We all know what loot boxes are, yet we can’t define them. Are they gambling? Are they unethical? Eager to protect this unfathomably lucrative box o’ loot, industry bodies have compared the system to trading cards. But Babe Ruth and Black Lotus are deceptively different from that Butterfly Knife.
The similarity starts and ends with the consumer perspective of not knowing what they’re getting. It’s a big similarity.
But there are some important differences, both functional and psychological. Problems arise when industry bodies (such as the ESRB or IGEA) claim the two are so alike they should be treated the same in a legal context.
The fact is, loot boxes are a new phenomenon. There’s no way around it. New definitions will need to be created. Consumers will need to be educated. Legislation will need to catch up. It’s human nature to liken it to a previously known thing, by way of explanation. But it’s also disingenuous to dodge regulation by comparing loot boxes to something more benign, such as trading cards or worse, an in-game purchase.
Value and Ownership
The virtual items you’re hoping to obtain do have value. That’s demonstrated by people paying money for them in scenarios when you can outright purchase them. But that value never leaves that ecosystem, and that item is never truly owned by the player.
Rather, the player has the rights to use that virtual item. Rights which can be revoked when the developer sees fit.
Some systems allow players to trade items, and the developer takes a cut of those transactions. Many don’t allow trading at all. There’s never a way to “cash out” of the ecosystem. Third-party websites attempt to facilitate this by proxy, but these exist outside the allowed terms of service and are regularly clamped down upon.
That’s in stark contrast to any physical collectible card game, in which you own the cards. There are no restrictions on resale. There are no restrictions on how you use it, or even play the specific game with it. House rules? That’s fine.
The difference in agency is night and day. Got banned? Servers went down? Developer went bankrupt? All of a sudden that virtual item you thought you owned is no longer accessible.
Clutching at any straw of a technicality, some would argue the lack of a “cash out” means loot boxes aren’t gambling. With all the pain and no gain, we contend it actually makes loot boxes worse than gambling.
Optimised Psychological Systems
As we’ve pointed out, loot boxes and gambling have more in common than the practice of offering value for randomised return. Psychologically, the way that exercise is carried out is more important than the actual value exchange.
It’s about the feelings a player has when pushing forward their chips in the hopes of finally getting that Widowmaker skin. Loot boxes, like slot machines (or “pokies” as we call them in Australia…aren’t we funny?) optimise their return rates (and where possible, reward schedules) to manipulate that feeling. Their job is to keep players playing, and keep players paying.
It’s about the perpetual “almost.” The denial of closure. It’s about feeling “due.” About the sunk cost fallacy. It’s about losing track of time and spending. It’s about the rush of a win, and the human brain being horribly incompetent at understanding chance.
At a deeper level, it’s about the chemicals that get released during all of these feelings. Something that can be manipulated through external audio/visual stimuli.
The similarities to slot machines aren’t coincidental. The techniques, and thus the feelings they cause, are brought over from the gambling industry. This is what often gets lost in the discussion about loot boxes. There might be a feeling of excitement about opening a box of trading cards, but that’s where it ends — there’s nowhere near the level of scientific optimisation.
Trading Cards Aren’t Random
Sure, they are for the consumer. From our point of view, trading cards are as good as random because at the point of sale, we don’t know what we’re getting.
But for the manufacturer, what’s in every pack has already been calculated before being sent out. Everything is known. It’s very different to a random number generator at the point of sale, in which the manufacturer doesn’t know if it will be serving a high-value or low-value product.
As for what’s better or worse, we aren’t sure yet. But the random number generator at point of sale is more like the definition of “gambling.” Akin to rolling a die or spinning a roulette wheel, the randomness is decided, for both sides, on the spot.
Trading cards, collectible sports cards, mystery boxes found on eBay, all appear random for one half of the equation. The other half already knows it’s “won.”
Winnings Change After Winning
Of course, after hundreds of thousands of online transactions, a random number generator with the right variables will product the desired result for the loot box provider anyway. That might make the point academic, but for the developer’s ability to make changes after the fact.
Winning odds, item attributes, ownership, or whether a virtual item even exists are all things that can be changed after it has been won. Perhaps the item itself doesn’t change, but the environment does, rendering it useless. Perhaps the odds are adjusted or the item is involved in a marketing promotion, drastically altering the item’s rarity.
The closest possibility with trading cards is the manufacturer flooding the market with a certain card once deemed rare. Never a good thing for owners of that card, but nothing removes the “original” status of the card. Ignoring the new wave of blockchain collectible card games, virtual items don’t discern between “first” and “recent.”
There’s one potential benefit to videogames in that regard. Now that games are a service, constantly upgraded, the cards stay relevant. Official competitive Magic: The Gathering play phases out expansions that are a couple of years old or more.
But that’s a benefit of online games — not a benefit of loot boxes.
You Always Get ‘Something’
One of the main arguments about loot boxes being gambling is that you always get “something” back. It was used by the ESA and ESRB in their statement on the matter.
This is also true of trading cards. You always get something back. But with trading cards, you always get something back of value. There will always be a sportsperson on that sports card, and you can always include one of those Magic cards in a deck.
You might not always want to, of course. And in that case, the solution is in the name. Trading cards can be traded. Or even sold.
By contrast, the “something” you get back from a loot box could be literally useless. A skin for a gun or character you have no interest in. An item that needs to be combined with another item, requiring more spins. Or perhaps an item that clearly labelled as a dud, please try again. Often you’ll get a duplicate item, sometimes in a game that doesn’t even allow duplicate items.
A “something” as good as “nothing.”
We also object to the logic involved here. If slot machines were to offer a five cent minimum return on every spin, do they cease to be gambling? That’s being generous — much of the time, loot box winnings are closer to a fraction of a cent in value.
There are more than a few practical and psychological differences between these systems. If you’re explaining loot boxes to someone as a shorthand – “It’s like trading cards, but…” – that’s innocent enough. But for industry spokespeople to claim to politicians and TV cameras alike that these are the same thing – and thus should be treated the same legally – is disingenuous, incorrect, and at worst a cynical attempt at evading necessary regulation.