A loot box is a randomized in-game reward that players can purchase or earn through gameplay. The rewards usually include key game pieces, updated weapons, avatar upgrades and other gameplay components depending on the type of game. The loot boxes are randomized, and players don’t know what they will receive until they purchase or acquire the loot box.
Loot boxes have come under fire in New Zealand (NZ) and from consumers who disagree with the in-game rewards available for purchase. Some players have even went as far as calling loot boxes “gambling” in spite of recent game developments. The main problem that seems to be consistent among gamers is that loot boxes can be purchased and for the right amount of money, players can become exceptional players without any real gameplay knowledge or experience. Most gamers also argue that because of loot boxes and the income they create, game developers are making rewards based on gameplay even harder to acquire, sometimes unrealistic for the number of hours players spend on game.
New Zealand’s Gambling Commission has recently decided that loot boxes do not meet the criteria to be considered gambling under the Gambling Act of 2003. New Zealand official Trish Millward wrote “While the payment of money for a loot box with the contents of which are determined by chance may appear to be gambling, the Department is of the view that loot boxes does not meet the legal definition of gambling”. However, in the United States, Hawaii State Representative Chris Lee stated that “The concern is that once the algorithm identifies a player who is likely to keep spending money they lower the odds and you keep spending more. It’s absolutely unethical and unfair.” Lee is taking a stand against loot boxes and has even called the new Star Wars Battlefront 2 an “online Star Wars gambling casino”. Loot boxes are currently regulated by gambling commissions in China and Japan and are subject of investigations by gambling regulators in several other countries.
The randomized loot boxes were first introduced in China around 2007 but since has become a highly popular rewards system for the gaming industry. ZT Online was the first known game to incorporate loot boxes and is a Chinese developed free-to-play game. Intended for the gaming community in China, ZT Online used loot boxes to assure monetization from a game that developers say otherwise would be illegally ripped or played for free by consumer sharing. It was a big hit for ZT Online and eventually the network reported a monthly revenue exceeding 15 million. Loot boxes have been implemented through several different types of games since their conception but are frequently used in free games to offer in game purchases and upgrades. This system has worked well for ZT Online developers and is the driving force behind the free-to-play game market.
Recently, Star Wars Battlefront 2 has received a lot of backlash for their loot boxes, even causing developers to rid the system all together over recent game updates. A Reddit reply from EA’s community team regarding loot boxes has become the most un-liked comment in the sites history and caused the Star Wars developers to reconsider their pay for upgrade “loot box” packages. Consumers were accusing EA Sports the developers of Battlefront 2, of making special characters too hard to obtain through regular gameplay, citing that to unlock Darth Vader it takes over 10 hours of gameplay to aquire his card and obtain his character. Developers swiftly removed the option to pay for loot boxes before the game hit shelves but states that they will be back after they figure out a more reasonable system for their loot boxes and upgrades.
The Gambling Act of 2003 is the legislation that regulates the gambling industry in New Zealand, except for sports betting and horse racing. The bill has consolidated the gambling laws for the country into one law that is more effective and current. The law was put into place to support responsible gambling, limit criminal activity and monitor the fairness and integrity of the games. The Act allows for multiple forms of gambling to be classified into 4 specific classes based on the amount of the prize that can be won. There are currently 4 agencies that oversee the gambling industry regulations in New Zealand: The Department of Internal Affairs, The Gambling Commission, Gambling Compliance Group, Lotteries Commission.
It is unclear at this time if loot boxes will eventually be classified as a form of online gambling in certain countries around the world or just another part of the game but in New Zealand it is unlikely to be changed anytime soon. Until there is a growing concern or a clear reason to change what has previously been stated, loot boxes in NZ will be legal and unregulated in the gaming industry.