Belgium, Australia, the United Kingdom, and the State of Hawaii are looking into the lawfulness of “loot boxes” in mobile games. “Loot boxes” are virtual prize packages that may be purchased in mobile games where the player is unaware of what virtual items are inside the package until following the purchase. It is important to note that while several regulatory bodies have expressed some concern with this form of prizing, none have taken any formal action to ban them.
The Belgian Gaming Commission recently expressed concern with the presence of “loot boxes” in a popular game and questioned if this may create gambling. As background, gambling involves three primary elements: (a) chance, (b) consideration, and (c) prize. For the loot box, the chance element is present given the uncertainty of the contents. Consideration is also present given that these loot boxes are purchased by players. That said, given that the prizes are virtual, the position has been that the current law does not recognize the items within the loot box as real “prizes” for purposes of the law.
Several regulators, however, are looking into this. The Belgian Gaming Commission may be credited with leading the charge when first announcing an investigation. Since then, Australia, the United Kingdom, and even Hawaii have followed. In Australia, the Victorian Commission for Gambling and Liquor Regulation believes that the purchase of such chance is considered gambling, but has no power to change the law—it is only able to investigate and advise. The United Kingdom Gambling Commission, however, took a different approach, stating that “where in-game items obtained via loot boxes are confined for use within the game and cannot be cashed out it is unlikely to be caught as a licensable gambling activity.” Finally, the State of Hawaii is pushing forward with considering legislation in this area, looking particularly at concerns with the draw of children to mobile gaming platforms.
With all of the activity in this area, many companies may be wondering if this requires a shift in practice. At this time, it does not. For now, virtual prizes should always be referred to as virtual and it should be made clear that they do not carry any real world value. Further, steps should be taken to avoid giving real world value to virtual currency for players outside of the game. For example, game promoters should not suggest that virtual currency or prizes may be exchanged for anything of real world value.