In a First, U.S. Senator Demands Government Oversight of Predatory “Loot Boxes” in Video Games

Last year, The Intercept talked to psychologists, gambling addiction experts, and state lawmakers about the proliferation of video game “loot boxes” — random assortments of prizes purchased by players, many of them children, who hope to score certain coveted powers, much the way slot machine users hope to hit the jackpot.

Many of these experts argued that loot boxes, typically purchased in small-dollar transactions, represent what is essentially a form of gambling aimed at minors, and called for government oversight.

In mid-February, Sen. Maggie Hassan, the New Hampshire Democrat, answered the call. First, she wrote a letter to Patricia Vance, president of the Entertainment Software Ratings Board, which designs the warning labels for parents on video game products, asking Vance to consider listing the presence of loot boxes as a warning on product packaging and to study the wider use of the practice. (The full letter to Vance is posted at the bottom of this article. ESRB did not respond to a request for comment.)

Hassan also pressed four nominees to the Federal Trade Commission on the issue during a hearing the same week at the Senate Commerce, Science, and Transportation Committee.

“In the past, the FTC has looked at video games,” specifically the impact of violence in games, Hassan said at the hearing. “Do you agree that children being addicted to gaming and activities like loot boxes that might make them more susceptible to addiction is a problem that merits our attention? And depending on how the ESRB responds to my inquiry, would the FTC be willing to look at loot boxes as an issue independently?”

All four FTC nominees agreed that they would be willing to examine federal oversight of loot boxes.

Christine S. Wilson of Virginia, who was nominated to join the FTC in January, was emphatic, citing her own children’s hobbies. “As the mother of two teenagers, I would agree that the extent to which teenagers play video games is certainly a concern and I would be willing to talk to staff and get more up to speed on this issue should I be concerned,” she said.

The gambling addiction community was heartened by Hassan’s step. “Loot boxes in video games are a dangerous and predatory form of gambling being marketed directly to kids,” Les Bernal, national director of Stop Predatory Gambling, told The Intercept. “Their sole purpose is to extract more money out of young people’s pockets. We urge Sen. Hassan and the FTC to follow through on stopping these video game operators from preying on kids.”

Consumer outrage against loot boxes reached a high point last holiday season, when sales of Electronic Arts-published shooter “Star Wars Battlefront II” came in below expectations after a backlash from players upset that people who spent money on loot boxes and other in-game purchases could gain a major edge over other gamers. The company responded by temporarily disabling these purchases.

Electronic Arts and the ESRB have both argued that loot boxes are not like gambling because the purchaser is never left empty handed, as gamblers often are, even if all they receive are prizes in which they are not interested.

At the state level, Hawaii lawmakers have started moving legislation on loot boxes; one set of measures would require special labeling on games that offer them, while another would outright ban the sale of such games to consumers under the age of 21.

“I grew up playing games my whole life,” Democratic state Rep. Chris Lee of Oahu, who authored the bills, wrote in a prepared statement. “I’ve watched firsthand the evolution of the industry from one that seeks to create new things to one that’s begun to exploit people, especially children, to maximize profit.”

Here’s Hassan’s full letter to Vance:

Patricia Vance
President
Entertainment Software Ratings Board

Dear Ms. Vance:

I write to today regarding an important gaming issue that was recently brought to my attention by a constituent.

The Entertainment Software Ratings Board (ESRB) has an important mission in both providing parents with the necessary information to make decisions about the suitability of games, and their content, for children, as well as ensuring that the industry is following responsible marketing practices.

The ESRB rating system is of great value to parents across the country, empowering parents to make informed decisions on behalf of their children. As technology advances, ESRB must work to keep pace with new gaming trends, including the in-game micro-transactions and predatory gaming tactics, particularly as they are deployed on minors.

The prevalence of in-game micro-transactions, often referred to as ‘loot boxes,’ raises several concerns surrounding the use of psychological principles and enticing mechanics that closely mirror those often found in casinos and games of chance. The potential for harm is real. Recently the World Health Organization classified “gaming disorder” as a unique condition in its recent draft revision of the 11th International Classification of Diseases. While there is robust debate over whether loot boxes should be considered gambling, the fact that they are both expensive habits and use similar psychological principles suggest loot boxes should be treated with extra scrutiny. At minimum, the rating system should denote when loot boxes are utilized in physical copies of electronic games.

To that end, I respectfully urge the ESRB to review the completeness of the board’s ratings process and policies as they relate to loot boxes, and to take into account the potential harm these types of micro-transactions may have on children. I also urge the board to examine whether the design and marketing approach to loot boxes in games geared toward children is being conducted in an ethical and transparent way that adequately protects the developing minds of young children from predatory practices.

Further, I urge the ESRB to consider working with the relevant stakeholders – including parents – to collect and publish data on how developers are using loot boxes, how widespread their use is, and how much money players spend on them.

Finally, I ask that you develop best practices for developers, such as ethical design, tools for parents to disable these mechanisms, or making them less essential to core gameplay.

Top photo: Maggie Hassan, D-N.H., greets supporters outside the Boys & Girls Club on Nov. 8, 2016, in Concord, New Hampshire.