How gambling regulations would affect the video game industry should they be implemented

In one of my previous articles, I already discussed why I believe that loot boxes are in fact gambling and should be treated as such. And I think most gaming websites including this blog of mine have discussed the matter at great lengths. And considering the fact that loot box mechanics are so varied I can see why the debate is split into two camps those for loot boxes and those like myself who are against it. But what I haven’t seen discussed yet is when and if a move is made to regulate things like loot boxes when they are considered gambling how that would affect us the gamer, the publishers, and developers? This got me thinking after it came to light that Belgian and Dutch authorities are investigating loot boxes in video games. What would happen if loot boxes were to be considered gambling?

In general when you consider things like casino’s and sport betting it is important to note that the main rule applied to all of them is that each person taking part should be treated equally. And that everyone will have an equal opportunity to win. And that the gambling house cannot change the rules of the game midway through. For instance, a slot machine in a gambling house must be set to pay out a certain percentage of winning over a certain amount of time and this need to be reported to the countries gambling commission. And this cannot be changed without their approval. This is an excellent system that monitors the machine and the casino to make sure that they do not rig the slot machines to not pay out a set amount.

This can be applied to video game developers and publishers as well when it comes to their loot box and microtransaction mechanics. No more scummy microtransactions patents that would swing the game in favour of a player who spends more money online. This will work extremely well when pointing to the guilty companies and saying we don’t trust you to not take advantage of your customers. So by law, you now need to provide the taxman with your yearly revenue stats of loot boxes and microtransactions validated against your company’s information to prove to the gambling board that you aren’t abusing your customers. And the information can be made public which proves to your customers that they aren’t being abused by the system. See where I am going with this?

This would be an excellent source of information to just see how much the video game industry is making out of loot boxes and microtransactions, not that some companies have had any issues bragging about how much they make using these systems. This would mean every single video game developer and publisher would need to regularly submit a revenue statements and win rate percentages when it comes to loot boxes. And they would need to submit to regular audits from the countries gambling commission to ensure that gamers are treated fairly and that companies are not trying anything underhanded. That would also mean that stricter measures would be put in place to stop children under a certain age from being able to purchase loot boxes or make microtransactions.

Online casinos have had these systems in place virtually since its inception online, so implementing such systems in video games would not be that hard of a thing to do. Developers and publishers are literally hiring psychologists, neuroscientists and marketing experts to add as many addictive elements to their loot box system as possible. The issue with gambling isn’t “winning something of value“. The issue with loot boxes and similar mechanics is the sensation and adrenalin rush you get before opening up a loot box which is the most addictive part of gambling one which people with addictive personalities cannot overcome. That anticipation the moment when all the lights are flashing and noises are going off before you get to see what you get out of your loot box.

You see all those colours and noises after you open a loot box in Overwatch? Ever wonder why they choose to do it that way? It is to make the opening of a loot box feel good. It basically stimulates all of your senses all at once. Blizzard and other companies know exactly what they are doing when they are doing this. Casino’s literally do the exact same thing with their slot machines, multicoloured machines flashing light making plenty of noise when you pull the lever. Activision/Blizzard was forced by the Chinese government under their online gambling rules to reveal the drop rate averages of their loot boxes. According to Forbes, the numbers for Overwatch‘s official “compliance” update are as follows:

Each loot box contains four items, either cosmetics or in-game currency
Each loot box is guaranteed to contain at least one item of “rare” (blue) quality
Every 5.5 loot boxes, on average, contains one item of “epic” (purple) quality
Every 13.5 loot boxes, on average, contains one item of “legendary” (orange) quality

And just for the record, these numbers probably don’t apply outside of China. There is online speculation, that Overwatch’s loot box drop rates may be different in different regions, or may even change over time based on player behaviour. Does not sound scummy at all right? We already saw two patents that were pending from Activision. One of these patents from Activision appears to incorporate a system whereby it manages matchmaking in online multiplayer games. In theory, what this system does is takes high skilled players and pair them up against low-skilled players to basically encourage low-skilled players to spend more money to get better in-game items such as weapons and armour in the hopes that it would improve their odds against the higher skilled players.

And that is what the gambling regulation would be perfectly suited for because currently, the loot box system is so open-ended that there is no way that they aren’t currently being abused by developers and publishers. Adding gambling regulations to the video game industry does not mean loot boxes will be a thing of the past, but rather that they will now have rules attached to them and that they will be strictly monitored by people outside of the industry. It means companies like Blizzard and Electronic Arts would have a set of rules that will be enforced and followed by them and an organization they need to report too to make sure that they aren’t abusing the system or creating a un-level playing field for gamers based on their spending habits.

I am of the belief that if loot box regulation made its way into the gaming industry you would see developers immediately ripping them out of games as quickly as possible instead of complying, and that should basically cement what I have been saying all along. That these companies have been taking advantage of us in a shady unlawful manner. Gambling, in general, be it in real life or in a virtual world preys not just on the psychologically vulnerable or those with addictive personalities but also on the socio-economically poor. And the developers and publisher have been milking these people for years now if they were found guilty of this the financial and legal ramifications would be massive.

I myself am strongly in favour of such regulation. I believe the benefits strongly outweigh any potential negatives, and that the currently unregulated system is a massive shit show and needs to be looked at. The video game industry is constantly pushing their limits to see how much profit can be made. And Electronic Arts pushed so hard that they eventually crossed a line where gamers said enough is enough. And hopefully, this will be the turning point in the video game industry we so desperately need. It is obvious that the bulk of gamers and those who are wilfully ignorant is not going to put an end to these practices, even though theoretically an individual has the power to do so when standing with others. Unfortunately, blind fanboyism for a product or a company has a tendency to cloud people’s judgment.

[Editorial Note:] So regardless if we can come to a consensus whether or not loot boxes are gambling or not, it would still make sense to consider regulating it for the exact same reason we regulate gambling. So we can keep the industry in line and make sure that they have the consumers best interests at heart.