FTC Investigating Loot Boxes, ESA Responds By Wrongfully Defending Loot Boxes
FIFA 19

According to a recent report from GamesIndustry.biz, as the Federal Trade Commission begins an investigation into Facebook and Google over the Cambridge Analytica data leak, finally addressing the anti-trust violations that the companies have been accused of, it was also revealed that the FTC will be looking to the connection between loot boxes, gambling and children.

FTC chairman Chairman Joseph Simons informed U.S. Congress that they would be looking into loot boxes, and the Entertainment Software Association, the parent company of the ratings board the ESRB, was quick to respond when Polygon reached out to them, stating…

“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.”

Wrong.

The Washington State Gambling Commission already set the precedent back in 2016 that the Counter-Strike loot box betting rings were indeed gambling, and illegal. The Commission’s exact statements were…

“In Washington, and everywhere else in the United States, skins betting on esports remains a large, unregulated black market for gambling. And that carries great risk for the players who remain wholly unprotected in an unregulated environment. We are also required to pay attention to and investigate the risk of underage gambling which is especially heightened in the esports”

Except the loot box betting wasn’t limited to just e-sports, but it’s another big issue happening within electronic entertainment.

Valve, however, was forced to send out cease and desist letters to those running the unsanctioned, unlicensed gambling rings. Valve’s exact statement to the gambling ring operators was…

“We are aware that you are operating one of the gambling sites listed below. You are using Steam accounts to conduct this business. Your use of Steam is subject to the terms of the Steam Subscriber Agreement (“SSA”). […] Under the SSA Steam and Steam services are licensed for personal, non-commercial use only. Your commercial use of Steam accounts is unlicensed and in violation of the SSA. You should immediately cease and desist further use of your Steam accounts for any commercial purpose. You fail to do this within ten days Valve will pursue all available remedies including without limitation terminating your accounts.”

These skin betting rings operated on identical principles to every other loot box system, insofar that players keep pumping money into the system in hopes of eventually getting a rare, high-priced skin. The big difference was that in the skin betting rings the bets were placed upfront and the percentage of win-rates were fixed by the betting operators, as admitted to by YouTuber PsiSyndicate, who claimed that one of the sites, SteamLoto, rigged the bets, so that while players always received an item (just like the ESA claims) it wasn’t the item they were betting for or wanted.

The system that the CS: GO gambling rings used were identical to how companies like EA has their loot boxes setup for games like FIFA 19, where it was revealed that getting your hands on a top-tier card carries a perpetual less-than-1% chance, as reported by Calvinayre.

So you’ll have to spend hundreds if not thousands of dollars to get a one-of-a-kind card in FIFA 19, which is what some players have been doing who have become addicted to loot boxes. In one case a teenager spent $7,600 after using his dad’s credit card in order to get the ultimate team in FIFA, as reported by USA Today.

In another case, one player spent $16,000 on loot boxes in FIFA, as reported by YongYea.

Interestingly enough, purchasing loot boxes with real money from those CS:GO lotto websites was considered gambling, but the ESA considers purchasing loot boxes in video games with real money as somehow being completely legal.

Also the ESA is wrong about loot boxes providing value to gamers. They provide LESS value to gamers given that traditional cash shops where you pay real money for clothing items or gear allow players to purchase exactly what they want when they want it. Loot boxes add a slot machine element to purchasing items with real money where the item you want you can’t get it unless chance favors you. How exactly are loot boxes “enhancing” an experience when players have to spend MORE money to get what they want from the loot box?

The psychology behind the gambling mechanics are outlined in a video by The Game Theorists.

The ESA also claiming that loot boxes always add something that increases the value of the game, therefore it’s not gambling, could also be used to defend actual casino gambling. If you always receive a free drink does it mean casino owners no longer need a license to allow people to gamble? If slot machines give you back one penny for every quarter you spend, does it mean that they’re no longer considered gambling?

The ESA has never answered these questions, and have always opted to skirt around issues relating to the similitude of actual gambling and spending real money on loot boxes. They also conveniently ignored the fact that had consumers not gone to Disney to get EA to remove the loot boxes from Star Wars: Battlefront II, the game itself would have allowed people to literally pay-to-win in a competitive game.

It was so bad even Angry Joe had to call out DICE and EA for the blatant cash grab, to which DICE responded by saying that loot boxes would get players to attempt to “try something new”.

Thankfully, Belgium is one of the few countries who called a spade a spade and decided to enforce their existing gambling laws by prohibiting loot boxes from being sold or implemented in games for those under 21 and from publishers who don’t have a gambling license.

So it’s now illegal to include unlicensed loot boxes in games sold in Belgium.

Unsurprisingly, Electronic Arts even refused to comply with Belgium law and chose not to remove the loot boxes from their games, which has resulted in them ending up in court over violating regional laws.

Belgium isn’t alone in the fight against loot boxes, though, especially as more kids get involved with gambling and loot boxes. Australia is also getting in on the fight, with the Australian Senate Environment and Communications References Committee suggesting that other Australian government bodies also investigate loot boxes after doing a report on the monetization method, as reported by IGN.

The Australian Senate Environment and Communications References Committee suggested that a thorough investigation be made and to examine the use of loot boxes and how they may exist within the current “regulatory frameworks” within Australia.

The report had to acquiesce that there are concerns from the community about real money loot boxes and their ties to gambling mechanisms, stating…

“The committee acknowledges the community concern that the inclusion of loot box mechanisms in video games may be normalising gambling and gambling-like behaviour. The committee also acknowledges the concern that children and some vulnerable adults may suffer gambling-related harms as a result of interaction with loot box mechanisms included in video games.”

However, the report still opted to defer the responsibility of an investigation on the other Australian committees, which may or may not result in any actions being taken.

(Thanks for the news tip Ebicentre)


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Billy has been rustling Jimmies for years covering video games, technology and digital trends within the electronics entertainment space. The GJP cried and their tears became his milkshake. Need to get in touch? Try the Contact Page.

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