Lex Loot Boxes - The Regulation of Gambling-like Products in Video Games

Loot boxes are gambling-like products inside video games that players can purchase with real-world money to obtain random rewards. Most of the time, the player receives an undesirable reward and ‘loses’. Occasionally, the player receives a highly sought-after prize. Such randomisation means players usually need to make repeated purchases and spend a substantial sum of money if they wish to obtain certain specific rewards. Many have argued that loot boxes are similar to traditional gambling, both structurally and psychologically. A link has also been found between spending money on loot boxes and experiencing harms from problem gambling, among other risk factors. The scientific literature requires time to develop before it can provide more definitive answers as to the potential harms of loot boxes. However, these products are of concern to players, parents, regulators, and policymakers given their resemblance to traditional gambling, coupled with their availability to young children and adults alike – without proper regulation (if any). This has led several countries to consider and adopt regulation to proactively address the problem. The video game industry has also adopted certain self-regulatory rules of limited efficacy in response to appease the public and perhaps forestall stricter and more effective regulation. Grounded in psychological and sociological findings on the potential harms of loot boxes, this thesis explores potential regulatory approaches in terms of what various countries have done or proposed to do. In accordance with the principles of open science, the thesis empirically and transparently evaluates how well various measures in different countries have been implemented in practice, i.e., whether companies have complied with them. Taken together, this body of work demonstrates that compliance with loot box regulation has generally been poor across the world. The regulation of loot boxes is unsurprisingly difficult, given the massive volume of content that must be monitored. Companies should seek to better understand the rules and comply more effectively while regulators should better inform companies and more actively enforce the rules, including initially using less formal and cheaper methods of enforcement. Given the lack of government funding for regulators and how this is unlikely to change in the foreseeable future, the most effective method of enhancing and (hopefully) ensuring compliance appears to be academic advocacy research that directly impacts upon policymaking and implementation, such as this thesis.