ESRB to Label Video Games Containing Loot Boxes

U.S. Senators Introduce Bill to Ban Loot Boxes in Youth-Oriented Games

A trio of United States Senators introduced a bill last week that aims to ban loot boxes and micro-transactions in video games targeted to minors. Senator Josh Hawley (R – Missouri) previewed the legislation earlier this month, which would significantly affect the way video game companies make money in the States.

Loot Boxes and Micro-Transactions, the Basics

Loot Boxes in Video GamesLoot boxes are in-game mechanics that award random items to players. They can usually be earned through regular play, but in many games can also be purchased with in-game currency or real money (or in-game currency that can be bought with real money). Players always receive something in the loot boxes and know what they can get, but do not know what they will actually receive until the loot box is opened. They are very much like “blind box” toys that can be bought in stores nowadays, say a package that contains a random LEGO minifigure. You pay, say, five bucks for a package, knowing you’ll get one of several minifigs, but you don’t know which one you will get.

Loot boxes are often compared to slot machines, which isn’t a bad comparison, except with slot machines, you often receive exactly zero. With loot boxes, gamers always get something, which is why the gaming industry doesn’t consider them gambling.

Micro-transactions are what they sound like: purchases that are generally low in price. These can be for the same sorts of items that are in loot boxes, things like weapons, power-ups, other useful items, or just cosmetic items like costumes. The prices are often low, but the purchases can add up quickly. A “pay-to-win” micro-transaction is one that gives the player an advantage in the game, as opposed to a cosmetic item that makes no difference whatsoever.

Cosmetic items are excluded from the bill’s prohibitions, as they offer no in-game advantage. It appears that this exclusion only applies to micro-transactions, as these involve direct purchases of items. It looks like loot boxes that only include cosmetic items are still off-limits.

Naturally, children often do not understand how these things work and, if not properly supervised or prevented from making purchases, can run up charges.

“Only the addiction economy could produce a business model that relies on placing a casino in the hands of every child in America with the goal of getting them desperately hooked. I’m proud to introduce this landmark, bipartisan legislation to end to these exploitative practices,” wrote Sen. Hawley in a press release.

The following from the first section of the bill covers the basics of the legislation:

SECTION 1. REGULATION OF PAY-TO-WIN MICROTRANSACTIONS AND SALES OF LOOT BOXES IN VIDEO GAMES.

(a) PROHIBITION OF PAY-TO-WIN MICROTRANSACTIONS AND SALES OF LOOTBOXES IN MINOR-ORIENTED GAMES
(1) GAME PUBLISHERS.—It is unlawful for a game publisher to publish—
(A) a minor-oriented game that includes pay-to-win microtransactions or loot boxes; or
(B) an update to an existing minor-oriented game that would enable pay-to-win micro-transactions or loot boxes in such game.
(2) DIGITAL GAME DISTRIBUTORS.—It is unlawful for a digital game distributor to distribute—
(A) a minor-oriented game that includes pay-to-win microtransactions or loot boxes; or
(B) an update to an existing minor-oriented game that would enable pay-to-win micro-transactions or loot boxes in such game.

After that part, the text is essentially duplicated, but to cover game publishers and distributors of games that have “constructive knowledge that any users are under age 18,” which seems like a dubious rule, at best.

“Today’s digital entertainment ecosystem is an online gauntlet for children,” said one of the bill’s sponsors, Senator Ed Markey (D – Mass.). “Inherently manipulative game features that take advantage of kids and turn play time into pay time should be out of bounds. I’m proud to partner with Senator Hawley and Senator Blumenthal on this important legislation because corporate profits should never come before children’s well-being.”

“I’m proud to sponsor this bipartisan legislation to protect kids from predatory gaming apps and hold bad actors accountable for their reprehensible practices. Congress must send a clear warning to app developers and tech companies: Children are not cash cows to exploit for profit,” said Senator Richard Blumenthal (D – Conn.).

The bill also mandates a study to be undertaken and two reports to be delivered to the relevant committees in Congress within two years of when the law is enacted (if it ever is, of course). One report will detail the actions taken by game companies and any additional federal and state laws pertaining to loot boxes and pay-to-win micro-transactions.

The other study is supposed to analyze the actual use of loot boxes and pay-to-win micro-transactions in video games and their psychological effects on gamers.

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