A video game ‘loot box’ offers coveted rewards, but is it gambling?

In the 1980s, arcade games chugged quarters as players tried to reach new levels. Today, many video games let players at home spend a dollar — or much more — to open digital “loot boxes” that offer features like new character outfits and powerful weapons.

Finding the rarest items in these boxes can be expensive for players and lucrative for game publishers because the contents are randomly generated.

That has legislators in several states concerned that the boxes constitute gambling and should be regulated like lottery tickets and slot machines.

A bill introduced in Minnesota on Monday would prohibit the sale of video games with loot boxes to people younger than 18 and require a stern warning: “This game contains a gambling-like mechanism that may promote the development of a gaming disorder that increases the risk of harmful mental or physical health effects, and may expose the user to significant financial risk.”

Politicians in California, Hawaii, Indiana and Washington state have also targeted loot boxes, which state Rep. Chris Lee of Hawaii said “are specifically designed to exploit and manipulate the addictive nature of human psychology.”

Most of those bills have stalled, though, sparing for now a substantial revenue stream for the video game industry, which is eager to counter rising production costs.

Activision Blizzard, whose portfolio includes popular games like “Candy Crush,” “Call of Duty” and “Hearthstone,” generated $4 billion in 2017 from in-game transactions, more than half its total revenue. That amount includes both loot boxes, whose specific contents aren’t revealed until after they’re bought, and traditional purchases.

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