By examining existing regulation, this article identifies the flaws of the ‘regulate-loot-boxes-as-gambling’ approach and critiques the alternative consumer protection approach of adopting ethical game design, such as disclosing the probabilities of obtaining randomized rewards and setting maximum spending limits. This article calls on the industry to publish loot box spending data and cooperate with independent empirical research to avoid overregulation. This article reviews the psychology literature on the potential harms of loot boxes and applies the behavioural economics literature in order to identify the potentially abusive nature and harmful effects of loot boxes, which justify their regulation. The regulation of loot boxes is a current and challenging international public policy and consumer protection issue.
Loot boxes have been, and continue to be, scrutinized by regulators and policymakers because their randomized nature is akin to gambling. Loot boxes represent a popular and prevalent contemporary monetization innovation in video games that offers the purchasing player-consumer, who always pays a set amount of money for each attempt, the opportunity to obtain randomized virtual rewards of uncertain in-game and real-world value.
