[Article] Loot boxes and Gambling in SA

A bit late to the game with this one, but if you want to know if loot boxes are considered as gambling in terms of SA law, here you go: http://www.nickhallsa.co.za/2017/12/07/lets-talk-about-loot-boxes-and-gambling/

TL:DR No they aren't

Comments

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    Hold on. Regarding the lottery part of the law. If the person is playing the game in order to get more loot, then the game is a lottery for them? And if the game exists to make it possible to sell loot boxes then the game is a lottery for the developer? (and this would be especially true in a free-to-play game or a game where most of the monetization is of the loot boxes).

    I know that wouldn't work in law, as the law currently stands. Because it is possible to say that the purpose of the game is to play it and not distribute loot boxes.

    But it feels like loot boxes being a lottery is in the spirit of that law, and the law simply didn't anticipate loot boxes.

    Also, I feel like a lot is hinging on video games not being real spaces, and so currency within them also isn't real. But the people playing don't always behave that way. And companies are definitely exploiting the fact that to many players stuff in the game has real value.

    I don't buy the Wizard's of the Coast argument that because the cards are only valuable on an unsupported market that they aren't giving away things of value on a gambling/lottery style system. Firstly, Wizards does support the market when they sell the cards to the market (those stores are selling brand new cards, not just second hand ones). Secondly the cards are widely distributed on places like eBay and Amazon, their value is widely understood and appreciated.

    I say this as a person who once spent R15,000 on Magic Cards over a couple months (and I definitely regret doing so, this was long before I had had any financial success in game development).

    I think as our civilization progresses it's likely people will spend more time in virtual spaces, and legislating those spaces as just fun and unreal is irresponsible when people are spending real money for the stuff in them (often to life crippling effect).
  • @LexAquillia

    I'd love to see an article on the CryptoKitties game - seeing as this really does cross over between entertainment and money.
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  • @tusim that isn't what I was asking for
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  • @EvanGreenwood
    Hold on. Regarding the lottery part of the law. If the person is playing the game in order to get more loot, then the game is a lottery for them? And if the game exists to make it possible to sell loot boxes then the game is a lottery for the developer? (and this would be especially true in a free-to-play game or a game where most of the monetization is of the loot boxes).
    Intent on behalf of the player isn't that important in the analysis from a legal perspective, but for clarity, even if the player is grinding for more lootboxes (or paying for them, even for specific loot) it still doesn't make it a lottery (at least in my perspective) because the lootbox element forms part of a larger entertainment product. Why are they grinding for the loot? to use it in the game. No one (I would be seriously surprised if it was the case) if some one downloaded a game specifically to get an item of loot within that game. The same kind of applies from a developer perspective. The way "system to distribute prizes" needs to be read (in terms of the laws of interpretation of statutes) is fairly narrow. The fact that a broader game includes a system that operates like a lottery does not make that entire system a lottery (even if the lottery system is the primary monetisation model). The other element to consider with lotteries specifically is that it assumes a 1 to many relationship, i.e. many people are competing for the same prize (or pool of prizes) there are, for all intents and purposes infinite loot boxes/loot. Just because I have purchased a loot box (or won a specific loot) does not exclude the entire population from getting the exact same thing. We are not competing for single prizes. It is definitely possible that a game could be a lottery, I just can't think of model in use now that meets that definition.
    Also, I feel like a lot is hinging on video games not being real spaces, and so currency within them also isn't real. But the people playing don't always behave that way. And companies are definitely exploiting the fact that to many players stuff in the game has real value.
    This is certainly an issue, and in some jurisdictions it may be the only reason why it is not considered gambling (or some other prohibited practice). I would definitely support some form of regulation (ideally with an attempt of self regulation first), as I think the practice if left unchecked is detrimental to the long term health of the industry, I just don't think gambling regulation is the right fit. I see this as much more of a consumer issue, and so consumer protection laws would be my first stop.
    I don't buy the Wizard's of the Coast argument that because the cards are only valuable on an unsupported market that they aren't giving away things of value on a gambling/lottery style system. Firstly, Wizards does support the market when they sell the cards to the market (those stores are selling brand new cards, not just second hand ones). Secondly the cards are widely distributed on places like eBay and Amazon, their value is widely understood and appreciated.
    I also think it's a weak argument, but until a court reversed the WotC decision it's what we've got. Importantly though, and why I do think that the argument still holds some water is that the value is determined by the secondary market; WotC, Blizzard, EA are never guaranteeing you a pay out of a specifc monetary value if you participate (i.e. the providers of the game aren't going to allow you to swap your loot item for real money).

    But as you say, as we move to a more digital world I can see us moving away from a strict 'fiat currency as a sole determinant of value' system to something a bit more fluid.

    @dammit I'll check it out (I'm not familiar with the game at all)

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    Thanks for the response and the legal perspective @LexAquillia !

    I'd honestly be pretty happy if the industry got heavily regulated from outside in this regard. At least initially it'd only negatively affect companies that have shown themselves willing to do their players harm.

    That said, the industry has been saved from governmental intervention in the past through self-regulation. I don't want this trend to revers., I guess it comes down to whether the big companies are so greedy that they push things too far.

    And given that most of the big companies are now publicly traded, and their shareholders don't give a shit about players, I kind of expect this industry to push things too far (arguably they already have, the wrath of governments is already having an effect).
  • I'd honestly be pretty happy if the industry got heavily regulated from outside in this regard. At least initially it'd only negatively affect companies that have shown themselves willing to do their players harm.
    Not necessarily; it might affect more than just bad actors. It seems like it would be relatively easy for regulations to trample any attempt to do F2P, no matter how decent the intentions of that F2P monetization. I mean, this is speculation on my part, but the difference between exploitative F2P and well-intentioned F2P feels like something legislators are not always well-equipped to distinguish between. (I don't mean game dev's intentions are the important part, I just don't have a snappier way of saying "good" F2P). If we legislated F2P into oblivion entirely, well that's interesting, but it feels like a nightmare of epic proportions trying to get that right considering how widespread F2P is.
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  • I'm inclined to agree with @francoisvn. I think internal regulation will almost always be superior to external regulation. External regulators are highly unlikely to understand the nuances between different FTP implementations and intentions. It would also set a precident of regulation of vdeogame products in genera.
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    @Francosvn Do you think there's willingness to self-regulate on the industry's part? When there's such profits to be made?

    I mean, these companies have been harming their players for a long time already. It's not like they didn't know what they were doing. Governments are starting to step in because there hasn't been self-regulation thus far.
  • @EvanGreenwood: I don't think there is enough movement within the industry to self-regulate. The big players in the industry are not really incentivized to do anything, and the smaller players' opinions don't really matter. I feel like the only chance of that is in direct reaction to impending efforts by the government to regulate - like as a bill is being tabled they step in and say "Woah there, not so fast! Let us handle this..." I also feel like a lot of the "self-regulating" efforts depend on a bit of regulation that ultimately redirects the important work to an industry body, but @LexAquillia would know better :)

    Also BTW you are terrible at spelling my handle correctly :P
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    @francoisvn The other option that the big companies have is to buy off legislators and make sure they don't need to self-regulate. At least in the states currently that's something they're able to do (and possibly are already doing, companies like Acitvision are big enough and do spend money financing political campaigns).
  • Honestly, in this capitalist world it would be considered bad business if those large companies weren't doing at least a bit of lobbying, as depressing as that is.
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  • I was reading an article where multiple ratings agencies and the UK government reviewed the practice of loot boxes, "UKIE, PEGI, and the ESRB, each of which concluded that loot boxes do not constitute gambling."

    I get the impression our industry is determined to push this issue until breaking point.

    The App Store has set up some guidelines where developers have to state what the odds on Loot Boxes are, I cannot imagine this curtailing the destructive gambling effects in the slightest. (Unless I'm misunderstanding something about gambling behaviour?).
  • The App Store has set up some guidelines where developers have to state what the odds on Loot Boxes are, I cannot imagine this curtailing the destructive gambling effects in the slightest. (Unless I'm misunderstanding something about gambling behaviour?).
    Yeah I agree. Firstly, there are a multitude of ways to obscure the information. Non-linear graphs with truncated axes? The possibilities are endless. Even if it's 100% clear and honest figures, I agree that they won't affect behaviour all that much - just look at how much money goes into lotteries...
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  • Here is 2 videos that I enjoyed on the topic of loot boxes:
    Part 1:



    AND

    Part 2:
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    https://www.gamesindustry.biz/articles/2018-04-27-self-regulate-loot-box-mechanisms-while-you-still-can

    So it looks like some Belgium and the Netherlands are banning some aspects of loot boxes, and these rulings may get broader in time. And some other parts of Europe may follow. And this of course comes as a condemnation of our industry's unwillingness to self-regulate.

    Here's the thing that really irks me:

    Our industry's response to the pressure to remove loot boxes has included some arguments that jobs would be lost if loot box style monetization was more regulated.

    This to me seems like bullshit. And I'm embarrassed that developers who should understand complex systems seem to buy into it (obviously not all developers, but I've seen developers parroting this talking point).

    Here's my reasoning, and please call me out if I've misunderstood the economics:

    Loot boxes (and similar monetization techniques) exist in games that are designed to be played for 100s or 1000s of hours. Often endless multiplayer or social games. In the marketplaces where these games exist there are a handful of games that are played by the vast majority of the player base. (For instance the MOBA genre in which 4 to 6 games dominate while all their competitors fail).

    These games, like DOTA2 or Fortnite, then are run as games as a service for years, which employ developers and marketeers to continue updating and promoting these games. But they don't employ nearly as many people in this phase of development and the profits go to the company owners and investors.

    In analogous spaces like free-to-play on mobile we see the marketplaces being even more top-heavy than ever before. With fewer games making more money and continuing development and promotion indefinitely. And while this isn't mostly due to loot boxes, my point is that these endless games that dominate their marketplaces and can be continually monetized and promoted and hold onto players for years are super good for investors, and pretty good for marketing jobs, but actually pretty lousy for developer jobs.

    I think there's reason to dislike loot boxes on an ethical front, in that loot box monetized games will be disproportionately paid for by minors and people with poor self control, and these games could do actual financial damage to their players. But I also think from a career perspective loot boxes help enable an ecosystem which is very top heavy, where a fewer companies win, but when they win they win big.

    Without loot boxes (and similar systems) I don't think we'd see a big drop in money going into games (maybe some, if we assume players stop playing Fortnite and watch some movies instead), but the money that is going into games would be going into more games with fewer blockbuster hits sucking up all the money and player time in the ecosystem.

    This top-heavy ecosystem (which seems likely to only become more top-heavy on PC and consoles if something doesn't change) obviously favours the publicly traded companies (like EA and Activision), or companies with massive profit-driven investors (like Epic), and that's why these companies have been lobbying against regulation on loot boxes, and spreading (what I see as) actual lies about loot boxes supporting jobs in the industry.

    I honestly believe the opposite is true, that in many cases loot boxes bring more wealth to the billionaire class at the cost of jobs.

    I honestly wish that IESA and trade bodies like the ESA were prioritizing supporting developer jobs. But obviously billionaires pay them to lobby on their behalf. Of course IESA has much smaller donors, but I imagine it's a political game, and IESA needs favour from the people sponsored by billionaires.

    *I know not everyone who owns or invests in a company like Epic is a billionaire, but my point is that there is a class of people quite dissimilar to ourselves in their economic position telling us what is best for us (and it frustrates me that some of us believe it).
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  • @EvanGreenwood how do you feel about games with lootcrates as a player?

    While most games like this are horridly anti-consumer I actually think there is a place for them. Fortnite, for instance, has only cosmetic items. I've had a ton of fun in Fortnite and spent exactly zero money. But when the new season starts I'll likely buy a Battle Pass for R100.
    I should mention though that I've only played the free BR mode, which has no lootcrates. I haven't played STW (although I will once it goes F2P later this year).

    CSGO is another example. I have about 1500 hours in it, and have spent about R200 total (that's one hell of a good cost/fun ratio), half of which I've probably got back by selling the skins that drop. As with Fortnite, CSGO is only cosmetics. There are cases with random drops in them, but after losing money on opening about 2 of them I only buy/trade single skins now. On the other hand a friend opened a case the other day and got R1500 gloves, so maybe cases work for the 1%.

    So I guess from a player perspective I actually like cosmetics in game. And since I'm talking only about individual skin stores, maybe I'm in the wrong thread.
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    @roguecode I'm not phased by loot crates as a player. I don't struggle badly with impulse control, so I'm not likely to become addicted and have a problem with them. I've bought some cosmetics in games (though not through a loot crate).

    My concerns about loot crates are honestly partly selfish. I don't want the games industry to become driven by these block buster hits, I want players to play a variety of games and occasionally one of them mine. I also care about the ethics and the harm gambling-esque systems can cause to vulnerable players.

    My one thing from a player's perspective about loot-crates... and compulsion systems in general... is that I want to see a lot of variety in games, I want to play with a lot of different toys... and endless games, when they do hook me, I kind of feel I waste a lot of time (like I have a few 100 hours in Dota, and I think 30 hours would have been more than enough). I want variety in my life, and while as a game developer I recognize the need to keep people motivated to play my games, as a player I don't want to get so hooked to a game that I end up doing repetitive things and that I see fewer games and have fewer unique experiences as a result.

    Although... actually... I keep forgetting. I did once spend R15,000 on Magic the Gathering cards at a time I couldn't afford it (back in 2009, while I was trying to save up to spend more time pursuing game development), and I didn't get much joy for that money. Not exactly loot boxes, but that does form part of my dislike for them (I'm unlikely to ever again let myself be tricked in that way, but as a result I empathize strongly for those who are being tricked by these systems).
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