How Loot Boxes Can Be Regulated

Loot boxes and microtransactions are not a new concept in gaming and have actually been prevalent for some time now, but the recent Star Wars Battlefront II debacle has brought the issue into sharp focus, as the franchise is a Disney property and thus, millions of minors across the globe will be exposed to its systems during the next few months.

Loot boxes are a potential problem due to their random nature, as while every box does contain a prize, the user does not know exactly what that prize will be until they open it. This form of “variable rate reinforcement”, where the outcome is uncertain, could be damaging to children as they could form addictive behaviors early on in their lives by playing videos games littered with real money systems and loot crates.

“Whenever you open , you may get something awesome (or you may get trash),” video game psychologist Jamie Madigan says. “This randomness taps into some of the very fundamental ways our brains work when trying to predict whether or not a good thing will happen.”

He adds: “We are particularly excited by unexpected pleasures like a patch of wild berries or an epic skin for our character. This is because our brains are trying to pay attention to and trying to figure out such awesome rewards. But unlike in the real world, these rewards can be completely random (or close enough not to matter) and we can’t predict randomness. But the reward system in your brain doesn’t know that.”

Where do micro-transactions originate?

Free-to-play and mobile experiences have changed the gaming landscape in recent years, as these apps were the first to introduce the now standard form of progression via paid items. These systems generally make it easier for casual players to access the best in game items, as instead of unlocking them through natural progression and extended playing time, they can bypass any barriers or hurdles to get the content they need by paying real money for in-game credits.

Console games currently retail for $60, but these types of micro-transactions have become more pervasive since the launch of the PS4 and Xbox One, and are now prevalent in both multiplayer and single player experiences, from team-based shooter Overwatch to action role-playing game Middle-earth: Shadow of War. Recent profit reports from major publishers in gaming indicate that they are deriving larger and larger shares of revenue from these practices.


The backlash about loot boxes reached fever pitch following the release of Star Wars Battlefront II in October. The furor eventually forced publisher Electronic Arts to temporarily remove micro-transactions entirely until they could implement a better system, but that action has done little to appease governments and authorities across Europe and North America, who are eager to determine exactly whether loot boxes are forms of gambling and to regulate the industry so vulnerable individuals are protected.

Belgium’s Gaming Commission launched an investigation into loot boxes as it claimed the mix of money and addiction is essentially a form of gambling, while the Dutch Gambling Authority is researching the issue, as games of chance in the Netherlands require strict licensing laws. However, the Entertainment Software Rating Board (ESRB) in America said last month that the new monetization trend doesn’t constitute gambling and compared it to collectible card games, but the issue is unlikely to go away if the trend continues unchecked.

Positive case studies

Hawaiian state representative Chris Lee believes loot boxes resemble casinos, so any attempts to regulate microtransactions will consist of laws to limit their use. Current legislation in the US does not cover newer forms of gambling tech and this means that there are loopholes corporations can exploit if they are not addressed in the near future. A positive case study for safe regulation is the lottery, which is supervised by a special board or administrator, who ensures retailers and players comply with laws and rules. The California State Lottery Act of 1984, for example, also states that a significant portion of revenues be invested inpublic education. This transparency is also extended to online results for popular lottery games, where players can see past winners and Powerball winning numbers.

In terms of loot boxes, new regulations in China offer a potential road map for other countries to follow. China now imposes obligations on online publishers, forcing them to disclose the odds of attaining any rare virtual items and services. This information increases transparency, as end users are able to assess the data and make a more informed decision about whether they want to buy a loot box. However, publishers are able to change these odds for each region to appeal to different cultural tastes, so any legislation would need to be tailored and carefully managed to protect gamers.

Loot boxes are a part of modern gaming,and while that is unlikely to change, the recent high profile concerns aired across mainstream media outlets will fast-track research and investigations into whether the practice is actually gambling, and change how these systems are implemented in AAA games.

Tom Parillo

Tom Parillo

I am interested in all things technology, especially automation, robotics and tech that helps change how society will live in the future.
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