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The Psychology Behind Why Loot Boxes Are Like Gambling Is Getting Clearer

Where does science draw the line?

MIKE MCRAE
21 JUN 2018

In the ultra-competitive market of video gaming, selling randomized rewards can bring in extra revenue for developers.

But these 'loot boxes' have long been thought to blur the line between in-game purchasing and plain old gambling. Now psychologists are weighing in, and pointing out that this line isn't as hazy as gaming companies might like to think.

 

Two researchers from Massey University in New Zealand and the University of Tasmania in Australia have stepped back to take a more objective look at the question of whether loot boxes should be considered a form of gambling.

Qualifying their commentary with clear definitions, they argue there's no two ways about it – in their words, "loot boxes present a number of striking similarities to real-world gambling."

A wide variety of computer games offer prizes for cash as a way to offset the massive costs that go into their development, either replacing the purchase cost or supplementing it. These microtransactions aren't new.

Loot boxes are unique in that you have limited control over the details of your prize.

Randomising the prize adds an incentive for players to try their luck again and again, either to collect items or to get their hands on something specific.

Which for game companies provides an income stream that's hard to ignore – they could be adding around $50 billion to the industry by 2022.

"This kind of reward structure is termed a variable ratio reinforcement schedule, and underpins many forms of gambling," say the authors, Aaron Drummond, from Massey's School of Psychology and James Sauer from the University of Tasmania's Department of Psychology.

 

To qualify the degree to which loot box rewards mirror the kinds of machines we'd expect to see in a casino, the pair characterised purchased prizes found at the time in 22 computer games, including Call of Duty: WWII, Star Wars Battlefront II, FIFA 18, and Injustice 2.

All of the games hold ratings that say they are suitable for players under 17 years old by the Entertainment Software Rating Board (ESRB), a US based organisation that assigns classifications to computer games.

Alarmingly, they found 10 of the 22 games met all five criteria they used to distinguish gambling behaviours from other forms of risk taking.

These included;

  • The exchange of money or valuable goods.
  • An unknown future event determines the exchange.
  • Chance at least partly determines the outcome.
  • Non-participation can avoid incurring losses.
  • Winners gain at the sole expense of losers.

Loot boxes are already on the radar of a number of governments around the world.

"Given these features are similar to those underlying traditional forms of gambling, the Belgium Gaming Commission and Australian and US regulators are investigating whether loot boxes constitute a form of gambling," the researchers say.

 

"However, at present, there is no consensus on whether such simulated forms of gambling constitute illegal gambling operations."

The Netherlands Gaming Authority have made it clear that loot boxes risk violating their laws. Belgium's Minister of Justice wants them banned outright. US States Minnesota and Hawaii are pushing bills that emphasise their illegality, with Washington looking into the matter.

Australian states appear to be aware of the issue, and claim to be investigating.

Not everybody is convinced, though.

New Zealand authorities are hesitant, telling the gaming site Gamasutra that their gambling regulator "is of the view that loot boxes do not meet the legal definition of gambling." Unsurprisingly, the CEO of EA Games agrees.

None of this is to say loot boxes are inherently bad, though a number of gamers argue otherwise.

Backlash from a number of communities has already led to the softening and removal of loot boxes in a number of games, especially where the reward affects game play.

Star Wars Battlefront II was included in the research, for example, but has since rolled back the feature.

 

But in spite of their relative unpopularity, randomised in-game purchases don't seem to be vanishing any time soon, meaning we need to have a consistent, reasonable discussion on how this impacts players of different ages and backgrounds.

With the World Health Organisation adding computer game addiction to the latest edition of their disease compendium ICD-11, the question of how and when gaming puts minors at risk is a pertinent one.

What we need is more studies like this one to help us better understand what we're dealing with.

This paper was published in Nature.

 
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