Should government regulate how much you can spend playing video games?

Should government regulate how much you can spend playing video games?
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Video games exist in an odd cultural blind spot. They are ever-present — on our phones, our computers, our tablets and in our living rooms. But they tend not to attract attention until someone trips over a very specific concern, generally in the interests of “the children.”

Then they get a lot of attention, indeed.

In the past, the debates have revolved around accusations of violence or sexism in the games. But now they’re the subject of a different kind of analysis: Are games sneaking gambling into our lives via “microtransactions” and random rewards (otherwise known as “loot boxes”)?

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Video gamers have been debating the merits of microtransactions and loot boxes for several years, taking positions that range from, “No one forces you to buy them,” to, “They’re evil and rapacious.”

 

What is a microtransaction and what is a loot box?

Essentially, a microtransaction is a mini-purchase made inside a game. Initially associated with free-to-play games (as the primary profit mechanism for such games), they have gradually been adopted across the board. Even blockbuster games use microtransactions to sell additional in-game items to people who have already paid full price (usually about $60) for the game.

Such purchases can be used for everything from characters, outfits and items to use in the game, but the purchase that has drawn the ire of gamers and politicians is the loot box.

A loot box is a reward that offers a random dice-roll on an in-game item (or items), offering the chance to obtain something very rare and desirable. However, due to the laws of probability, buyers are much more likely to get a common or unremarkable item from the loot box.

A certain amount of randomness is inherent in video games. Most games with loot systems (i.e. rewards that are won from in-game victories or taken from fallen enemies) use a random mechanism to determine the loot. The problem comes into play when users can buy the loot boxes outright. That’s when some say the game system has turned into little more than a digital slot machine.

At its most benign, games like “Overwatch” let users both buy and earn loot boxes, and the boxes generally contain cosmetic items — nothing that would make the game easier or the player more powerful.

At the other extreme are games that weight purchased loot boxes and other microtransactions in a way that gives a significant advantage to bought items — or even locks away extremely desirable characters in loot boxes with lottery-like odds against getting them.

Horror stories from parents who check their credit card statements to learn that their child has charged hundreds of dollars in video game transactions helped spur the movement to curb these random rewards. However, gamers — usually quick to defend their turf from interlopers — have mixed feelings about loot boxes.

Is it gambling?

Defenders liken the loot box to buying a pack of baseball cards and being disappointed that you didn’t net a ‘52 Mantle. But critics point out that the online purchase mechanism is designed to get people to continue buying packs in a way that fosters addictive behavior. Moreover, the games themselves can be cagey about the odds of winning a desirable item in a loot box.

The accusations of gambling have caused politicians to perk up their ears, and that brings the debate into a whole new ballfield.

In Hawaii, there are currently three bills in consideration that seek to limit video game sales or regulate the gaming industry. One, SB3024, seeks to prohibit anyone under age 21 from buying a game that lets you buy loot boxes or purchase something that could be redeemed for a loot box. Another, HB2727, would require a warning label on games with loot boxes that says, “Contains in-game purchases and gambling-like mechanisms which may be harmful or addictive,” as well as information about the probability rates of randomized rewards. That bill and a final one under consideration, HB2471, would establish a government department charged with overseeing the gaming industry and regulating it as necessary.

But there’s the rub. While gamers may have issues with loot boxes, they might be less enthusiastic about government intervention, if it comes with a regulatory body dedicated to policing games.

And Hawaii isn’t the only place contemplating official action. A New Hampshire state senator has sent a letter to the Entertainment Software Ratings Board, asking it to reconsider its stance that loot boxes aren’t gambling. And officials in Sweden, Germany, Belgium and the U.K. have all begun inquiries into the loot box mechanics or discussed regulating or banning them.

Politicians are trying to take advantage of that outcry to push for greater regulation of the industry, taking advantage of a position that looks simple from the outside. “Think of the children,” is the refrain of those looking for headlines and hoping that no one will care enough to thoroughly examine the policy they’re advancing.

But once again, the urge to legislate may be moving ahead of a more sensible solution: Give the market a chance to work.

The recent outcry grew out of widespread displeasure with a series of high-profile games released in 2017 (including “Star Wars: Battlefront II” and “Middle Earth: Shadow of War”) that angered gamers with what they perceived as a particularly unfair loot box mechanic. The backlash over the “Star Wars” game was so bad that the company behind it was forced to apologize. Sales of the game were below expectations and Disney, which owns the “Star Wars” brand, is even rumored to be looking for a new publisher for the next “Star Wars” games.

Obviously, the technology industry moves and adapts with lightning speed. Considering that government typically moves very slowly, attempts to regulate how game companies make their profits will always be three steps behind.

Instead of rushing to regulate games, we should trust consumers to push the industry toward transactions they find acceptable. Game companies can help by becoming more transparent about the random loot mechanics.

And legislators can keep their focus on things like hospitals and budget crises instead of worrying about whether someone who’s old enough to die for his country is old enough to buy a virtual reward box.

Malia Hill is the policy director of the Grassroot Institute of Hawaii (@GrassrootHawaii), a public policy think tank dedicated to the principles of individual liberty, free markets and limited, accountable government