B.C. Research Links Video Game Loot Boxes And Problem Gambling

With each passing generation, video games have become increasingly sophisticated and immersive. As virtual worlds continue to evolve, researchers are zeroing in on loot boxes, a particular in-game feature that they believe is an emerging form of problem gambling.

Loot boxes, are a fixture in nearly all popular gaming franchises after debuting over a decade ago.

They are randomized prize generators that can be accessed through gameplay, in-game currency or directly with real money.

According to Luke Clark, director at the University of British Columbia’s Centre for Gambling Research, loot boxes are essentially a mystery box inside a video game. As a result, the feature is drawing comparisons to slot machines.

“There’s been a lot of concern about whether loot boxes are effectively a disguised form of gambling,” Clark said.

Loot box phenomenon a world-wide issue

UBC’s findings are only the tip of the iceberg in what has quickly blossomed into an international matter.

Researchers at the universities of Plymouth and Wolverhampton released a detailed report concluding that loot boxes are “structurally and psychologically akin to gambling.” The researchers’ work was backed by GambleAware, a charity dedicated to keeping people safe from gambling harms.

A key finding suggests video game companies employ an array of well-known psychological techniques to encourage player spending, including:

Endowment effects (by giving away ‘free’ loot boxes, but then charging for opening).
Fear of missing out.
Price anchoring.
Special limited-time offers or items.
Obfuscation of costs (i.e., via in-game currencies).

In essence, loot boxes are part of a “sophisticated choice architecture” used to monetize modern video games.

The early returns on the effects of such a system are proving worrisome to researchers.

Of the 93% of children playing video games, 40% open loot boxes.
Around 5% of loot box purchasers spend roughly £70 per month.
- This cluster generates over half of the industry revenue from loot boxes.
- 1/3 of these spenders fall into the ‘problem gambler’ category.

Study finds shared traits between vulnerable groups and problem gamblers

According to the GambleAware researchers, individuals most likely to be addicted to video games share common characteristics with potential problem gamblers, namely sports bettors.

“We’ve noticed that the demographics of sports gamblers that have issues are quite different from regular gambling, so we do take a look at that and we do have some people that are looking specifically at sports gambling,” said Marie-Noelle Savoie, BCLC’s vice-president of legal compliance and security.

Specifically, the demographic Savoie is referring to is young men. This is the same group that is most susceptible to the allures of the loot box system. In fact, GambleAware’s report confirmed that lower education and younger age directly correlate to an increase in video game spending.

In wake of this discovery, UBC’s Clark posed the possibility of regulations to protect children from loot boxes, if they ultimately prove a form of gambling.

That very question is at the centre of a British Columbia man’s class action suit against video game developer, Electronic Arts Inc.

Class-action lawsuit filed in B.C. may proceed

Mark Sutherland, the plaintiff in this case, claims EA misled users regarding the availability and scarcity of rare or valuable items within loot boxes.

He also alleges that the defendants controlled the probabilities of a loot box containing a specific item without disclosing the probabilities before users purchased the opportunity to open a box.

Sutherland’s lawsuit works on behalf of all B.C. residents who paid directly or indirectly for EA’s loot boxes since 2008. It covers more than 70 of EA’s games.

On March 14, Justice Margot Fleming in B.C. Supreme Court certified the case, meaning it will go to trial.

Justice Fleming declared Sutherland’s claim discloses a viable cause of action under the Business Practices and Consumer Protection Act. The act makes it an offence for businesses to engage in acts or practices that reasonably deceive or mislead customers.

However, she did reject a significant component of the plaintiff’s claim. Sutherland argued the use of loot boxes resulted in unlawful gambling and was unconscionable, but Justice Fleming disagreed.

An EA official said the company is pleased this particular matter was rejected.

“This further affirms our position that nothing in our games constitutes gambling. We don’t believe the remaining claims have any merit either, and will continue to vigorously defend against this opportunistic action.”

Sam Jaworski, a lawyer representing the plaintiff, expressed optimism despite the setback.