Loot Boxes: Virtual Kinder Eggs or Casinos for Kids?

Dylan Gaffney

“Loot boxes” have revolutionized the video game industry over the past decade. Millions of players open these virtual containers in order to receive unknown in-game items ranging from purely cosmetic “skins” to substantive characters and levels. Generally, the particular reward is determined entirely by chance, without player input.

While loot boxes have become a popular feature, they have also been a source of controversy due to their resemblance to gambling. Publishers such as Electronic Arts defend the boxes’ “surprise mechanics,” claiming that they mimic the excitement of opening toys such as Kinder eggs.[1]  They further note that unlike most traditional gambling, the boxes guarantee rewards and those rewards are not convertible into real world currency.[2] Even when players purchase a loot box with real money through microtransactions, they know the one-time purchase will have exclusively in-game effects.

However, this framing undercuts the way many players interact with loot boxes. For instance, in MLB:  The Show, players may purchase “stubs” with American dollars. They can use these stubs to open “packs” containing random items of various stub values. Once a player opens a pack, they may use the items or sell them for more stubs. If a player is lucky, their items will be worth more than the pack’s cost, but this is unusual. Therefore, much like gambling, the system incentivizes players to spend more money in hopes they eventually have “pack luck” and receive a valuable item that makes the whole endeavor worthwhile.

Additionally, virtual currencies are not always entirely distinguishable from real money. In the game Counter-Strike: Global Offensive, players occasionally earn “cases” through gameplay. Cases contain items ranging in value depending on rarity. To open the case, a player must pay $2.50 out of their “Steam Wallet,” funded at a 1:1 exchange rate by credit card deposits and/or gift cards. Players may also trade cases and items with other users using Steam Wallet funds. Unlike the aforementioned stubs, however, Steam Wallet funds are not an in-game currency exclusive to Counter-Strike; they can purchase goods throughout the entire Steam platform. This means a player can raise funds by selling their Counter-Strike items and use those funds to open loot boxes in other games or even purchase entirely different video games through the Steam Store. Thus, this loot box system blurs the line between in-game and real-world rewards and aligns closer to traditional gambling.

Perhaps the most troubling aspect of loot boxes is that they often target children, who are legally barred from traditional gambling. Under the ESRB rating scheme, any game including “Real Gambling” requires an “Adults Only” rating, limiting purchases to those over 18 years old.[3] Most retailers will not even carry such games. However, ESRB asserts that loot boxes do not qualify as gambling since “the player is always guaranteed to receive in-game content.”[4] Hence, loot boxes may be present even in games rated “Everyone” that openly target young audiences. While ESRB did begin labeling games with “in-app purchases” in 2018, this designation does not affect the rating or availability of games or loot boxes.[5]

For these reasons, lawmakers have increasingly scrutinized loot boxes. Following a controversy involving Electronic Arts’ use of loot boxes in Star Wars Battlefront II, the Belgian Gaming Commission found that loot boxes qualified as gambling under local law, leading publishers to pull the mechanics from their games nationally.[6] Other countries have since introduced their own restrictions.[7] However, loot boxes remain unregulated in the United States. In 2019, a bipartisan bill addressing loot boxes gained some traction in the Senate.[8] However, the bill did not advance further than its referral to the Committee on Commerce, Science, and Transportation.[9]

Meanwhile, loot box related law suits are reaching federal courts, though with little success for plaintiffs so far. In early 2022, the Northern District of California dismissed a claim against Google for hosting apps with loot boxes on the Google Play Store.[10] The court found Google immune under Section 230 of the Communications Decency Act, suggesting that virtual store owners are not liable for loot boxes in third-party games.[11] However, in March, plaintiffs filed a loot box class action against Take-Two Interactive, publisher of the NBA 2K franchise.[12] The complaint argues that “loot boxes ‘psychologically distance’ players from the real-life financial implications of in-game purchases” that “are particularly attractive to minors who may not understand the real-world implications of spending virtual currency.”[13] The outcome of cases like this will likely determine whether loot box expansion is nearing its end, or just beginning.


[1] Digital, Culture, Media and Sport Comm., Oral Evidence:  Immersive and Addictive Technologies, 2017–9, HC 1846, at Q1142 (UK), https://data.parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/digital-culture-media-and-sport-committee/immersive-and-addictive-technologies/oral/103191.html [https://perma.cc/B43G-GZ7N] [https://web.archive.org/web/20221008164558/https://data.parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/digital-culture-media-and-sport-committee/immersive-and-addictive-technologies/oral/103191.html].

[2] Id. at Q1186.

[3] Jason Schreier, ESRB Says It Doesn't See 'Loot Boxes' as Gambling, Kotaku (Oct. 11, 2017), https://kotaku.com/esrb-says-it-doesnt-see-loot-boxes-as-gambling-1819363091 [https://perma.cc/WU65-87E8] [https://web.archive.org/web/20221004041336/https://kotaku.com/esrb-says-it-doesnt-see-loot-boxes-as-gambling-1819363091]

[4] Id.

[5] Owen S. Good, ESRB Introducing ‘In-Game Purchases’ Label in Response To Loot Box Controversy, Polygon (Feb. 27, 2018), https://www.polygon.com/2018/2/27/17057978/esrb-loot-crate-box-in-game-purchases-label [https://perma.cc/BD8D-QXW9] [https://web.archive.org/web/20221007015754/https://www.polygon.com/2018/2/27/17057978/esrb-loot-crate-box-in-game-purchases-label].

[6] Peter Naessens, Belgian Gaming Comm’n, Research Report on Loot Boxes (2018), https://gamingcommission.be/sites/default/files/2021-08/onderzoeksrapport-loot-boxen-Engels-publicatie.pdf [https://perma.cc/Z8TM-DSCR] [https://web.archive.org/web/20220604093343/https://gamingcommission.be/sites/default/files/2021-08/onderzoeksrapport-loot-boxen-Engels-publicatie.pdf].

[7] Nicholas Straub, Every Country with Laws Against Loot Boxes (& What the Rules Are), Screen Rant (Oct. 5, 2020), https://screenrant.com/lootbox-gambling-microtransactions-illegal-japan-china-belgium-netherlands [https://perma.cc/32RF-233N] [https://web.archive.org/web/20221007015959/https://screenrant.com/lootbox-gambling-microtransactions-illegal-japan-china-belgium-netherlands/].

[8] Owen S. Good, Anti-Loot Box Bill Gathers Bipartisan Support in Senate, Polygon (May 23, 2019, 11:38 AM), https://www.polygon.com/2019/5/23/18637155/loot-box-laws-us-senate-josh-hawley-ed-markey-richard-blumenthal [https://perma.cc/88S8-S6SU] [https://web.archive.org/web/20221007021332/https://www.polygon.com/2019/5/23/18637155/loot-box-laws-us-senate-josh-hawley-ed-markey-richard-blumenthal].

[9] S.1629 - A Bill To Regulate Certain Pay-To-Win Microtransactions and Sales of Loot Boxes in Interactive Digital Entertainment Products, and for Other Purposes, Congress.gov, https://www.congress.gov/bill/116th-congress/senate-bill/1629/all-actions [https://perma.cc/US8T-HXU7] [https://web.archive.org/web/20221008164333/https://www.congress.gov/web/20221008164333/https://www.congress.gov/bill/116th-congress/senate-bill/1629/all-actions] (last visited Oct. 6, 2022).

[10] Coffee v. Google, LLC, No. 20-CV-03901-BLF, 2022 WL 94986 (N.D. Cal. 2022).

[11] Id. at *8.

[12] Cecilia D’Anastasio, Take-Two Faces Lawsuit over Controversial ‘Loot Boxes’ in NBA 2K, BNN Bloomberg (Mar. 3, 2022), https://www.bnnbloomberg.ca/take-two-faces-lawsuit-over-controversial-loot-boxes-in-nba-2k-1.1732258 [https://perma.cc/33GV-2H5P] [https://web.archive.org/web/20221007021726/https://www.bnnbloomberg.ca/take-two-faces-lawsuit-over-controversial-loot-boxes-in-nba-2k-1.1732258].

[13] Id.