Prof. Nerilee Hing, Prof. Matthew Rockloff and Prof. Matthew Browne, Experimental Gambling Research Laboratory, CQUniversity

Classifying games with loot boxes as M will do little to protect children from gambling harm

Introduction

The Australian Government has announced it will seek the agreement of the States and Territories to introduce a mandatory minimum classification of M for computer games containing paid loot boxes. This M (Mature) classification means that the content is not recommended for persons under 15 years, but it has no legal force. In this Editorial, we argue that this classification will do little to protect children from the harm associated with loot boxes, and instead that games with loot boxes should be restricted to 18+.

What are loot boxes?

Loot boxes are virtual containers embedded in the popular video games that children and young people routinely play. Loot boxes can be purchased with real money, with virtual currency, or they can be won in the game. Loot boxes are like a lucky dip because what’s inside them is not known in advance. When opened (after purchase or a win), they reveal virtual items of wildly differing rarity and perceived value. These items can include in-game currency, weapons or special abilities that can enhance in-game performance, or skins that have aesthetic and prestige value, and often these items can be sold for cash.

Why are loot boxes a form of gambling?

We consider purchasing loot boxes to be a gambling activity, because it involves spending real money on a chance-based reward of an uncertain value. Older children often recognise loot boxes as gambling. Loot boxes use psychological techniques drawn from gambling to encourage spending and persistent play. One powerful technique of loot boxes is their use of variable reinforcement schedules: the player doesn’t know when they will receive a prize or how valuable it will be. Like Skinner’s experiments with rats and pigeons isolated in a box, this behavioural conditioning technique is used in the most harmful form of gambling – poker machines – and encourages rapid uptake of the activity and persistent repetitive behaviour in the hope of being rewarded. Like poker machines, the wins follow an inverse distribution of rare/valuable and common/trivial: a mechanic that is crucial for fostering excessive play in order to achieve the desired wins. Despite these intrinsic similarities to the most dangerous form of conventional gambling, loot boxes are not regulated as gambling in Australia and therefore lack consumer protections, such as age restrictions and clear information on the odds of winning.

Do children engage with loot boxes?

Loot boxes are embedded in the digital games that many children play from early childhood and throughout their primary school years. By adolescence, about 8 in 10 Australian children aged 12-17 years engage in loot box play and around 4 in 10 spend real money to purchase loot boxes in games.

Loot boxes can be harmful because they provide young people with a gambling currency and a way to gamble when underage.

Skins that are purchased or won in loot boxes have real-world value. By example, the owner of a very rare skin (the Blue Gem CS:GO knife), which they purchased for $100,000 in 2016, knocked back an eye-watering US$1.2 million offer to buy it in 2021. Of course, most skins are worth far less, only a few dollars. But the point is that skins have real-money value and can be sold, traded or gambled on unregulated skin gambling and esports betting websites. This means that the skins children win in loot boxes can be gambled, for money or for more skins, on sites that have little regard for age-gating or consumer protections. Essentially, skin gambling is an unregulated “Wild West” industry that makes gambling easily accessible to kids and that targets kids through advertisements, online influencers and other promotions embedded in the games they play. In NSW, one in seven (14.5%) young people aged 12-17 years report recent engagement in skin gambling, including on esports events and on games of chance like slots and other casino games. Governments have banned this activity, but in practice little is done to stop it. Without loot boxes, skin gambling would not exist. This is a compelling reason for banning underage access to loot boxes in games.

Loot boxes and skin gambling are linked with gaming and gambling disorders in youth.

Paid loot boxes and skin gambling attract our most vulnerable children. Australian adolescents who purchase loot boxes are six times more likely than non-purchasers to experience problem gambling, even after accounting for other forms of gambling they might do. Further, adolescents who purchase loot boxes are twice as likely as non-purchasers to have a video gaming disorder. Similarly, those who engage in skin gambling, as opposed to purchasing loot boxes, also have elevated rates of problem gambling and video gaming disorder.

What should be done?

We think it’s unacceptable to allow children easy access to these harmful products, and then leave it to parents to monitor their children’s use of them. While some parents may feel lenient towards their children accessing some mature content in video games, many are likely unaware that this could include gambling content and expose their children to the risks of gambling problems. Games with loot boxes and other types of simulated gambling should be treated in the same way as monetary gambling and restricted to 18+. Games with simulated gambling, including loot boxes, should also be explicitly labelled as having “gambling content”. That label would be a tangible disincentive to game developers, whereas a “M” rating could only make a game more attractive to youth (i.e., look at me, I’m an adult!). If parents, or even a child, sees a label of “gambling content” it would make them think twice about the game. If the Government is genuinely serious about reducing gambling-related harm to children, they should mandate truthful labelling on these games, restrict their use to adults, and crack down on skin gambling operators.