Loot boxes as a form of gambling, and their potential for contributing to gaming related harm
Loot boxes as a form of
gambling, and their potential for contributing
to gaming related harm
Mike Dixon and Chanel Larche
This non-peer reviewed entry is published as part of the Critical Gambling Studies Blog.
There
is something extremely compelling about opening a box when the contents within
it are unknown. From depictions of
treasure chests in pirate movies to children who can barely contain their
excitement on Christmas morning, the appeal seems almost universal. The gaming industry has tapped into this
appeal. They go by different names:
mystery boxes, treasure chests, or most commonly, loot boxes. Loot boxes take many forms – some can be
earned through successful play, or they can be bought with real money in a
process called a ‘microtransaction’.
Loot boxes are immensely popular.
Zendle, Ballou and Meyer (2019) note that over 70% of games played on Steam (a videogame distribution platform where players buy,
play and discuss games) contain loot boxes. Whereas developers used to depend on
players spending say $60 for a new release, now there are free-to-download
games with game designers being financially compensated solely by
microtransactions. This relatively new
business model is exceedingly successful. In 2018, such microtransactions
generated $30 billion in sales with projections rising to $50
billion by 2022.
Loot
boxes have generated much controversy. Regulators in China, Japan, Belgium, and the Netherlands believe they are a form
of gambling. They see paying for loot
boxes as akin to wagering on a slot machine.
You pay to open a box hoping to get something good, but like a slot
machine, the outcome is unknown and the odds of getting something desirable are
small.
The
effects on some gamers read like testimonies from problem gamblers. An anonymous Reddit post reads ‘When your brain
works like mine, you can't stop. There is always the little voice of
the back of your head that goes “Yeah no man, you should've quit like 30 boxes
ago”, but even when you're telling yourself to stop, you're still clicking buy,
and you're still opening boxes’. Heather Alexandra writes, ‘To some, loot
boxes may be a gameplay issue or a consumerist concern. To me, they’re far more
seriously a moral issue. I know, because I have fallen for them. I don’t know
how else to say this, but I have a gambling problem. I didn’t find this out at
a casino. I found this out playing games’.
In
this blogpost, we will discuss some issues with which regulators are grappling,
some research that links loot box purchases to problematic gambling, and gaming
related ‘harms’ that may be linked to loot boxes.
Mark
Griffiths is one of the most prolific gambling researchers. He considers gambling to have the following hallmarks: ‘(1) the exchange is
determined by a future event for which, at the time of staking money (or
something of financial value), the outcome is unknown; (2) the result is
determined (at least partly or wholly) by chance; (3) the re-allocation of
wealth (i.e., the exchange of money [or something of financial value] usually
without the introduction of productive work on either side); and (4) losses
incurred can be avoided by simply not taking part in the activity in the first
place’ (Griffiths, 2018).
For
loot boxes purchased via a microtransaction, there is a staking of money. What you get is usually determined by chance
(and as with slot machines, the odds or payback percentage are typically
unknown to the player). These first two
hallmarks are unequivocally shared by loot boxes and spins on a slot
machine. Legal arguments have ensued
over whether there is reallocation of wealth – with the gaming industry arguing
that the items in a loot box only have value within the context of the
game. For example, many loot boxes contain
only cosmetic items called ‘skins’ that game creators suggest have no monetary
value – you cannot cash out a skin within the game for money. For at least some games, however, payment for
a rare skin may be only a few clicks away.
There are on-line markets that buy and sell skins – thus a player could,
theoretically, open a loot box, find an exceedingly rare skin and sell that
skin for far more than they paid for the loot box.
Some
of the legal arguments lie, not on whether skins can be exchanged for money,
but how they can be exchanged for money.
In slots when one cashes out, the player’s balance is printed out by the
slot machine – the player walks to the cashier area and exchanges the printed
ticket for cash. Thus, cash in and cash out are transactions overseen within
the casino. For loot boxes, the players
purchase the skins within the game but to redeem the value of the loot box’s
contents players must exit the game and go to 3rd party sites not
controlled by the game. In the UK, this
distinction was salient enough for loot boxes not to fall under gambling
regulations.
Thus,
one view is that the game designers are not at fault since they are at arms’
length from the translation of skins into cash.
From the players perspective presumably, the rewarding value of the rare
skin is equally reinforcing regardless of where they redeem the money. Critics also argue that without the game,
there are no skins, and without the skins the marketplaces would not exist.
Research
suggests that focusing on whether or not loot box items can be translated back
into cash may be peripheral to the potential harms imposed by loot boxes. Research by Zendle, Meyer, and Over (2019) polled over 400
adolescents about why they have purchased loot boxes. Crucially less than 1% of the sample cited
making money from loot box items. This contrasts with more traditional forms of
gambling, where viewing gambling as a way to make money is associated with
gambling problems. For these
adolescents, a far more compelling reason for purchasing loot boxes is the
thrill of opening the loot box itself.
This thrill may have many components.
First there is the aforementioned universal appeal of the unknown. Loot box designers have designed loot boxes
to ramp up the anticipatory excitement using effective audiovisual cues. We have documented
that players watching such loot boxes being opened show significant increases in physiological
arousal in the anticipatory period prior to the loot box being opened (Larche
et al., 2020). The designers of the loot
boxes use a slots-like, random element to determine the prizes to be won. They are programmed so only very rarely will
players open a loot box with a rare item that they value (i.e., akin to the
rarity of large wins in slots). Mostly
they will receive common items of little value – with the awarding of the
prizes delivered on an intermittent random reinforcement schedule. In Zendle et al.’s study some adolescents
reported buying loot boxes to get the ‘gambling feeling’ that comes with
opening them.
Those
representing the gaming industry view loot boxes as a
harmless activity akin to collecting sports or other memorabilia cards. You pay to purchase a pack of cards whose
contents are unknown. You hope there
will be cards you value (favourite players, non-duplicates, etc.). They argue that what makes loot boxes different
from plays on a slot machine is that you always get something – maybe not the
items you want, but you always get something.
By contrast, in slots, the most frequent outcome of a spin is the loss
of the player’s entire spin wager. That
is, unlike loot boxes, you can bet on a spin and get nothing back.
It
is of interest to push this line of reasoning that loot-boxes are not gambling
because ‘you always get something’. We
have obtained the programming documents for modern multiline slot machines (Harrigan
& Dixon, 2009). These programming
documents reveal that although full losses are the most frequent outcome, the
next most frequent outcome are losses disguised as wins (LDWs). Here the player
bets say 10 cents on each of 20 lines for a spin bet of $2.00 and gets back say
20 cents. On these LDW outcomes, the player ‘gets something’ but certainly not
what they wanted, much like the gamer who gets three common, low value items
when they open the loot box. By the
logic that loot-boxes are not gambling because ‘you always get something’,
would LDWs not be considered a gambling outcome?
Consider
also the ‘bonus features’ that are interleaved into regular slot machine
play. Like the loot box, they are
infrequent, yet very exciting events that are highly motivating to
players. For example, in the popular
game Lucky Larry’s Lobstermania entering the classic
bonus round triggers a game feature where players are shown a fisherman hauling
in lobsters of various sizes – the bigger the lobster the more credits they are
worth. In these bonus rounds the player
always wins something – it could be a little or it could be a lot. Again, it would be hard to argue that because
the ‘player always gets something’ that these bonus features should not be
considered gambling.
In
gambling research, gambling related arousal is a crucial, if not the
crucial reinforcer of gambling behaviour (e.g., Brown, 1986). To the gaming
industry much has been made of how loot boxes often contain items that are
purely cosmetic – they do not improve the skill of the player, only the
appearance of the player’s avatar or their weaponry. As such the tacit reasoning goes, how
valuable, and hence how harmful can they be?
The
key to the appeal of loot boxes containing cosmetic skins appears to depend on
the rarity of the items in the loot box.
Indeed the excitement of opening loot boxes with rare items is such that
players even get a vicarious thrill from watching others open a box. This YouTube video of loot-box openings from the popular game
Overwatch has been viewed over 1.8 million times!
We
showed these videos to avid Overwatch players and recorded their subjective and
objective reactions. In Overwatch, the
contents of loot boxes are categorized according to their rarity – in the
videos there are rare items, even rarer items (referred to as ‘epic’ items) and
the rarest items (so-called ‘legendary items’).
We showed that players’ subjective and physiological arousal scaled up
with the item’s rarity, with legendary items triggering the greatest
arousal. Importantly players’ urge to
open more loot boxes also scaled up with their rarity. Finally, we used a measure from the gambling
literature called the post reinforcement pause (PRP) to gauge how rewarding
these different types of items were. In
slots, when players spin and lose, they tend to initiate the next spin
quickly. When they spin and win, they
tend to pause, as though to internally celebrate the win - the bigger the win,
the longer the pause (e.g., Dixon et al., 2019). The PRPs to the loot box openings was eerily
similar to the pattern of pauses shown by slots players. The rarer the items in the loot box, the
longer they paused to internally celebrate these items.
In
sum, even though these items were purely cosmetic, players showed measurable
increases in arousal depending on how rare the items were. Importantly, these reactions were measures of
vicarious thrill. It stands to reason that had we measured players’ reactions
to opening their own loot boxes, players’ reactions would likely be
amplified. This study shows that players
react to loot boxes in ways that are very similar to slot machine outcomes. In
both games, players show excitement-linked arousal to the rarest outcomes (‘legendary’
items in Overwatch loot-boxes, big wins in slots).
The
arguments above suggest that there are important parallels between loot boxes
and slot machines. There are studies
that suggest that slot machines are associated with greater gambling harm than
other types of gambling (e.g., Delfabbro et al., 2020). Importantly research
also suggests that loot boxes are associated with gambling harm.
Zendle
and Cairns (2018) in a large-scale survey of over 7000 gamers found evidence
for a link between the amount that gamers spent on loot boxes and the severity
of their problem gambling measured using the Problem Gambling Severity Index
(PGSI). This link was stronger in terms
of effect size (η2 = 0.054) than other traditional correlates of problem
gambling like depression. Importantly
this link was also stronger than the association between problem gambling and
simply buying in-game items when sales did not involve the loot-box format
(η2 = 0.004). Thus, it is the
gambling-like features of loot boxes that the authors deemed crucial in the
loot-box-spending –problem-gambling link.
While this study polled adults, Zendle, Meyers and Over (2019) conducted a similar study on 16 to 18 year-olds. They again found a link between loot box spending and gambling problems, but the effect size of the association (η2 = 0.12) was more than twice as large as with the adult sample. This link between loot box spending and gambling problems among adolescent loot box users has since been replicated (Kristiansen & Severin, 2020), suggesting that those in age groups where frontal lobe capacities are still developing may be particularly at risk for development of gambling problems arising from loot box purchasing.
Some
conjectures about general harm associated with loot boxes
Understandably,
parents may be less concerned about legal definitions of gambling, compared to
whether loot-boxes may be harmful to their children. As aforementioned, loot boxes are designed to
be exciting. Part of their allure is
their unpredictability – one never knows whether the contents within the loot
boxes will be so common as to be considered worthless by the player or so rare
that they are considered extremely valuable.
The reinforcement schedule of loot boxes appears to mimic the random
ratio reinforcement schedule used by slot machines. In some games, players have the choice to pay
for loot boxes with a microtransaction or they can earn loot boxes by
successful play. At first glance it
would seem that those who choose to earn rather than buy their loot boxes can
avoid the problems documented by Zendle’s group. One of the hallmarks of problematic play,
however, in both the slots domain, and in videogaming, involves playing to
escape. In both situations certain
players experience a state of immersion that we call dark flow - an experience
of total immersion in the game, distortions in the passage of time, and importantly,
positive affect (e.g., Dixon et al., 2018).
Some players appear to play slots, or videogames as a maladaptive coping
mechanism to deal with negative aspects in their daily lives. They may be depressed, or bored, and elevate
their mood via the flow that is induced by the attention-capturing aspects of
slots or video game play. While slots
outcomes are determined purely by chance, success in video game play depends in
part on skill. We have shown that skill
impacts the degree of flow experienced – the more skill, the greater flow, the
greater flow, the more positive affect (Larche & Dixon, 2020). We have also shown that those who endorse
playing video games to escape experience greater flow than those who play video
games for other reasons (Larche et al., 2020).
Importantly these players also score higher on measures of problematic
game play. Thus, if players are
attracted by the gambling-like nature of loot boxes, and the only way of
getting loot boxes other than paying for them is to earn them through leveling
up, this will set up a situation where 1) their skill will improve, 2) their
experience of (dark) flow will intensify, 3) their positive affect during play
will be elevated. For players with problems in everyday life, such games may be
especially appealing because they are a forum where their mood becomes
elevated. Such coping mechanisms will
incur costs in terms of too much time devoted to video games and less time
available for school work, relationships, etc.
The
link between skill, flow and positive affect has implications for games in
which loot boxes contain features that actually improve players’ skill. Indeed, in Zendle et al.’s study with
adolescents, the most often cited motivation for purchasing loot boxes was to
accrue game-play advantages. Thus, if
loot box items improve players’ skill, and greater skill is linked to greater
flow, then loot boxes with items that confer game play advantages may be
particularly alluring to those who game to escape and theoretically could contribute
to gaming harm.
The
amount of time spent playing video games among teens is somewhat shocking. A poll of U.S. parents of teens indicated that 41% of
13-to-18-year-old boys played every day (20% for girls). Among boys that play every day, over 50% of
them spend three hours a day or more!
Such time expenditures, and the link to dark flow are two aspects that
really stretch the analogy between loot boxes and card collecting. We cannot imagine that even the most avid
Canadian collector would engage with his hockey card collection every day for three
or more hours!
The
time devoted by some to playing video games speaks to their immersive
qualities. We have shown that role playing
games (RPGs) lead to greater flow experiences than arcade type video games
(Larche et al., 2020). Thus, something
about the ‘alternate world’ of the RPG games heightens this immersion. The fact that a significant number of teens
are playing these games for three hours or more per day shows how invested they
may be in these alternate worlds. For the non-gamer, the thought of spending
money on a loot box that contains cosmetic items seems ludicrous. For those immersed in the world of the game
for hours on end, the appeal is more transparent. In Zendle’s study, 15.3% of adolescents
reported buying loot boxes to change the way that the characters or other
things they control look. These individuals conveyed the teenage angst related
to fitting in with other players: ‘There's too much incentive to do so. Once
you get better at the game, everyone else at your skill level has more and more
expensive skins, prompting me to buy more and more to fit in.’ Others seek to look different, look unique or
look good – a kind of status motive. They buy them to ‘show off’ to other
players.
One
important difference between the card collecting analogy and loot boxes
involves a sense of agency. While a rare
hockey card may complete a set, there is no sense in which the rare card
becomes part of purchaser’s persona. By
contrast, in the immersive games in which loot boxes appear, the skins within
the loot box become an integral part of the player’s avatar which may elevate
the group status of the player, and in turn elevate the reward associated with
game play. This may be of special import
for those who play to escape – they escape to a world where they have status
and respect – a contrast to the real world where they may be struggling.
In
sum, our reading of the literature suggests that loot boxes and slot machines
reveal more similarities than differences.
While loot boxes always give the player something, so too do slot
machine LDWs and bonus features. Like slot machine outcomes, they are randomly
determined, and have a reinforcement schedule in which low-value items are more
common than the rarest coveted items.
The effects on the players are eerily similar to slot machines with the
rarest items being more rewarding, arousing and urge inducing than the more
common items. Finally, the propensity to
buy loot box items is linked to gambling problems with the association strength
being especially high (i.e., problematic) among adolescents. Aside from their gambling-like nature, loot
boxes may also be theoretically problematic for those who use gaming to escape.
Mike Dixon is a full professor of
psychology at the University of Waterloo. He has been continuously funded by
Natural Sciences and Engineering Research Council since 1997 and has also
received grants from the Heart and Stroke foundation of Canada, the Alzheimer’s
Society of Canada, and the Ontario Problem Gambling Research Centre. He has
published over 100 articles in journals such as Nature, Addiction, Journal of
Cognitive Neuroscience, Cognitive Neuropsychology and Cortex.
Chanel
Larche
is a PhD Candidate in Psychology (Cognitive Neuroscience) at the University of
Waterloo. Her Master’s and PhD work
explores the role of flow experience in problematic gaming and gambling
behaviour, as well as the convergence of gambling and video-game modalities in
general (e.g., the introduction of gambling features into certain video-games,
and the gamification of gambling games). Her work aims to determine the
implications such convergences have on a player’s psychophysiological
experience and problematic gambling and gaming behaviour. This work has
received funding from the funded by Natural Sciences and Engineering Research
Council, Gambling Research Exchange Ontario, and Fonds de Recherche du Québec
(Nature et technologies).
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