of loot crates along with many game manufacturers would certainly agree loot boxes are not gambling due to their entertaining and not (as) addictive nature. However, when it comes to deciding whether a particular segment of gameplay is or isn't gambling, it is, after all, best to rely on a country's gambling laws and regulations rather than one's personal feeling.

Are Loot Boxes Going to Be Banned?

With the state of things so far, it is highly unlikely loot crates will be entirely banned any time soon, but they may be going through more strict regulations than they have so far.

If you are playing from a country that has banned loot boxes or frowns upon their usages, it is up to your personal preference and responsibility to decide are loot boxes worth it. Problem Gambling has been a much addressed and discussed topic both inside and outside of the iGaming community with the idea of helping players get maximum fun out of their gambling practices but staying grounded and safe.

The AskGamblers crew will be monitoring the latest changes concerning loot box regulations, and we will keep you updated. Until then – play smart, go to our forum for any game concerns you may have, and follow our latest podcast episodes on Spotify.