Tobold's Blog
Sunday, November 26, 2017
An old problem

I played Magic the Gathering both in physical form and in various digital forms. Anybody who does thinks not much differently of his digital cards than of his physical cards. After all the cards in both forms serve the exactly same purpose, and being able to use the physical card as a doorstop isn't really relevant enough to value the physical card more than the digital one. However legally I only ever owned the physical cards. Virtual property still has no legal standing in Europe or the USA, so my digital cards are not considered my property. That is a very old problem, and up to now nobody really cared enough about it to consider it worth changing.

But this month comes along EA's Star Wars Battlefront II with its loot box controversy. And some politicians woke up and realized that such a system is very similar to gambling: You pay real money for a random chance to win something which is of value to you. It is easy to imagine a child being seduced by that and spending hundreds or thousands of daddy's credit card, because daddy is an idiot regarding his kid and his credit card. Even if research suggests that the real whales are more likely to be lonely bankers with too much money, a politician would rather be seen protecting the children than protecting the bankers. So an attack on loot boxes makes political sense with that child protection story.

However suddenly our old problem is back. Virtual property still doesn't exist, legally. So the content of a loot box, legally speaking, has no value. So buying loot boxes can't be gambling, because, legally speaking, you can't win anything of value. Having ignored the problem of virtual property in the past is now biting the legal system in the ass.

I, being a scientist by education, once had a very interesting conversation with somebody with a legal background about the nature of truth. As a scientist I believe that there is an absolute truth, which I can examine and measure, and then describe with words. If the words don't fit with reality, the words are wrong. The legal guy thought that writing down words in a law or contract created truth. If the words didn't fit with reality, reality was wrong. This is one of those cases. It is pretty much obvious to any sane person that loot boxes are a form of gambling (regardless of whether we think gambling is good or bad). You pay money in the hope of winning a prize, and whether you get that prize depends on random chance. Whether you buy a raffle ticket to win a stuffed animal at the carnival or whether you buy a loot box to win a hero character in Battlefront 2 is exactly the same in the mind of the buyer. Only the legal words describing the two situations differ substantially.

While I am in favor of systems that prevent children having access to loot box systems in games, for me that is actually only the start. In order to get to that point we need to legally recognize loot boxes as gambling. And for that we need to legally recognize that virtual property exists and has value. That is a much larger and more important issue than just loot boxes.

Without the agreed meaning of language as described by your lawyer, science as you understand it cannot exist. Or, rather, it can exist but you, as a thinking, communicating human, will be either be unable to perceive it or communicate what perception you do have. The fact may come before the word but the word comes before the fact.

As for your definition of gambling "you pay real money for a random chance to win something of value to you" - that's not gambling. That's not even particularly similar to gambling. Gambling, in the context not just of the law but of normal language usage, requires the possibility of total loss. What you're describing is a blind purchase: you pay a set amount of money to receive an item whose exact nature is not known to you. In every case you receive an item for your payment. Whether the items available are of equal value is another matter entirely - you may be gambling on your chance of getting the exact item you want but you are not gambling on your chance of getting one of the items you have paid for: that risk is zero.

This is hardly new. It's why we have the expression "to buy a pig in a poke", first recorded in the 16th Century. Of course, no-one expects politicians to be accurate in their use of language. They rarely are and it's not part of their job to be. Lawyers and bureaucrats, however, need to show as close to absolute precision as they can. Hence loot boxes not being gambling. Which they patently aren't.

Loot boxes *do* have the possibility of total loss: They can contain a selection of worthless junk that is of no value to you.
You are trying for a simple answer to a complex issue. Treating virtual assets as though they have real world value opens a can of worms. Unlike your physical Magic the Gathering cards, you never take actual possession of your virtual cards. They are, and remain forever, on somebody else's server. So what responsibility would that company now have if those virtual cards were assigned real world value? Can they never shut down the game lest you sue them for the value? Likewise if their servers crash or get hacked, can you now bring them to court for failing to sufficiently protect your valuable assets. And can they charge you a storage fee, or maybe offer insurance, to cover holding on to your pretend goods?

Also, to your comment above, and as Bhagpuss said, the fact that YOU personally do not value something does not in any way change whether or not something has actual objective value. Surely your training in science should confirm that.

Is this really an issue of what an individual might, or might not get in a loot box? Or is it a matter of "odds" or "chance" in getting something that is beneficial to the gaming experience? EA could have simply priced all items(that appear in loot boxes) individually in an item shop for a set amount, but they didn't. Does anyone not question why they went the loot box route instead? If you can buy an item straight-up from an item shop, you have a 100% chance of obtaining said item. Bhagpuss's "pig in a poke" is a prime example of this, as anyone can go out and buy a pig straightup for say, .99 cents. So why would anyone in their right mind spend $2.99(on a loot box) in the hopes of winning a .99 cent pig?
If lootboxes are "bad" (for whatever reason, be it gambling and/or predatory behaviour) then how can mobile games be consdidered perfectly fine? Saved few exceptions they all base their economy on "chests", "diamonds", "energy" and similar stuff. Spending real money on any unlocked tablet is a LOT easier than spending money on a console: why aren't mobile games considered "predatory" too? Why arent those random "chests" considered "gambling" too?
Buying a pig in a poke is still gambling.

Consider a slot machine that costs a dollar to play, and always pays out at least one cent. Sometimes it pays $10.01 or $5.01, but usually it pays $0.01.

Clearly playing this machine is just the same as playing a machine that costs $0.99 to play and usually pays nothing.
I do not think I agree with either Bhagpuss or Tobold's definition of gambling.

"A person engages in gambling if he stakes or risks something of value upon the outcome of a contest of chance or a future contingent event not under his control or influence, upon an agreement or understanding that he or someone else will receive something of value in the event of a certain outcome."

It does not require total loss to constitute gambling. However, there must be something of value to be had. Not virtual but real world value. That is why lootboxes are not gambling. The value of the items is tied to the value of the game itself (and its' continued existence). If the game is shut down, the items become meaningless. As they have no real world utility, no real world value can be assigned. As it stands, while Bhagpuss' definition is incorrect, his conclusion is right.

Even if you spend real money to buy a lootbox, because all of the items you can potentially receive are not assigned specific real world values, they all hold equal value (equivalent to the cost of the lootbox). There is no downside risk as objectively speaking, all the items are worth the same. Whether you value one item drop more than the others is irrelevant to determining the item's objective value (the cost of the lootbox).

An example where loot boxes could become gambling:

However, if Anet or Blizzard said that item x from the lootbox could be exchanged for 25 USD (or some real world item like a chair for example) and item Y for $10, then it would be gambling. But this is not because the virtual item has a real world value, but because the developer has offered the item IN EXCHANGE for something of real world value (in this case, money). This would now be similar to exchanging gambling chips for money except you would be exchanging a +1 sword instead.

At least this is my layman's view.

TLDR: As Bhagpuss said, it is simply a blind purchase. For the reasons I mentioned in my previous post.
"understanding that he or someone else will receive something of value in the event of a certain outcome"

If people are willing to pay $20 for a virtual sparkling pony, doesn't that make a sparkling pony "something of value"? So if you put that sparkling pony in a loot box, it completely falls under your definition.
It's irrelevant whether real world values are 'assigned' so long as the values are different to you.

At the end of the day, the service a company provides to you can be of different value to you depending on whether it is the Greatsword of Orc Obliteration or Tub of Mauve Pants Colour.
I do not think it qualifies as gambling unless you have a chance of receiving nothing in return. If you are guaranteed to receive some sort of virtual trinket for your purchase, it may qualify as price gouging, but not gambling.
I think nobody would be interested in pretending that the term 'gambling' doesn't apply, if it weren't that 'gambling' has legal implications.
This problem was elegantly solved in the Florida court that tried that two punks who ran a CS:GO skin gambling site. They accepted that while the publisher does not accept these items as property, there is a livid black market and people can sell their "non-property" for very real money.

Similarly as you cannot legally own heroin, yet if you set up a casino where you can gamble in heroin, they add gambling next to your drug charges.
The problem with that is that when the server gets turned off, is the company subject to lawsuits for depriving people of their property? If they nerf an item, do I get to sue them for diminishing the value of my property? When they render all my items into vendor trash by releasing an expansion?

It's not property. It's not un-property. It would probably be better to tackle it as regulating a scam where a company exploits the human love of gambling and emotional attachment to virtual items to make money.

On the issue of what is or is not property, your lawyer friend was more right than you. You can't own anything, as far as the universe cares. The concept of property is subjective. If it wasn't, you couldn't steal anything, any more than you can break the laws of physics.
"If people are willing to pay $20 for a virtual sparkling pony, doesn't that make a sparkling pony "something of value"? So if you put that sparkling pony in a loot box, it completely falls under your definition."

You are only using part of the definition. As I said, in a contest of chance that involves risk and a future contingent on things not under his control. In short not 100% probability. You are buying the pony for $20. That is a pure purchase.
Regulation has a way with accomplishing nothing but hurting the little guy. Gambling regulation doesn't stop gambling, it stops the little guy from creating a blackjack table.
Lootbox regulation won't stop Battlefront, Hearthstone or Overwatch from having lootboxes. EA/ATVI will simply deal with any regulation like any legal casino does. But it will probably stop the indie developer from implementing them due to too much paperwork.

And if anyone needs lootboxes it's the little indie developer whose game has a small, but dedicated audience. They NEED recurring monetization!

So why hand big companies like EA and Activision a de-facto monopoly on lootboxes? Madness.

Furthermore, age restrictions and criminalization of desirable things tends to make everything worse.
Kids learn to smoke and drink at an earlIER age BECAUSE it's regulated. It's simply cool to be bad.
And how many thousands need to die in South America, Afghanistan and other places, because drugs are illegal in the West? How much money do we have to spend on police and military to fight drugs? How often should drugs be cut with poisonous chemicals so drug peddelers can make bank? And so on.

I'd sooner go the other way.
Let all ages gamble.
Do you honestly think children can't or won't find something else to blow all their parents money on if lootboxes don't exist?
Just stop trusting kids with credit cards.

And btw, Laws are a matter of intention, they're descriptions not definitions. Description is subjective. If lawmakers decide lootboxes are gambling, then they are.
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