Unpacking Loot Boxes: Gaming Or Gambling?


The gaming industry is growing and, in parallel with it, several legal issues arise. In addition to other concerns (see this article), one of the hottest and most debated topics in the gaming sector is related to so-called "Loot Boxes". Loot Boxes have become a major source of income in the videogame industry but many countries are currently setting up specific committees to establish whether, for instance, certain kinds of Loot Boxes should be qualified as gambling and need to be regulated appropriately.

The question mainly arises from the fact that gambling is often considered an illegal activity in many countries, due to its potential harmful consequences. For instance, from an Italian jurisdiction perspective, Article 110 (4) of the Decree June 18, 1931, No. 733 (Testo Unico delle Leggi di Sicurezza Pubblica, as further amended) provides that running gambling business is illegal, unless specifically authorized by the public authorities.

But what are Loot Boxes and what are the main related legal issues?

Loot Boxes are virtual items in online video games (usually in the shape of crates, cases or bundle boxes, hence the name) that contain non-monetary rewards through which the gamer can improve the gaming experience (e.g. in terms of strength, extra points, new facilities/weapons) or advance in the game. In order to do so, the gamer must purchase the Loot Boxes using real money, though the user has no obligation to do so. Moreover, the reward in the Loot Box is hidden and unknown to the gamer, who will have to buy it in the hope of finding the wished for enhancement/improvement, with no prior guarantee that it will occur. Therefore most commentators define Loot Boxes as "virtual games of chance" - i.e. games in which luck rather than skill determines the outcome - which use microtransactions that allow the purchase of virtual goods for a small amount of real currency.

Because of these characteristics, a number of commentators associate paying to open Loot Boxes with gambling, raising obvious concerns because of the potential large proportion of minors that are involved. Clearly, in both Loot Boxes and traditional gambling games (e.g. slot machines), individuals spend real money in the uncertain expectation of getting a prize which is valuable for them.

However, not all Loot Boxes are the same. It is true that they usually require a payment of real money in order to be opened but there are also cases in which opening Loot Boxes is...

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