Loot boxes and gambling

A previous article discussed loot boxes as microtransactions and the purpose they serve in gaming. While this view may offer something in terms of answering why we have loot boxes, this does not offer much perspective as to whether or not we should have them in the first place. Regrettably the conversation does not seem to have moved beyond a comparison to gambling that seems disingenuous and does not follow the more interesting threads such a discussion presents to us. In this post I’d like to address the topic of gambling and its regulation in gaming. This is a deviation from the originally stated plan at the end of the previous post. This current post is to address gambling mostly to be able to move on to a broader discussion of how games optimize for certain things and the effects it may have on us in follow up articles. If you aren’t particularly interested in the gambling question, I’d recommend skipping this one.

A test for gambling

One essential feature that emerges from both popular and legal definitions of gambling is betting. There is a spectrum of skill in terms of gambling, ranging from slot machines (pure probability) to a chess match in the park (pure skill), but the risk of money or an item of value on some contingency is constant through them all. There are likely some gradations for gambling as well. For instance, charity 50/50 events (purchase of tickets for which a winner receives half of all revenues), POGs, and Magic with ante all caused some consternation among my Salvation Army attending family (the fear that Magic might turn me to Satan worship also meant I could not have black cards in my deck too, but that had nothing to do with gambling anything but my soul) but were ultimately deemed to be fairly innocuous and comparable exemptions for most of these cases exist in law. For this reason it seems most productive to use betting as the measure against which we will evaluate potential gambling activities, with a secondary consideration as to severity to prevent us from saying anything too ridiculous.

From this it seems that the ESA’s (and later PEGI’s) release is sensible and consistent: loot boxes are not gambling since a player is assured to get an object of value, even if it’s not one that they wanted. This is more or less the CCG (Collectable Card Game) way of looking at loot boxes in recognizing that the intent of the buyer may be to get a specific item, but that the commitment of the booster pack is to offer a random draw from a distribution and that the nature of the purchase is not re-evaluated based on the value to the consumer.

A common objection to this view is to point out the resale value of physical cards as opposed to digital goods which do not have a resale value (or whose resale value comes in the form of a prohibited activity such as selling an account). While this is a seductive thread to follow, there are two problems with it. First, the resale of a given physical product depends on there being a reasonably liquid market for it, which is why POGs don’t provide any return on the original investment, and why your landlord will not accept a Black Lotus card for rent. At best we can say the expected value of the contents of the pack discount the listed price (so if a booster pack costs $5 and the expected value of its contents are $1, then the price you make your decision on is $4 assuming you intend to sell your cards after you’re done with them and they retain their value) and we don’t seem to be arguing that it is the price of loot boxes that make them gambling. Second, this value on physical goods seems to be smuggling individual tastes into a policy recommendation that applies to all. An individual purchase decision will be driven by a player’s private valuation of the product and whether or not it is equal to or greater than the asking price. I may individually assign no value to digital goods, but then, all this really tells me is that I won’t buy loot boxes, DLC, video games, operating systems, apps, music, or movies (unless you really think people are buying these for the boxes and discs). Given that there are complaints of content being locked behind a paywall or the game being pay to win, it seems more reasonable to assume that the average gamer does find some value the contents of a loot box.

When the ESA says that loot boxes are not gambling because the player receives something of value, they are pointing out the difference between a wager (heads you get the money, tails I keep your money) and an exchange for goods or services (I will give you X if you pay me Y). Some goods and services do involve uncertain values: art, mortgages/real estate, insurance etc. and these are distinct from gambling. While there may be a case for the regulation (self or otherwise) of loot box systems, it is inappropriate to attempt to make it by equating loot boxes with gambling and then use the existing regulatory framework to solve the problem.

Regulation

Against the measure of betting it is reasonably straightforward to see that loot boxes are different from gambling, and so it raises the question as to why this particular line of attack has gained such currency. It is not necessary to equate loot boxes with gambling to be opposed to them, just as it does not follow that rejecting this comparison implies support for loot boxes. The principal appeal of this strategy seems to be that it uses existing mechanisms to address the perceived problem, especially since ESRB ratings already contain guidelines regarding gambling. However, this feature is less appealing on investigation. First, while most discussion seems to surround assigning an M (17+) rating to games containing loot boxes, the existing guidelines assign the most restrictive rating, AO (18+), to games that involve gambling with real currency. The AO rating is comparable to the NC-17 rating for motion pictures in that this rating has the consequence of limiting where the product can be published and how it can be advertised. This restriction does not come from the ESRB but rather from the reactions of various outlets to the rating. Specifically an AO rated game cannot be streamed on Twitch, will not be permitted on a Nintendo, Playstation, or Xbox console, and will not be carried at certain retailers. These guidelines can be changed, but this means that part of the initial appeal for the policy of loot box regulation through ratings is an illusion and so the policy should justify itself over alternatives that would require changes of a similar magnitude.

A deeper concern I have with this recommendation is the disconnect between the claimed severity of the problem (children being taught to gamble) and the efficacy of the solution. The broad perception of these ratings systems seem to be that they are either a tool to keep socially conservative politicians happy while presenting the fewest impediments to buying our games, or at worst are a minor inconvenience when trying to get games underage. While anecdote can only get us so far, one does not need to look far to find examples of gamers who have been able to purchase games that should be restricted to them, and digital distribution only makes enforcement harder. Contrast this to the age restrictions at casinos (and the penalty that non-compliance carries) and it is clear that if we accept the premise that loot boxes are gambling then using the existing ratings system is not a serious remedy.

Why focus on gambling?

My suspicion is that this policy proposal is not actually intended to address gambling at all but instead is designed to slow the adoption of loot box systems through making them less profitable. As with motion pictures, a large number of big budget and high profile games design with the goal with obtaining a T (or equivalent) rating (13+) so as not to restrict the potential audience. Assigning a more restrictive rating means fewer purchases of the game (assuming proper enforcement) and, of course, fewer potential customers for loot boxes. The result is that if the expected value from the loot box system with the restricted pool is less than the revenues from the purchase of the game from players who would be affected by the restriction, the loot box system won’t be implemented. Incidentally, it also means that fewer gamers overall will experience the game and that those who do play the game will bear more of the costs of development, reducing the consumer surplus.

While my own feeling is that this system will be ineffective at restricting the exposure of loot boxes to underage gamers, even if we assume proper enforcement the result is a blunt instrument that prevents gamers unconcerned or unaffected by loot boxes from getting titles they would otherwise enjoy while shifting the burden onto gamers whose only protection from the damaging effects of these systems is their birthday. As a whole I find this an unserious and disingenuous  approach to the claimed problems with loot boxes. In fact I get the impression that a significant number of people calling for this kind of system are utterly indifferent as to the effects of loot boxes provided that they are not implemented in the games they play. The relabeling of games with loot box systems as mature does not make sense as a strategy for dealing with gambling addiction because it’s not intended to be a strategy to address gambling addiction but rather a rhetorically convenient means of curbing an unpopular pricing strategy.

Streamers in particular are ripe for condemnation as a few have assumed the mantle of ‘thinkfluencer’ on the supposed outrages of loot box systems while simultaneously being affiliated with Loot Crate (Columbia record club for cheap plastic crap) and Humble Monthly (loot box for games). Indeed, affiliation with either of these programs is viewed as having ‘made it’ in at least some circles of streaming and yet these programs are founded on the very same trade off of low price in exchange for uncertain (and often unknown) outcomes. I don’t see anything wrong with these programs per se, though I personally don’t see the value in either of them (my own advice on Humble Monthly is to only buy if the guaranteed game is worth it to you), but then, I’m not trying to burnish my image through condemning loot boxes either. It has been made abundantly clear to me that I am in the minority regarding loot boxes, I only ask for consistency when delivering the jeremiad.

Conclusion

It is one thing to complain about a policy recommendation, but do I have any alternatives to offer? Not on the issue of gambling. It’s worth remembering that the most common interaction with gambling is someone at a casino or lottery doing it essentially for recreation and without any harm. It may surprise you to find out that I’m largely uncomfortable with the idea that the government is involved in gambling (essentially I’m of the “The lottery is a tax on people who can’t do math” persuasion and don’t think the government should be involved in an activity that clearly does have a damaging effect on some citizens. Though I recognize the revenues it raises, and would stop short of banning it and so recognize that something state run is a second best solution). I reconcile these beliefs through acknowledging that there are a lot of things that I think would be better for everyone if people did them. I think people should read more, support the library, vote in municipal elections, talk to their neighbours, and not drink so much. I recognize that these are my own preferences, and that more than my opinion is required to legislate them (libraries provide benefits above and beyond their direct use and so tax dollars support them. People can generally drink what they want, but we forbid them from getting behind the wheel of a car, because it ceases to be only their problem).

However, I also think my lack of a policy prescription stems from the fact that I think there is a lack of clarity as to the question we are asking because people really only seemed to care about addiction once it was their own money on the line. Addiction is the main reason we regulate gambling, and it is one of the reasons we have an age restriction. And yet we know that addiction in gaming is not limited to monetization strategies like loot boxes. The discussion is confused and superficial because we have been unwilling to follow the implications of our newfound concern for addiction. If we are going to discuss regulation, then we need to broaden our perspective from loot boxes exclusively even if only to articulate why they are a special case (if, indeed, they are) and found our policy recommendations on more than rhetorical convenience.

I will leave it to follow up articles to discuss some of the techniques behind loot boxes and attempt to come to grips with the question of addiction.


Note on affiliate links: I have an affiliate status with GOG.com for which I am given a portion of sales for traffic I drive to the site. The inclusion of a given title is for illustrative purposes first, but when it is available on GOG I will provide such a link. Naturally I encourage you to do your own price comparison or buy on your preferred platform. I include, on occasion, affiliate links from other broadcasters to support people who helped me in a given post or the cast in general. For this article the Humble Monthly link supports my friend and mod JessyQuil.

Charity Streams

Part two of the loot box article is still forthcoming, but life happens and so I have a reason to write a different post in the meantime. Starting today (December 11th), I will be doing a series of casts every weekday for the next two weeks, each with a new (surprise and generally crowd pleasing) game. Some of you may remember the format from my 1k follower celebration. Why the surprise and all the effort? A friend of the cast (TheEyesOfSyn92) had some misfortune befall her as mentioned in these tweets. In brief, while doing laundry someone took what they wanted of her clothes and threw the rest into the garbage. Syn herself has not directly made any appeals to repair this loss beyond reporting it to the police, but I have decided to do these special casts in order to do a small fundraiser to help lessen the impact of the theft.

In some ways I think this is a fitting response as I originally met Syn through helping JessyQuil on a charity cast after which she started regularly stopping by the cast and has been quite dogged in getting more people to watch my stuff. However, I am also aware that I rarely do streams like this directly (more on this below), and we are in a holiday season that makes many demands on your wallet for charitable causes as well as gifts and sales. With that in mind I thought I would explain why I am doing this series of streams specifically and a few thoughts on how I navigate the giving space in general. I hope this appeal will at least inspire you to make a token donation towards this specific goal, but if nothing else it should suffice as a few thoughts on charity streams and giving once the two weeks are up.

There are a lot of charities out there right now, to a point that it sometimes feels like they’re the new scam. The cause can seem dubious, more than expected goes to administration fees, and there’s a certain level of fatigue given how often people on the street or on a cast seem to be out their rattling the cup to get you to sub, donate, sign up for a mailing list, or buy some ornament. This effect is compounded by the fact that there is an unspoken tip on Twitch that charity is generally a good way to raise one’s profile, and so perceived insincerity is added to even more asks in an already crowded space. The biggest problem here is that none of these are really good reasons not to give, but they do serve as excuses to avoid it. Should the caster’s motivations really factor in to whether or not I feel good about money being given to a worthy cause? If I have doubts as to how much of my pledge goes to the cause, can I offer some alternative that will put the money to better use? If not, is no money really a better outcome than some positive value?

These concerns are partly why I have been more inclined to support others in their charity casts than undertake them on my own, although I did start casting off the back of an Extra Life marathon I did to support a children’s hospital I had to go to when I was little. In this case it had a clear benefit to my community, I had a personal connection to it, and I was relying on my personal network of friends as I had no broadcast to speak of at that time. What I didn’t communicate about that cast was that I had a secret goal in mind. If I did not earn what I was making per hour as a research assistant x 24, I would make up the rest out of pocket. Since I cared about the charity it seemed to me that 24 hours of working and giving the money should be the baseline I compare 24 hours of playing video games against, and that if the latter had a shortfall I had not spent the time well. This ensured my incentives were aligned with taking the fundraiser seriously, and I am happy to report that people were remarkably generous in their giving, leading to an outcome in which the time was valued well beyond what I could have earned through my labour. To put it another way, my cast normally has a donation button and now is equipped with a subscription button and the option to cheer with bits. There are already 3 asks on my channel, and so if I am going to ask you to do something with your money, the least I can do is respect it and put some time and thought into doing it right.

Let’s assume for a moment that giving is affordable and the right thing to do. Why this particular cause? I should be clear, Syn has not asked this and I am a little nervous that this may be crossing a boundary into something unwanted. Nobody particularly wants to be seen as a ‘charity case’ and I’m not inclined to label her as such. Instead I see this as more akin to insurance. I have been mugged twice, and the first time involved a very substantial amount of money I happened to be carrying in cash that day. I was fine,  but word got around and people were good enough to check in. While I did not bring up the matter of the money (with the exception of the intended recipient), more than a few cheques or small amounts started working their way toward me. Not enough to make me whole, but enough to lighten the blow. I would like to think that this is not unique to me. In some ways a social network can act like insurance: instead of an individual bearing the full brunt of misfortune, the network absorbs a small inconvenience, and the burden on the individual is less. The fact that Syn may be a stranger to you (and for what it’s worth, I’ve never met her in person) is less relevant than my hope to encourage a culture in which we care for one another, and let the sum of relatively minor expenses/inconveniences cushion the blow. The benefit to the recipient is not just monetary, but also stems from the knowledge that people care and are invested in their wellbeing (even if it is a small amount). Like insurance, nobody can predict when something will happen, and many people go through life without needing it, but it remains a prudent choice given the potential outcomes. I can no longer say I have not drawn from the support of my social network, but I can say how much it meant to me to experience that kind of care. I would like to appeal to the belief that had the fates decided differently, someone would undertake a similar initiative for you.

There is no case to be made that this is the most important donation you can make. Everyone needs to evaluate what they can give and where they would like to allocate it. I heard on a podcast once that “If you weren’t in a financial position to go in and buy a coffee whenever you’d like, then don’t buy me one either.” I have no interest in spreading hardship, and so if any value would constitute hardship, then there are other ways you can help (spreading the word is a great start). I am only interested in spreading inconvenience as thin as possible. For those of you who are in a state to contribute $15/$10/$5/$2/$1 or anything in between it would be wonderful if you did. Did you get a game that you loved and would have paid $25 on for $5 on a sale? Maybe pass a little of that surplus on and make someone feel better. Did you find some money in the past? If you’ve got a better job now, maybe pass on some fraction of it. If you see the loss of clothes as trivial compared to other things you could use the money for that is completely fine, I only ask that you contribute a trivial amount. The sum of trivialities over a population could almost erase what happened to someone who was wronged at random. In exchange, I am doing my best to put on a good show for two weeks with a new game every day. If you like my cast, my writing, for some reason find my tweets interesting, and especially if you haven’t donated in the past, I’d ask you to consider even making a token donation towards the cause.

If you would like to help out, the most direct way would be to give to Syn directly at her donation link. This may be inconvenient when you are in the stream and so I will honour any donations made through my channel and cover the PayPal fees (though I discourage this as a practice as general since there are no mechanisms for accountability beyond Syn reporting I have not honoured my claim). If it truly is beyond your means, I would encourage you to share this post or the casts with people who might like to contribute or participate in the two weeks of broadcasts.

Finally, there is a segment I know I will not be able to reach. They may be concerned about dishonesty or simply not see the value in an act that does not have some kind of world shaping significance. I can understand this perspective, and while I would argue that micro matters like how we treat and support each other matter more than we give credit for, I must acknowledge we live in an affluent society (it is, indeed, the premise under which I am appealing for donations in the first place) and that what we consider hardship is much lighter than what others face. If your reason for not participating in this particular cause is because of the perception of greater need, then I invite you to follow one of the links below. There is nothing to prove to me, but if you were unmoved by the appeal above solely due to greater needs elsewhere I would call on you to prove it for yourself and do a little bit to alleviate the suffering you feel is greater:

Medecins Sans Frontieres (Doctors Without Borders)

Give Directly

I hope to get a chance to see you all and thank you personally in one of the broadcasts.