The Legality of Loot Boxes – Designing Ethical Lootboxes: II – Extra Credits

The outcry around Star Wars Battlefront II kicked quite the hornet's nest Even major non-gaming news outlets picked up the story, and as soon as that happened, politicians jumped on the bandwagon, seeing an easy way to score some political points

And, if you're not a fan of the loot box monetization model, that's probably been pretty exciting to see, which I can understand But if I may pump the breaks just a little bit, we should probably at least consider the potential consequences of what we're asking for After the Battlefront II debacle, a number of politicians came out saying that something must be done about loot boxes, and that they were gonna protect our kids from the horrible addiction of video games But I want to specifically talk about Chris Lee, the Majority Whip for Hawaii He has been perhaps the loudest voice on this, and he's not a bad guy

He's young, he's an effective politician, and it seems like he actually does know a thing or two about games He took this on specifically because he thought it was an issue that will engage millennial voters, which, depending on how you view it, is either awesome because he decided to do something about an issue his constituents were vocal about, or a little cynical and dismissive because he thinks younger voters care more about video games than larger world issues But in either case, the reason I bring up Lee is because he said that he wants to regulate loot boxes under Hawaii's gambling laws This is basically the angle that every US politician has approached the issue from, and there are a whole host of problems with applying those specific laws to this issue

For one thing, gambling is illegal in a number of states Not just to facilitate, but to participate in This means that, under those laws, game makers aren't just committing a crime by selling these games, players are committing a crime by playing them In some states, those players would be liable for felony level offenses, and that is not okay Lee has also suggested that games with loot boxes be treated like gambling machines and be restricted to players 21 and up, which

look Before we decide that somebody under 21 can't have access to a piece of art, you had better have very good data to show that that art is gonna do lasting harm When I was growing up, people used to have bumper stickers that said "I buy music for minors", because the US government briefly tried to prevent anybody under 18 from buying music with explicit lyrics

That whole endeavor was absurd, and saying that nobody under 21 can play Overwatch because it has loot boxes in it is, to me, just as damaging Now, to be fair, Lee specifically calls out "Pay-to-Win" loot boxes most of the time when he talks about this issue But from what I've been able to find, nobody's really taking the wider ramifications of this sort of legislation into account Ever since Magic: The Gathering took off, microtransaction games have avoided the gambling label because the system doesn't allow you to cash out You cannot sell your Overwatch skins back to Blizzard, or your Madden players back to EA

Which, at least in the eyes of the law as I understand it, meant that they didn't have real-world value This, effectively, made your purchase of a loot box or a booster pack less like placing your chips on red, and more like buying a raffle ticket But if we did decide that loot boxes fit the legal definition of gambling, that changes a lot of things Suddenly, non-transactable digital goods will almost certainly have to be considered as having real world value in the eyes of the law, and that creates all sorts of problems Like, first off, banning players

I have seen so many player responses to bans over my career, and one of the most common, often from the most toxic, racist, or homophobic players is, "You can't ban me I have spent $300 on your game You're stealing my money, and I am going to sue you" Now, right now, that argument carries no weight Almost all game EULA's have language that just says you can be banned for violating Terms of Service

No lawyer is ever gonna take up that case But what happens when digital goods suddenly do have real-world value, and companies have to start worrying about being sued over bans? Will toxic players be able to, effectively, buy themselves immunity to disciplinary action? Will companies be even more hesitant to ban that one horribly toxic guy who's dropped 200k on the game because they know they'll be legally responsible for destroying 200k worth of that person's property And what about shutting down servers? Once non-transactable digital goods have monetary value, how do you handle closing down a game server? Do you have to give all the players their money back? Could somebody sue to stop you from shutting the server down? And what about rollbacks? Let's say a dupe exploit is found in your game and players are duping gold left and right, just destroying the in-game economy and making the game experience miserable as a result But if gold can be purchased in your game, if you erase all of that gold that people acquired unfairly are you liable for it? And what about the gold earned legitimately by players during the hours you're gonna have to rollback? And the legal questions just keep on cascading from there I mean, every monster in an RPG has a random drop rate for goods which essentially makes it a walking loot box

If access to some monster is locked behind a paywall, is that gambling? I know that seems like a silly question but it does provide companies an easy way to circumvent loot box laws Much like netmarble and Blizzard did to sell loot boxes in China by instead selling currency and having it come with quote 'free' loot boxes If I can't sell you a loot box, but I can turn that loot box into a boss that drops random loot and make you pay money to enter the dungeon where that boss lives, is that a loot box? Cause that's functionally the model for almost every MMO out there I mean each WoW expansion comes with new raids, and new raid bosses with better loot which can't be accessed unless you pay for access Is it gambling if I make you pay a dollar every time you try to do a raid but not gambling if I charge you thirty-five dollars to be able to do the raid as often as you want? You see what I mean? There is a whole bunch of effects this sort of legislation could have on games beyond simply restricting loot boxes as a model

So we got to be incredibly careful about how we approach this legislation Just like Mr Lee himself has said, a change to these laws in just one or two states could have an enormous effect on the games we make And of course this isn't to say we shouldn't look into legislating or regulating this stuff We absolutely should

Requiring game makers to post the odds for their loot boxes? Great! Forcing game makers to put in a pop-up alert when you've spent X dollars in a week saying hey You've already spent $50 on loot boxes this week, are you sure you want to spend more? Also great! Making it so that at least once a year every item sold via loot boxes must be put on sale at a fixed price in the in-game store? Totally great Not allowing kids under 21 to buy games with loot boxes in them? Not great Potentially having consumers charged with illegal gambling for playing games with loot boxes in them? Definitely not great All I'm saying is that we just have to be careful about these things Good legislation takes a lot of time and thought and study and we consumers should be just as eager to see that time and thought and study happen as we are to decry the things we dislike

Before we go though, I just want to say we have a great deal of respect for Chris Lee here I am legitimately glad he's interested in making sure that our laws keep up with our technology We think he's done many admirable things, and we think it's excellent that he's created a public discourse around this We disagree with the suggested implementation he and others have pitched, but at least he's listening We should be having this discourse

And in fairness to him, we've put links to his videos on the topic in the video description below I would encourage you to check them out, so you can get both sides of this rather than simply our side And if you do, I would ask that everybody be respectful and go in with the mindset that this is a person trying to listen and trying to do something about our complaints If we can start a true dialogue here, maybe together we can all find an answer that prevents loot box abuses without doing unnecessary splash damage to the medium at large Oh hey, we got an update here

Since the writing of this episode, house bill 2686 was entered into the Hawaii State House, which would, if passed, make it quote 'be unlawful for any retailer to sell any person under 21 years of age a video game that contains a system of further purchasing: a randomized reward or rewards or a virtual item which can be redeemed to directly or indirectly receive a randomized reward or rewards' So if you're under 21 in Hawaii And you want to try out Hearthstone or Madden or Overwatch or Counter-Strike or Call of Duty or PubG you might want to go pick those up now Just cause it might become a lot harder to do that soon Anyway See you next week