- Sen. Josh Hawley of Missouri plans to introduce a bill that would ban microtransactions in games marketed to kids.
- The Protecting Children from Abusive Games Act would prevent the sale of “loot boxes,” which contain a random collection of items, and “pay to win” models in those games.
- Hawley, who has also criticized social-media platforms, says the microtransactions are designed to profit from addictive and compulsive behaviors.
- Visit Business Insider’s homepage for more stories.
Government officials want to crack down on an increasingly common feature of video games: “loot boxes.”
Sen. Josh Hawley of Missouri plans to introduce a bill that would ban loot boxes – a random collection of items that players can buy in a game – and other types of microtransactions in video games marketed to children.
The Washington Post reported on Wednesday that Hawley’s bill, called the Protecting Children from Abusive Games Act, would affect games designed for children, as well as mature games with players under the age of 18, like “Mortal Kombat” or “Call of Duty.”
Microtransactions have become a major part of the video game industry and make up the business model of many popular games – for example, “Fortnite” is available for free but generated more than $2 billion last year from microtransactions. Other games with some version of microtransactions include “FIFA 19,” “Apex Legends,” “Overwatch,” “PlayerUnknown’s Battlegrounds,” and “NBA 2K19.”
But what exactly is the difference between a loot box and a microtransaction? Here's a look at why the controversial game-payment features are raising the ire of lawmakers, and a breakdown of everything you need to know about loot boxes.
So what exactly is a loot box?
Loot boxes are virtual packages containing digital items for use in a specific video game. Most games sell loot boxes for real cash via microtransactions, but some allow players to earn them by playing too.
The thing that makes loot boxes especially controversial is that players usually don't know what's inside the box - the contents are randomized, with the odds of encountering an item set in advance by the developer. That has led critics to liken the boxes to a form of gambling.
In some cases, the items inside a loot box can also make the game easier, creating an added incentive to spend real money to acquire a digital item faster. Providing power-ups through microtransactions is often derided as a "pay to win" business model.
Hawley said that loot-box systems encourage addictive behavior in children and that game developers should face legal consequences for their actions.
"Video game companies are using 'pay-to-win' and 'loot box' systems to addict children to their games and spend their parents money," Hawley wrote on Twitter on Wednesday. "The industry needs to be upfront about their role in America's growing addiction economy & stop practices that exploit kids."
In statements to Kotaku and The Post, Hawley gave the example of Candy Crush, a popular mobile game that sells items to make it easier. While the base game is free, microtransactions allow players to spend as much as $150 on a single purchase.
Loot boxes are expected to generate $50 billion in revenue for app makers by 2022.
Juniper Research reported last year that loot boxes and related gambling could generate as much as $50 billion in spending by 2022.
Critics of the loot-box business model compare microtransactions to gambling because the odds of obtaining specific items are often unknown to the buyer and because the desire to find the rarest items can lead some players to continue spending money on a game with little return on investment.
As more video games adopt loot boxes and microtransactions as a standard, lawmakers have expressed concerns that children are being exposed to an entry-level form of gambling.
Especially rare loot-box items often come with long odds. Legendary items in "Overwatch" - of which there are more than 100 to collect, with no way to control which ones you get first - show up in just 7.5% of loot boxes. Collecting them all can mean buying more than 1,200 loot boxes for $2 each, or playing for hundreds of hours.
While the game costs $40 to play, players have speculated that you'd need to spend $1,000 to $3,000 to unlock every item.
The Federal Trade Commission is already planning a workshop to discuss loot boxes and microtransactions.
Sen. Maggie Hassan of New Hampshire has asked the FTC to investigate loot-box practices to ensure that children are protected and that parents are informed about potential negatives.
FTC Chairman Joseph Simons responded by planning a public workshop with consumer advocacy groups, members of the video game industry, and their parent organizations.
The workshop, called "Inside the Game," is scheduled for August 7 in Washington, DC. People can leave comments and suggest discussion topics by emailing [email protected].
The Entertainment Software Association says parents already have the tools they need to prevent excessive spending by their children.
Hassan also wrote an open letter to the Entertainment Software Rating Board in early 2018, asking the board to collect data on the use of and revenue generated by microtransactions in video games.
The ESRB is responsible for providing an age rating for new games based on their content. As of February 2018, games rated by the ESRB that have microtransactions carry an "in-game purchases" label.
The Entertainment Software Association, which operates the ESRB and represents the political interests of American video game companies, says parents already have tools to control their children's online spending. Its CEO and acting president, Stanley Pierre-Louis, issued a statement in response to Hawley's comments:
"Numerous countries, including Ireland, Germany, Sweden, Denmark, Australia, New Zealand, and the United Kingdom, determined that loot boxes do not constitute gambling. We look forward to sharing with the senator the tools and information the industry already provides that keeps the control of in-game spending in parents' hands. Parents already have the ability to limit or prohibit in-game purchases with easy to use parental controls."
A few countries have already moved to ban loot boxes on the basis of gambling, but most are still waiting to make a judgment.
While multiple countries have determined that loot boxes do not constitute gambling, a few have pushed back against the practice.
Belgium and the Netherlands found that loot boxes violated their gaming laws and banned them, leading several video games to pull their games in those countries. China has also announced regulations that limit loot-box practices and gambling-based games in general.
In September, the Gambling Regulators European Forum released a joint statement signed by officials from 15 European countries and the Washington State Gambling Commission expressing concerns about a connection between loot boxes and gambling.
It could be a while before the US government is ready to take regulatory action against loot boxes or other microtransactions, but it will be interesting to see how the conversation develops after Hawley's bill is introduced and the FTC hosts its workshop later this summer.