The Legality of Loot Boxes : Countries Vary in Views

Questions about the legality of loot boxes have been answered by regulators of different countries, to which varying views and actions have been taken.

Countries like the UK and the U.S. generally allow video game developers to offer loot boxes, for as long as their mechanics do not go into the boundaries of gambling laws, In China, Belgium and the Netherlands, loot boxes have been constituted as falling in the same structure as online gambling. As a result, said countries have outlawed their inclusion as reward features of video games. In Japan, loot boxes are allowed but subject to certain restrictions.
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The differences of opinion though, stirred confusion among gamers. Loot-box supporters opine that they are structured under the same framework of the “surprise toys” so loved by children. The problem though is that some game developers went beyond the mechanics of offering mystery prizes by way of loot boxes. The offering began to draw criticisms when their acquisitions involved payment of real money, described as similar to staking of wagers in exchange for an unknown game enhancement or rare feature.

Some others oppose the addition of loot boxes in games because they perceive loot rewards as predatory tactics. Parents raised concerns that even if offered as in-game rewards, the prospect of winning a mystery prize encourages minors to play non-stop, and could lead to game addiction if not closely supervised.

Understanding the Aspects that Determine the Legality of Loot Boxes

Countries that arrived at a decision to allow loot boxes made references to online gambling laws. That is regardless of whether a loot box was randomly won as a prize, or acquired as in-app purchase. Three elements were considered and compared to what statutes specify as critical elements that define an activity as online gambling.

First is “value”, the second is “chance” and the third is “valuable prize.” If a loot box is randomly awarded as a game prize, there is no value involved, which makes the chance of winning a valuable prize, free of cost. If a loot box is acquired by way of real-money purchase, and even though all elements of gambling are present, it still does not necessarily constitute online gambling.

Prizes that are valuable to gamers may come in the form of customization features, such as characters or avatars, skins, weapons, armors, which they would otherwise have to pay for if they so wish to acquire. These virtual objects are not considered things of monetary value in the real world, and therefore cannot be monetized by the gamers who won them via loot boxes.

Things would be different if the mystery prizes being awarded come in the form of gaming hardware and accessories, which gamers could monetize by selling them even at a bargain price, If that is the case, regulators may have decided that the elements of value, chance and prize constitute fall in the same category as online gambling.

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