Jordan Tomizza
E103

There has been a lot of controversy surrounding the debate about whether or not ‘loot boxes’, in video games, are akin to under-age gambling in an online space. To those who are unaware, loot boxes are purchasable items in video games that give the player a chance at winning highly sought after cosmetic items for their characters; some of these cosmetics are worth hundreds of dollars. These items can then be traded to other players, sold on online marketplaces, or be used for betting during professional esports matches. The controversy highlights concerns over how these micro-transactions, and obvious gamble-like behaviours, may affect teens during their development and whether or not they will be prone to offline gambling at casinos in the future. These are viable concerns that should not be ignored. Today, I’d like to look into this controversy to see if I can find answers to the following questions:

  1. How has the esports environment enabled this behaviour?
  2. Is there any real harm being done to our youth?
  3. Should the microtransaction and loot box paradigm be met with legislation?
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Before we get into this, we should start by digging through some background information. The expansion of the esports industry is due to its participatory characteristics: anyone with an internet connection can participate by playing, viewing, or contributing to online forums. It acts as the ultimate escape from our mundane lives, while also fostering an immensely large community amongst like-minded individuals.

Esports operate under the same sports spectacle that we’ve encountered during the golden age of TV. It acts as a mechanism to build social capital while keeping us entertained through escapism. (Corrigan, 2014). However, the spectacle comes at a cost to our wallets by being a commodified space in the leisure economy; an economy that encourages continual consumption. (Friedman, 2011). In regard to esports themselves, the commoditization would be ones viewing of an event; whether that be online through streaming platforms, or by physically attending a tournament.

Our inherent need to socialize and be a part of a community drives many to attend these events; the escapism we seek through entertainment is amplified in this regard (Seo, 2013). The major draws to the tournaments are the player’s skill at the games, and the incredibly large prize pools; for example, the DOTA 2 International tournament had a prize pool of over $10 million US in 2014, and a prize pool of over $20 million US in 2016. (Hallmann, 2018). But how are esports able to have prize pools this large? Demand. These tournaments are viewed by millions of people, and the industry is growing at an exponential rate; growing from a $200 million industry to a $500 million industry from just 2014 to 2016, and this is expected to increase even further. (Jensen, 2018).

How has the esports environment enabled this behaviour?

The popularity of esports has attracted millions to flock to video games, and online spaces, to participate in the new age of digital media and content creation: live streaming. Twitch.tv, the largest streaming platform, attracts tens of millions of viewers who watch billions of games each month. These viewers can watch for free, donate to their favourite streamers or esports players, or subscribe to streams at a cost of $5 per month. One study has shown that, although many viewers do not subscribe to streamers, the act of spectating their favourite players fills a very real psychological feeling of gratification. (Sjöblom, 2017). Many viewers flock to professional player’s streams in order to learn how to get better at the game themselves.

Herein lies the problem: Professional gamers become models for “normal” behaviour in the gaming environment. Streamers are known to attract viewers, followers, and subscribers, through opening incredibly large numbers of loot boxes.

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Many see loot boxes themselves as similar to slot machines; but that is not the case. For example, by betting with slot machines you have a high chance of not receiving anything besides a lighter wallet, whereas, with loot boxes, you always receive something; although, all but one or two items in the loot box are generally worth pennies. It’s worth noting that esports games that become unprofitable are sometimes discarded by the developing companies. This happens through shutting down servers or neglecting game maintenance; therefore, the loot box economy, in a sense, financially keeps the esport status of the games afloat. (Karhulahti, 2017).

On Twitch, many viewers are underage and may become infatuated with the behaviour of their favourite esports player or professional streamer, seeking the adrenaline in opening a loot box to receive a high price cosmetic item. Some may even see this as a way to start up their own stream, as opening loot boxes has been proven as an effective method to get views. However, the act of opening loot boxes isn’t the major problem in the grand scheme of things; the problem is in regards to the actual betting of these cosmetic items on professional matches.

Is there any real harm being done to our youth?

As the audience for esports and professional gamers grows, betting companies have begun to get involved in the phenomena. Major, well known, betting companies that have transitioned from traditional sport, to esport, have put age gates, and other mechanisms, in place to deter underage gambling; however, other sites, like CSGO Lounge, have not. The major difference between the two is that the major betting companies allow for betting real money on all popular esports matches, while CSGO Lounge allows for the betting and trading of cosmetic items, known as “skins”, specifically during professional Counter Strike matches. However, Counter Strike has a large online marketplace where skins are traded for other skins, and other sites exist where they can be traded for real money; therefore, the skins represent real value and are generally treated as such by gamers.

Loot boxes, as the most viable way to gain skins in the first place, have been called “predatory gaming” that is designed to ‘exploit human psychology in the same way casino games are so designed.’ Does this mean that loot boxes reinforce gambling-esque behaviours in our youth, and that they may be more susceptible to offline gambling in casinos when they’re older? According to a recent peer-reviewed study, this is not the case. The results of the study showed that virtual economies have indeed created gambling-like activities in video games, and that increased exposure of esports and online gaming leads to a higher chance of players participating in video-game related betting and trading; however, it also showed that there was not a significant increase in the potential for developing “problematic gambling behaviour” in an offline setting. (Macey, 2018). Basically, the study determined that you are much more likely to stick to betting skins on your favourite video games than you are to start betting physical money in a casino.

Should the microtransaction and loot box paradigm be met with legislation?

Some countries have already started banning minors from buying loot boxes, stating that there are too many similarities between them and gambling, and they’ve estimated that over $7 billion worth of skins were bet in 2016 alone. That is an insane amount of money! And, although studies have shown that offline gambling habits are not substantially affected by “skin gambling”, the fact of the matter remains that the similarities between the two are uncanny: thus warranting some form of legislation. However, I would argue that loot boxes alone are not the problem: the problem resides in the ability to sell and trade in-game items for real money.

Loot boxes, on their own, are a great way for development teams to earn money to continue building their games, especially when they are working off of a freemium model. Without the microtransactions involved, they would either run out of funds and not be able to provide adequate maintenance, or they would have to charge money for their game, hindering their growth and availability to the public. However, there are obvious ethical implications in how a company implements their loot boxes and microtransactions.

A positive example would be with the game Fortnite. Fortnite is a game that allows players to play the full game for free while offering the choice of a “battle pass”, which lets players unlock cool outfits for their characters. Similarly, players can buy “boxes” of coins to purchase the exact outfits and other cosmetic items that they want. A negative example would be with Star Wars Battlefront 2, which not only costs money to play, it gives players access to certain, more powerful, weapons and characters if they want to pay even more, thus giving them an advantage over the players who refused to pay a second time.

Final thoughts

After digesting all of this information, I would now argue that it makes sense for legislation that prevents unethical implementations of loot boxes and microtransactions, as well as for legislation that disallows minors from participating in the actual betting of skins and cosmetic items. In my opinion, companies that create ethical solutions in implementing loot boxes and microtransactions should not be hindered in who the sell them too, as they directly support in the longevity of the game.

References

Arthur, C., & Stuart, K. (2014, August 30). How video gaming turned into the world’s newest spectator sport. Retrieved January 30, 2018, from https://www.theguardian.com/technology/2014/aug/30/video-games-spectator-sport

Corrigan, T. F. (2014). The Political Economy of Sports and New Media. Routledge Handbook of Sport and New Media, 43-54. doi:10.4324/9780203114711.ch4

Crews, E. (2017, May 22). Professional Video Gaming May Have an Underage Gambling Problem. Retrieved January 30, 2018, from http://www.geekinsider.com/professional-video-gaming-may-underage-gambling-problem/

Cross, K. (2017, December 19). How the legal battle around loot boxes will change video games forever. Retrieved April 09, 2018, from https://www.theverge.com/2017/12/19/16783136/loot-boxes-video-games-gambling-legal

Friedman, M. T., & Andrews, D. L. (2011). The built sport spectacle and the opacity of democracy. International Review for the Sociology of Sport, 46(2), 181-204. doi:10.1177/1012690210387540

Hallmann, K., & Giel, T. (2018). ESports – Competitive sports or recreational activity? Sport Management Review, 21(1), 14-20. doi:10.1016/j.smr.2017.07.011

Jenson, J., & Castell, S. D. (2018). “The Entrepreneurial Gamer”. Games and Culture, 1-19. doi:10.1177/1555412018755913

Karhulahti, V. (2017). Reconsidering Esport: Economics and Executive Ownership. Physical Culture and Sport. Studies and Research, 74(1), 43-53. doi:10.1515/pcssr-2017-0010

Macey, J., & Hamari, J. (2018). Investigating relationships between video gaming, spectating esports, and gambling. Computers in Human Behavior, 80, 344-353. doi:10.1016/j.chb.2017.11.027

Meola, A. (2018, January 09). How eSports has given rise to competitive gaming betting and gambling – with skins and real money. Retrieved April 09, 2018, from http://www.businessinsider.com/the-rise-of-esports-betting-and-gambling-2018-1

Mulkerin, T. (2017, May 05). Racist and sexist behavior in esports is exposing what regular players experience every day. Retrieved January 30, 2018, from https://mic.com/articles/175101/racist-and-sexist-behavior-in-esports-is-exposing-what-regular-gamers-experience-every-day#.JJclAYE0C

Seo, Y. (2013). Electronic sports: A new marketing landscape of the experience economy. Journal of Marketing Management, 29(13-14), 1542-1560. doi:10.1080/0267257x.2013.822906

Sjöblom, M., & Hamari, J. (2017). Why Do People Watch Others Play Video Games? An Empirical Study on the Motivations of Twitch Users. Computers in Human Behavior, 75, 985-996. doi:https://doi.org/10.1016/j.chb.2016.10.019

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