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Consumer Protection Should Be Centerpiece of Loot Boxes Regulation, New EU Study Says

A recent study has recommended that the European Union (EU) should take loot boxed into consideration from a consumer protection perspective instead of the one associated with gambling.

The research, called “Loot boxes in online games and their effect on consumers, in particular, young consumers” and carried out on behalf of the Internal Market and Consumer Protection Committee of the EU, is currently one of the most thorough studies in loot boxes. It outlines some problematic design features of engagement mechanics and industry monetization.

According to reports, it is exactly these mechanics that make video games so attractive to play. Such mechanics are used in many characteristics that gambling and loot boxes have in common, such as so-called presentational features. As revealed by the IMCP report, the aforementioned design features are not exclusively used by game developers but they use what they described as “behavioral bias” – some hidden or unsuspected dangers in customers’ behavior that are not typical for well-informed and rational consumers.

As revealed by the report, some features of video games may become particularly dangerous for players because they tempt users to play longer and could motivate them to spend more and more money on in-game items such as loot boxes. They could also copy some addictive techniques that are often used in casino gambling.

The report reads that some presentation features and reward structures might be misleading to customers, especially in terms of the chance of winning valuable in-game items and could be fuelling addictive behavior. As explained by the authors of the study, responsible game design, in which no proven addictive features are used, could solve the controversial issues associated with video games’ loot boxes. Apart from that, researchers say that players should be informed that in-game items, including loot boxes, are available in games before they are allowed to download them. Players should also be informed about the probability of receiving certain items when purchasing a loot box.

Researchers Say Customers Should Be Better Informed about Loot Boxes-Related Issues

Considering the so-far unsuccessful attempts to restrict access to problematic video game features, such as loot boxes, through gambling laws, the recent IMCP study suggests that consumer protection efforts should become the centerpiece of the regulation, especially considering the fact that the EU has such rights over legislation. Researchers claim that protective measures should be introduced at multiple points through the consumer journey.

The study noted that the starting point should be ending the disproportion in information between video game publishers and players. According to researchers, such an approach would better raise customers’ awareness about risks, establish more successful refund policies and disclose probabilities. Still, although they recommend such an approach, the report authors also note that experts have certain doubts that such measures would be efficient.

Parental controls were also among the important factors to limit the harmful effect of loot boxes. Researchers noted that such controls are not much effective unless they are the default. Apart from that, they say that the effectiveness of such measures should be verified regularly, for example, through consumer testing.

For the time being, attempts of fitting loot boxes as a matter subjected to gambling regulation have turned out largely unsuccessful so far. Apart from that, any legislation would find it hard to remain adequate for ongoing industry developments in the longer term. This has already been seen with the adoption of battle passes over loot boxes in video games as a means of monetization.

Battle Pass Model and EU Regulation of Loot Boxes

The battle pass model that has been adopted by some video game developers turned out to be favorable to many companies and customers, as it removed the element of chance and other aspects of video games that have been associated with gambling. Still, the model has faced some criticism, especially in terms of monopolizing a player’s time, as some video games require a considerable amount of playtime in order for the customer to unlock all of the available content. According to experts, such systems also keep video game players engaged by using some psychological tricks.

Discussions regarding the implications that battle pass systems on player behavior are still ongoing, and further scientific analysis is required.

As a whole, loot boxes are still among the most controversial topics in the industry, with anti-gambling campaigners around the globe insisting they should be constituted as a form of gambling, with some countries, such as the Netherlands and Belgium, having already done that to a certain degree.

Still, despite many recent studies aimed at showing that loot boxes resemble gambling very much, no conclusive scientific evidence has been provided to prove that loot boxes are able to lead to the same psychological and behavioral outcomes for players as gambling does. Another obstacle that prevents loot boxes from being treated as a form of gambling is the fact that legal and regulatory frameworks of EU member states are not the same, so such an initiative is practically impossible. As a result, the EU Commission has not addressed the issue directly so far, but it has initiated a number of recommendations as part of an effort to keep underage players protected from gambling-related harm.

For the time being, each of the EU member states has autonomy over its gambling legislation. Still, there are three common aspects that are being present in the definition provided by almost every state – players must wager something of monetary value, the outcome of the game is determined at least partly by luck, and the expected reward must also be of monetary value.

In 2018, 19 of the EU member states signed a declaration to confirm their concerns associated with the blurred lines between gaming and gambling. The declaration, signed as part of the Gaming Regulators European Forum identified loot boxes, skin gambling, gambling-themed content and social casino gaming, as areas of concern. As mentioned above, the EU does not have the authority over its state members’ gambling laws, but it still has the opportunity to harmonize rules regarding customer protection within the single market shared by the state members.

 Author: Hannah Wallace

Hannah Wallace has been part of our team since the website was launched. She has a master’s degree in IT.