These controversial micro-transactions are a feature in many of today’s most popular online games. But are they really  the gateway to a gambling problem - or about as threatening as a Kinder Surprise? 

What exactly are loot boxes?

Loot boxes, aka “pay-to-win micro-transactions,” are virtual merchandise gamers buy blind, and redeem to receive a randomised selection of game enhancers -  customisation options, “skins,” bonus points or weapons, to name a few. Think of them as digital grab bags that players spend real or in-game currency on, without knowing what’s inside.

 What’s the point of loot boxes?

The appeal to players is getting a bundle of in-game items with the chance of scoring something rare and valuable. But more often than not, the contents of a loot box is simply a grab bag of easily obtainable items the player doesn’t actually want or need.

For game developers, loot boxes are a powerful way to monetise otherwise “free’ games - generating ongoing revenue while avoiding the drawbacks of paid subscriptions. In the last year, loot boxes have become increasingly popular. 

What games feature loot boxes?

Recent games featuring loot boxes include Overwatch, PlayerUnknown’s Battlegrounds, Destiny 2, Rocket Leagure Star Wars Battlefront II, FIFA 17, Forza Motorsport 7, Middle-earth: Shadow of War, Gears of War 4 and Halo 5: Guardians

Should features like this Overwatch loot box be illegal for minors?

What’s the problem with loot boxes?

Loot boxes are “psychologically akin to gambling,” according to a recent Australian study of 7,400 gamers, which was part of a Senate inquiry into micro-transactions and “chance-based items.”

"Spending large amounts of money on loot boxes was associated with problematic levels of spending on other forms of gambling,” the study found. This is what one would expect if loot boxes psychologically constituted a form of gambling. It is not what one would expect if loot boxes were, instead, psychologically comparable to baseball cards” - or for that matter, Kinder Surprises, as one British defender of the practice recently maintained.

The Australian report - and similar international studies - found loot boxes “condition gamers to require the excitement associated with gambling” when they play games.

Then there’s the problem of fairness. Those players who can afford to spend money on loot boxes can collect more items and level up faster. 

"Spending large amounts of money on loot boxes was associated with problematic levels of spending on other forms of gambling

How are loot boxes being regulated?

In Australia at present, not at all. Despite an official inquiry recommending that loot boxes be restricted to players 18+ (legal gambling age), and to carry explicit warnings and parent advisories, the government decided in March that more research was needed to establish whether game developers should play a role in protecting children.

Yet a separate survey has found that 71% of Australian parents who had some familiarity with loot boxes believed game developers should be more transparent.

Industry self-regulation is gaining some traction, however. For example, the Google Play store now requires apps that include loot boxes to display the odds of winning. And many games now boast about the absence of loot boxes on their platforms - Fortnite, most prominently - and instead create revenue through direct purchases using in-game currency.

But international critics have argued that in-app purchases of cosmetic items are still tantamount to betting and can be a risk to the mental health of young players - not to mention the financial health of their parents.

What happens in other countries?

In Belgium and the Netherlands, loot boxes have been prohibited under existing gambling legislation. In the US, a bill currently before Congress proposes banning the practice in all video games played by minors, while in China, restrictive measures have also been put into place. 

But it needs to be said that Kinder Surprises are actually also illegal in the US, although for different reasons.

Seriously. Read about it here. 

How should I talk to my child about loot boxes?

If your child plays a game that features loot boxes, you need to have a conversation about what they are - and what they aren’t. Talk to your child about gambling, and the difference between having a bit of fun by taking a chance, and getting hooked into a losing quest for big winnings.

Spend some time playing alongside your child, and learn how in-app purchases work to advantage certain players over others.

Be clear about your rules around use of your credit card online to purchase any in-app items, including loot boxes. If appropriate, work out a budget that outlines allowable expenses, or consider a pre-loaded credit card they can use at their own discretion.