Loot Boxes: The Legal Gambling Loophole for Kids

Back in the '90s and early 2000s, buying a video game for a home console meant gaining access to everything that game would ever have to offer.

Sure, sometimes there were cheats that could only be accessed through a Game Genie, and in Pokemon's case, your mom might have needed to stand with you in a two-hour line at the mall so an official Nintendo rep could manually trade you Mew. But by and large, the $60 purchase price of pre-PS3 era console games was all-inclusive.

A Brief History of Home Console Microtransactions

Microtransactions didn't become mainstream overnight. The Sega Dreamcast offered very limited DLC options as far back as the late '90s, but since the PS2 became the dominant system of the era and didn't support the necessary network functionality for DLC, the practice never caught on. Xbox, on the other hand, did have the necessary hardware, and by the mid-2000s they were starting to test the waters in their online marketplace.

Initially, Microsoft simply offered a few add-on options for their first-party games (a new map for Perfect Dark Zero, new cars for Project Gotham Racing 3, etc.) purchasable for a small price––microtransactions, if you will. And while nobody cared much about Perfect Dark Zero, the goal wasn't actually to sell extra maps. Rather, these microtransactions would serve as a proof-of-concept for an entirely new revenue stream for third party developers.

Bethesda, the company behind the hit Elder Scrolls RPG series, quickly jumped on the wagon, creating one of the earliest and most infamous pieces of DLC ever: the Horse Armor DLC.

The Horse Armor DLC

Unlike Perfect Dark Zero, The Elder Scrolls IV: Oblivion was a wildly popular game, considered one of the best Western RPGs at the time of its release. Oblivion offered players a truly open fantasy world to explore in whatever way they wanted. They could follow the main storyline or ignore it entirely. They could be a hero to the villagers or loot their homes and cut them down. They could even ride horses, and if they really wanted, they could spend $2.50 of real-world money to buy their horse armor.

The gaming community hated the Horse Armor DLC. "Who would ever spend real money on useless in-game horse armor?" they wondered while mercilessly memeing the crap out of it.

As it turns out, a lot of people. Regardless of whether people were buying the Horse Armor DLC as a joke or because they genuinely felt compelled to have access to every bit of content in Oblivion, so many of them spent $2.50 that the Horse Armor went on to become one of the most successful pieces of DLC that Bethesda ever created.

It's especially strange to look back at the Horse Armor DLC in light of the way DLC has now been integrated into nearly every single console game of the modern era. Nowadays, cosmetic DLC is arguably the most desired form of add-on content, at least when the alternative to cosmetic DLC is DLC that adds in-game advantages. Moreover, $2.50 for a useless piece of cosmetic DLC might even be considered cheap now.

The Benefits of DLC

DLC isn't inherently bad. As gaming technology has continued to improve year after year and new games become bigger and more complex, they also demand a higher budget. But the price of new console video games have stayed roughly flat at $60 for over two decades, and the majority of gamers most likely wouldn't appreciate the price hike that would be required to keep a lot of games profitable on their own. In a sense, microtransactions provide a solution.

Theoretically, players who want to play a complete game can play it for the same price that games have always cost, and players who'd rather experience all the non-essential content a game ever has to offer, including various additions added post-launch, can pay extra to do so. Ideally, such practices would both boost a game's longevity and ensure that video game developers get paid and treated fairly, although that certainly hasn't been the way things have played out. In fact, all of this works in theory, but everything gets a little messy in practice.

Sometimes DLC really is great. Season passes, typically available for a one time purchase price of $20 to $30, provide players with all the subsequent year's upcoming content for a game and lay out what that content will entail to justify the additional price tag. Oftentimes, these updates really do give games staying power.

On the other hand, some game studios purposely hold back finished content at launch to release later as DLC. And while that's their prerogative, it makes purchasing DLC feel less like buying new content to support the game's longevity, and more like paying to get something that probably should have been included with your $60 purchase in the first place. Even worse, some companies have implemented on-disc DLC, wherein the DLC is not only finished at launch but fully included on-disc, albeit locked behind a real-world paywall. This is arguably fine for purely aesthetic items, but some games have even done this with playable characters.

At what point does DLC become less of an add-on and more of a predatory practice diminishing the value of an already expensive purchase?

Loot Boxes

There's "good" DLC that adds hours of story content long past a game's launch for an affordable price. There's a whole lot of "bad" DLC that feels like an unnecessary cash crap. And then there are loot boxes.

Largely based on free-to-play mobile games, specifically those of the Japanese "gacha" or "capsule toy vending machine" variety, loot boxes are essentially randomized in-game DLC. Rather than outright purchasing the specific item they want, players instead purchase rolls on what amounts to a digital slot machine.

On console, the concept first showed up Blizzard's popular 2015 team shooter, Overwatch. Here, the loot boxes were openable with in-game currency as well as real cash, and the contents were limited entirely to emotes and costumes that didn't affect any actual gameplay mechanics. As such, it came off as relatively inoffensive. Players who wanted more stuff faster could spend money on it, while other players could build up their collection of alternate aesthetic options at their leisure.

But five years later, loot boxes are everywhere, and their in-game implementations have gone far beyond simple aesthetics. Star Wars Battlefront 2 became a major source of outrage in the gaming community for implementing a loot box system that gave out character enhancements and stronger weapons. This resulted in a competitive multiplayer shooter that cost $60 upfront, wherein players were not winning based on skill but rather based on how much money they had spent to enhance their characters. And while this is a common occurrence in free-to-play mobile games, the upfront, traditional price tag on Star WarsBattlefront 2 almost felt like a scam.

All that said, the most controversial element of loot boxes isn't the way that they can break fair gameplay, but rather the fact that they commonly appear in games geared towards children.

There's no way around it: Loot boxes are gambling. Players are literally spending real world money to roll a random number generator in hopes of receiving a rare reward. And while technically every loot box contains a "reward," many are considered worthless as players are almost always rolling for the specific rare items or costumes that inevitably become the highest status symbols in their respective games. If that's how adults spend to choose their money, so be it.

But in Fortnite––the wildly popular, cartoonish battle-royale-game––the average player age is 16, with many players being younger than 13. Fortnite is hardly alone, and loot box mechanics can and do pose traps for children who neither have the mental acumen to make financial decisions nor the money of their own to spend.

Recently, after years of complaints by gamers and parents, the Entertainment Software Rating Board (ESRB) finally added a specific clarification to their rating system for games that contain loot boxes. Previously, they had lumped all microtransactions into a blanket warning––a, frankly, worthless label that failed to distinguish between a $20 Season Pass that provides all extra content for a game's lifespan and a predatory gambling machine.

That's not to say loot boxes shouldn't exist, at least not necessarily. Opening loot boxes can be a lot of fun, and if it's a lucrative game model that ensures developers can keep their game running, then it's their prerogative to offer that option to adult gamers who can handle the repercussions. But a warning label isn't enough. Casinos don't have warning labels that alert parents to the possibility that children may be gambling; casinos don't let children onto the gambling floor at all. Unfortunately, gaming companies aren't going to fix things from the goodness of their hearts. Legal action will most certainly be needed.

As long as we have a legal loophole that allows children to gamble with real money in video games, there's no valid defense for loot boxes.