Federal Trade Commission will investigate video game loot boxes

Chairman Joseph Simons promises Congress to investigate potential for child susceptibility to addiction, problem gambling

US Federal Trade Commission (FTC) Chairman Joseph Simons has promised Congress that the agency will look into loot boxes in video games, citing concerns about problem gambling and children's susceptibility to addiction.

Broadcasting Cable reports that the pledge and discussion occurred during a hearing into FTC oversight of Facebook and Google in the wake of the Cambridge Analytica data-leak and various concerns about anti-trust laws. The conversation occurred as a part of concerns regarding manipulative marketing in children's content, including concerns about Google, YouTube and in-game purchases in video games marketed toward young children.

Senator Maggie Hassan (D-NH) mentioned that loot boxes were predicted to be a $50 billion business by 2020 and that such transactions were "endemic" to the industry.

Simons concluded that the FTC was "undertaking this project and keeping the committee informed about it."

The US is hardly the first country whose government has investigated loot boxes. Belgium is opting to prosecute publishers who keep loot boxes in their games under anti-gambling laws and currently is going toe-to-toe with EA on the issue even as other publishers pull loot boxes from their titles. Meanwhile, the UK Gambling Commission said last week that there is no link between loot boxes and gambling.

[UPDATE]: A representative of the Entertainment Software Association offered the trade group's position on the subject, saying, "Loot boxes are one way that players can enhance the experience that video games offer. Contrary to assertions, loot boxes are not gambling. They have no real-world value, players always receive something that enhances their experience, and they are entirely optional to purchase. They can enhance the experience for those who choose to use them, but have no impact on those who do not."

He went on to point out that the ESRB has moved to address loot box concerns by applying a label to packaging of physical games informing parents that in-game purchases are available for the title, and launching a website to inform people about parental controls in game systems.

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Latest comments (2)

Nicholas Lovell Founder, Gamesbrief3 years ago
I am a supporter of lootboxes (but think they must be regulated, although whether that should be under existing consumer protection law, under existing gambling regulations or under new loot ox regulation is still unclear). But I think the ESA's statements contain many errors of logic.

- "They have no real world value": tell that to Valve, where items can be traded within the system for real money. The Dutch have found that if players can legitimately transfer items won in a lootbox to each other within the terms of the EULA, they have real world value.

- "Players always receive something that enhances their experience." If this was the test, then all betting shops would guarantee that every bet won a lollipop even if you lost the bet. That doesn't fly with gambling regulators.

- "They are entirely optional to puchase" - totally irrelevant to whether something is gambling. Gambling is optional; it is nevertheless regulated.

I think labelling is a good start, but I suspect we should be making all games with loot boxes in them age limited (probably 12+, which seems to be the direction that PEGI is taking).

But in the end, the ESA is likely to be on the wrong side of history. When the public and the politicians line up against the publishers, the publishers are going to lose.

Edited 1 times. Last edit by Nicholas Lovell on 28th November 2018 4:06pm

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Klaus Preisinger Freelance Writing 3 years ago
The error in logic is that the ESA tries to capture the narrative and represent its members with arguments based on legal minutia that is questionable even for the one market the ESA represents. Meanwhile, the publishers need to operate globally to hit their revenue goals and need strategies and arguments which can be applied and defended on a global scale. That has not happened yet.

These highly combative arguments and strategies we see now will never work in all relevant markets. At the end of the day it is silly to argue the law with consumer and child protection agencies who, at the end of the day, have an easier time affecting changes in the law.

A lot of things are not quite illegal, or not technically something illegal. Loot boxes swim in the same waters as legal highs and 'bath salts'. Sure, they are legal, until reasonable law making catches up with them. Then what?

Can that be the long term strategy of publishers do be a better workplace?
"Congratulations Mr. Smith, you no work at the biggest publisher in the world, we pay high wages and there is neither crunch, nor overtime. Maybe out entire business model and therefore your career is predicated on the existence of certain legal loopholes, but I trust you will sign here anyway."

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