Are loot boxes gambling?

While writing about a gaming mechanic that is only important to video game fans (the PC, mobile and console gamers that spend their time alone or in teams blowing stuff up, shooting stuff, solving stuff, playing sport stuff, etc.) may seem a little odd on a gambling and online casino website dedicated to giving South African gamblers all the news they need about their favourite pastime, it actually serves a far broader purpose – especially when it comes to online gambling in the South African market.

The borders between video gaming and gambling games, slots games in particular, are growing ever murkier. The two industries seem to take a lot of influence from each other: video games in terms of monetizing their product and gambling games in terms of creating visual spectacles that will draw in the punters.

With the rapid rise of eSports and the insane money that goes with it, a lot of focus is being turned onto the video game market. Anything that is pushing the multi-billion US dollar valuation is bound to fall under scrutiny and this is just what the industry is worth without taking into account the huge potential of the eSports gambling market (currently estimated to be around US$16 billion).

Loot boxes are the topic that is set to make or break the vast profits that gaming companies are making. The discussion around whether they are a gambling mechanic or not could affect and dictate a lot of gambling legislation around the world. The CasinoPlay crew have heard the rumblings and our digging has turned up some very interesting knock-on effects that may come from this worldwide discussion.

What are loot boxes?

Loot boxes are virtual rewards and incentives in video games. Some games are free to use but you need to collect loot boxes to progress through the game. Other games drop random loot boxes as rewards and to give the player additional benefits over the game or other players.

What makes loot boxes so controversial is the fact that players can opt to buy loot boxes for real money rather than wait for them to appear in the game.

And that is where things start becoming controversial – real money!

Most gamblers will know that those two words take their gaming from fun to potentially affecting them on a financial level. The same is true of loot boxes. And the way loot boxes are designed and programmed is based so much on slots mechanics it’s frightening!

Are loot boxes gambling

How are loot boxes like gambling?

Let’s take a look at a loot box.

A seemingly innocuous in-game item sitting somewhere in the environment. But open it up and you never know what will be revealed. It could be weapons or armour or stat boosts or in-game currency – items that will give you an edge over the other competitors. But how do you know what’s inside?

You don’t.

Much like a slot machine or online slot game, the contents of a loot box are dependent on a Random Number Generator style system. One person could get a very common, low-level item. Another could a rare and highly valuable one. It’s entirely random, just like the slots.

So far, so innocent. It starts becoming a little troublesome is when players can choose to buy loot boxes for real money. Now we are not looking at a simple in-game mechanic, we are looking at a financial transaction for a reward based on chance.

Sound familiar? Maybe like using real money to spin the reels for the chance of getting a jackpot?

And it goes further because the contents of loot boxes can be traded – or sold – between players. Now we have players that are farming loot boxes to make profit. These, and the way the game makes you spend money to buy items that you need to get further in the game, are known as micro-transactions. Not quite so innocent anymore.

Why are loot boxes seen as a potential problem?

On the surface it’s all about the age of gamers. A lot of gamers are under the legal gambling age so if loot boxes are deemed to be gambling…

But there is also a deeper psychological concern. The potential for gambling to become addictive is well known and well documented. But there is growing evidence that video gaming can be just as addictive and problematic.

Understand, anything can lead to addictive behaviour. Sure we focus on the negative things like drugs, alcohol and gambling but there are supposedly healthy pursuits like bodybuilding or stamp collecting or healthy eating that can take a dark and decidedly unhealthy hold over peoples’ lives. Video games are no different except that they are designed, like gambling games, to feed our need for risk and reward.

Where this becomes an issue with loot boxes is the young and impressionable minds of those children who may be susceptible to compulsive or addictive behaviour and the fear that loot box mechanics and the monetisation of them could lead to irresponsible, underage gambling issues.


Really, really. Remember when we mentioned the increasing overlap between the video game world and the gambling world?

Video games and online gambling games have a lot in common: bright colours, lots of movement, intriguing soundtracks (actually, video games go beyond intriguing soundtracks – the music is insane!) and – the big kahuna of drawing in the crowds – risk and reward.

When you gamble you risk your cash in the hope of getting a win or jackpot reward. With video games you risk your time and your character for the reward of completing the game or beating the opposition. Or that was the risk and reward before loot boxes and micro-transactions.

Loot boxes have almost become the bonus games within your modern slots games. They are actively sought out by players and they are designed to be appealing. They have animations and sound effects that build the tension and anticipation until they burst open to shoot out their rewards. They have different levels of rarity and collectability. And they can give incredible benefits to the player and their gameplay or become very lucrative sellable items.

So, to recap. Items that are paid for with real money, generate random rewards, and are worth more real money?

While this may seem inane to us seasoned gamblers, put yourself in the shoes of a young, naïve child with access to a parent’s credit card or a savings account topped up with a monthly allowance.

How does this affect MY gambling?

It has no effect – right now. Yes, it does seem to be an issue when it comes to ridiculous profits for gaming companies or for those at risk of a gambling addiction. Other than that?

Well, this is where the CasinoPlay crew started thinking.

Right now, around the world, governments are trying to decide what if any regulations need to be put in place on loot boxes and micro-transactions. Some countries don’t see a problem. Some countries want to put sever restrictions in place. And some countries want to ban it outright.

For South Africans, and South African online gamblers especially, the outcome could be game0changing.

Currently, our legislation on online gambling is in a very grey area. It is legal but it also isn’t. You can’t operate an online casino in South Africa but you can play at an offshore online casino. You can transfer online casino winnings into your SA bank account but sometimes you can’t.

It’s a mess.

BUT! If legislation is passed that makes loot boxes and micro-transactions just an in-game mechanic, it could fundamentally change the legal status of online gambling in our country forever.

And open up even more opportunities – legal opportunities – for us online casino fans to enjoy our favourite games.

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