LOOT BOXES: "IT'S A TRAPF" Rebecca E. McDonough* 1. INTRODUCTION A microtransaction is "a business transaction that involves a very small amount of money, typically under about $5.00."2 In the context of video games, microtransactions enable players to purchase customized content, accessories or other game advantages beyond the initial purchase price of the game. A global outcry sounded throughout the video game community in November 2017 after the beta release of Star Wars Battlefront II ("Battlefront 1l") because of microtransactions featured in the game.4 Beta test players discovered that they could more easily purchase their wins in the video game than earn them through game-play.s The nucleus of player complaints stemmed from game developer, Electronic Arts, incorporating "loot boxes" as a means of purchasing hero characters such a Darth Vader and Luke Skywalker to bypass the hours of game play required to earn them. Whereas 4,500 hours of playing time could unlock all of the game content, players could more easily buy it for $2,100, thirty-five times the initial purchase price of the game. Restricting access to two of the most iconic characters of a much-beloved franchise prompted a Change.org petition for Lucasfilm to revoke the game developer's licensing permissions. In Battlefront II and other games, players can either play to earn or use real money to purchase digital game items held in these loot boxes.9 In response to player backlash, Electronic Arts made all Battlefront II loot boxes free to open. This controversy heightened awareness and concern for video Rebecca E. McDonough 1. STAR WARS: RETURN OFTHEJEDI (Lucasfilm Ltd. 1983). 2. RAMESH BANGIA, DICTIONARY OF INFORMATION TECHNOLOGY 358 (2nd ed. 2010). 3. RYAN ROGERS, How VIDEO GAMES IMPACT PLAYERS: THE PITFALLS AND BENEFITS OF A GAMING SOCIETY 135 (2016). 4. Backlash Grows On 'Star Wars' Video Game 'Loot Boxes,' PHYS.ORG (2017), https://phys.org/news/2017-11-backlash-star-wars-video-game.html. 5. Ben Gilbert, Fans are Outraged by the new 'Star Wars' Game, BUSINESS INSIDER (Nov. 13, 2017, 11:44 AM), https://www.businessinsider.com/star-wars-battlefront-2-microtransactions-outrage- 2017-11. 6. Gilbert, supra note 5. 7. A.B. 2194, 2017 Leg., Assemb. on Privacy and Consumer Prot., (Cal. 2018). 8. PHYS.ORG, supra note 4. 9. Jeffrey N. Rosenthal and Ethan M. Simon, Loot Boxes in Video Games: Gambling by Any Other Name?, THE LEGAL INTELLIGENCER, Apr. 24, 2018, at 7. 2019 LOOT BOXES 63 game regulation beyond the gaming community. 0 Combined with the fact that many loot boxes mimic the visual and auditory stimulations of slot machines, requiring players to pay for the chance to win something has led players and lawmakers to draw parallels between loot boxes and gambling." There are three elements required to classify an activity as 'gambling'- consideration, chance and prize.1 2 In this context, "[c]onsideration refers to participants risking something of value on the activity, chance describes the elements of uncertainty in the activity, and prize is the potential reward or outcome." This issue received considerable international concern prior to the release of Battlefront II. The Chinese Ministry of Culture and the State Administration of Publication, Press, Radio, Film and Television enacted microtransaction regulations as early as 2012.14 Findings of the National Gambling Impact Study Commission of 1999 determined that "[njew mechanisms for enforcing gambling on the Internet are necessary because traditional law enforcement mechanisms are often inadequate...especially where such gambling crosses State or national borders." 5 It was not until December 2018 that individual states, like Hawaii and New York, began to propose legislation addressing loot boxes. In February 2018, Senator Maggie Hassan questioned Federal Trade Commission nominees about the future of loot box regulation and effectively raised the issue to the federal level . This article will argue that video games featuring loot boxes or loot box-like mechanisms requiring a player to pay to receive an unknown prize constitute gambling. As such, these games require heightened regulations to protect all consumers, but most importantly consumers within applicable vulnerable populations like children and adolescents. Part I of this article examines the 10. Tae Kim, EA's Day of Reckoning is Here After 'Star Wars' Game Uproar, $3 Billion in Stock Value Wiped Out, CNBC (Nov. 28, 2017), https://www.cnbc.com/2017/11/28/eas-day-of- reckoning-is-here-after-star-wars-ga me-uproar.html. 11. Justin Olivetti, The Perfect Ten: The Truth About Lockboxes, ENGADGET (May 12, 2017), https://www.engadget.com/2012/05/17/the-perfect-ten-the-truth-about-lockboxes/. 12. Anthony Cabot, et al., Economic Value, Equal Dignity and the Future of Sweepstakes, 1 UNLV GAMING LAW J 1, 2-3 (2010). 13. Brett Abarbanel, Gambling vs. Gaming: A Commentary on the Role of Regulatory, Industry and Community Stakeholders in the Loot Box Debate, ABA/IMGL GAMING LAW MINEFIELD CONFERENCE (2018). 14. Chaim Gartenberg, China's New Law Forces Data, League of Legends, and Other Games to Reveal Odds of Scoring Good Loot, THE VERGE (May 2, 2017), https://www.theverge.com/2017/5/2/15517962/china-new-law-dota-league-of-legends-odds- loot-box-random. 15. 31 U.S.C.S. § 5361(a)(4) (2018). 16. S.B. 333, 120th Gen. Assemb., 2d Reg. Sess. (Ind. 2018). 17. Nominational Hearing for the President's Nominees to Serve as Federal Trade Commissioners Before S. Comm. on Commerce, Sci. and Transp., 115th Cong. (2018) (question by Sen. Maggie Hassan, Comm. Member) https://www.commerce.senate.gov/public/index.cfm/ 2018/2/nomination-hearing (at 1:38:97-1:39:28). 64 NORTHERN KENTUCKY LAW REVIEW [Vol. 46:1 concept of a loot box, the experience of opening a loot box, and the potential content of such boxes. Part 11 addresses the international response to loot box regulation, with specific focus on government regulation in Asian and European countries. Part Ill discusses class action lawsuits against collectible and trading card manufacturers and how these cases differ from those that could be brought against video game developers. Part IV explores more recent caselaw applicable to loot boxes as well as legislative responses to the loot box controversy at the state level. Finally, Part V highlights the correlation between the gambling nature of loot boxes and the propensity for addictive or gambling behaviors in vulnerable populations. II. THE CONCEPT, EXPERIENCE, AND CONTENTS OF LOOT BOXES Loot boxes, or sometimes referred to as loot crates, are digital packages embedded within a video game.is Players either encounter these boxes through game play or acquire them from an in-game shop.19 While there are loot boxes that can be purchased with game credits or currency earned as a player advances through the game, theses loot boxes are not at issue here. The loot boxes at issue here are those which a player purchases by entering his payment information or confirming a purchase with the payment information linked to his account. These microtransactions occur when the player encounters a loot box through game 18. Benjamin Pu, What are Loot Boxes? FTC will Investigate $30B Video Game Industry, NBCNEws (Nov. 28, 2018), https://www.nbcnews.com/tech/tech-news/loot-boxes-gambling-video- games-ftc-look-it-n941256. 19. Fraser Brown, Quake Champions is Getting Rid of Loot Boxes and Overhauling its Economy, PCGAMER (Dec. 6, 2018), https://www.pcgamer.com/quake-champions-is-getting-rid-of-loot-boxes- and-overhauling-its-economy/. 1OXES 6! es the loot box from th~e n-vgame shop."' aver has lrding the oot box's contents when he purcha icreenshot of Bal ~front II virtual currency packages required U lase loot boxe prior to making the boxes free to open." Opening a loot box is visually, physically and auditorily s1 of the controller sets the process into motion. As suspenseful music builds intl background, the gaming controller begins to vibrate, and bo th culminate n t 4 box exploding open.2 Depending on the garne, the contents shoot into t and descend to the foreground or jump to the foreground ~nd spin acro screen while fireworks, confetti or coins fa n the backgroun the cdse ol ly Deft toot ('rates in Battlefronl warners strike TECH http5 twwextremetechcom/gar 9021-e y- endsiootcrates~battkdrontii~gamers-strike~ba 21. Kevin webb, Regulators from more than a Dozen Countries or ~g to Crack Oow~ ~t Boxes.' a Controversial Video Gaming Practice that Could be Tool 4uch lii e Gambling, Busi DER (Sep. 17, 2018), httpsj/wwwbusinessinsia dercom/loobboxes ~europ~ an~regulation-2l am.source=copy-link&utminedium~referral&~ ~tmcontent4opba r&utm term=desktop. 22. Hruska, supra note 20 (image available ~t https:/!wwwext oads/2017/11/Battlefront~Pic,~pg) Th.com/wp~cont 23 Alex wiltshire, Behind the Addictive Psych~ logy and Seductive Art 01 oat Boxes, PEG~ p. 28, 2017), httpsl/www.pcgamer.com/behi nd4be~addictive~psychoIc y-an&~seductive u~uu~'uuxvsI. 24, cecilia D'Anastsi o, Why Opening ot Boxes Feels Like Christmas, According to Game Dev.~ KOTAKU (Mar. 20, l017), httpsl/l taku.com/why~openingloot~boxes4eelsizke~christmas according479344680O?~. Am medium=sh retromsite&utmsource=kotakucopy&utm campaign=top, 66 NORTHERN KENTUCKY LAW REVIEW [Vol. 46:1 these animated theatrics, the player surveys the contents and moves on with his game balancing "on the knife-edge between feeling hungry and feeling rewarded." 26 What the player gains from the loot box is often not as exciting as the process of opening it. "Skins," decorative items that change a character's or weapon's appearance, are the most common loot box items.