The FTC agrees to investigate loot boxes

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The US Federal Trade Commission will investigate loot boxes, chairman Joseph Simmons told a Senate Commerce Subcommittee (opens in new tab) on Tuesday. Simmons was asked to begin the investigation by Senator Maggie Hassan, who has previously raised concerns about loot boxes. 

Hassan asked the Entertainment Software Ratings Board to investigate the way it rates games with loot boxes earlier this year, warning that she’d get the FTC involved if it didn’t. There’s been reluctance from the Entertainment Software Association, however, which oversees the ESRB. 

ESA president Michael Gallagher defended loot boxes (opens in new tab) back in May and claimed that regulation would impair the ability of the industry “to continually test new business models”. He doesn’t believe loot boxes are connected to gambling. 

"When you look at the definitions of gambling throughout the world, and how this is done and how it's regulated in places like Las Vegas and the US, it's quite different to the mechanism with loot boxes in games," he said. "That conclusion has been reached—in other words, that this game mechanic is not gambling—by the Entertainment Software Ratings Board in the US, by New Zealand's gambling authority, and by the UK's gambling authority."

Gallagher advises self-regulation, but Hassan disagrees. In particular, she has concerns about the impact on children. 

“Loot boxes are now endemic in the video game industry and are present in everything from casual smartphone games to the newest, high-budget video game releases,” she said. “Loot boxes will represent a $50 billion industry by the year 2022, according to the latest research estimates. Children may be particularly susceptible to engaging with these in-game purchases, which are often considered integral components of video games.”

She went on to cite a report from the UK Gambling Commission (opens in new tab), claiming that the report found that exposure to loot boxes could correlate with an increase in under-age gambling. Though the report could have been clearer, it definitely did not conflate loot boxes with gambling, however, or even suggest that loot boxes could lead to gambling. 

"We've not in any way, in the survey, referred to it as exposure to gambling," a Gambling Commission spokesperson said. "The reason we've asked that question is that it's a very popular subject matter and we want to try and make sure that we have as much information and data around it as possible."

This doesn’t mean that an investigation couldn’t be valuable. It’s exactly why the UK Gambling Commission asked about loot boxes in its survey in the first place, though it certainly could have dedicated more than a brief paragraph to the topic. A deeper investigation that looks into how loot boxes are marketed, for instance, or how parents can educate themselves could be extremely helpful. 

After raising her concerns and asking the FTC to investigate, Simmons agreed with a simple “Yes”.

The ESA is sticking to its defence of loot boxes, reiterating that they aren’t gambling and people can choose not to engage with them. This, of course, completely sidesteps the issue of their possible impact on children, who couldn't be expected to know the risk. And the concern isn’t simply that loot boxes are gambling—they could be something completely different and still be toxic. It's a complicated issue that isn't going to be solved by ignoring it. 

Cheers, Variety (opens in new tab).

Fraser Brown
Online Editor

Fraser is the UK online editor and has actually met The Internet in person. With over a decade of experience, he's been around the block a few times, serving as a freelancer, news editor and prolific reviewer. Strategy games have been a 30-year-long obsession, from tiny RTSs to sprawling political sims, and he never turns down the chance to rave about Total War or Crusader Kings. He's also been known to set up shop in the latest MMO and likes to wind down with an endlessly deep, systemic RPG. These days, when he's not editing, he can usually be found writing features that are 1,000 words too long or talking about his dog.