I’m writing to bring an important issue to your attention, and ask for your help. Over the last few years big video game developers have begun to employ predatory mechanisms designed to exploit human psychology to compel players to keep spending money in the same way casino games and slot machines are so designed. According to mental health experts games employing these kinds of predatory mechanisms can present the same mental health, addiction, and financial risks as gambling.
Many families are now coming forward with first-hand accounts of these predatory mechanisms compelling people, in particular youth who are particularly vulnerable to a gambling or gaming addiction, to accrue thousands of dollars of video game-induced debt.
Since about 2010, the largest video game developers have begun using increasingly aggressive schemes built into their online games to compel players to purchase in-game content such as characters, tools, or other upgrades. These in-game purchases, which typically range from about $1 to $100, are often referred to as “microtransactions.” The latest form of these microtransactions is the in-game purchase of a “loot box,” which buys a box with a random chance of containing an item of value, or an item which is worthless. In some games valuable items won in a loot box can be immediately resold to other players in online marketplaces for hundreds of dollars.
The loot box game mechanism is designed to exploit the same psychological responses that make slot machines addictive, posing a significant risk to vulnerable consumers. Slot machines use high-speed variable-rate rewards, in other words a random chance of winning something of value, which has been shown to play a significant role inducing gambling addiction faster than any other casino game. This is typically coupled with enticing visual and audio cues designed to strengthen a positive response from a user, such as flashing lights and slot machine-like audio cues.
Loot box game mechanisms are often styled to literally resemble slot machines, and are made available to anyone in games on their mobile phones, consoles such as the X-Box, Playstion, and on home computers. This may explain why the American Psychological Association has identified “Internet Gaming Disorder” as an emerging diagnosis which warrants further study in the Diagnostic and Statistical Manual of Mental Disorders (DSM-5).
There are typically no meaningful warnings when downloading or purchasing a game that may contain these addictive predatory mechanisms. This leaves consumers unaware of the danger which could be present, particularly to people who are vulnerable to addiction and underage youth without the cognitive maturity to recognize a forming addiction. Further, regular automatic updates to online games can introduce loot boxes and other predatory mechanisms into a game at any time, making it extremely difficult, if not impossible, for a player or parent of a player to know which games may or may not be appropriate for them.
Today online games can be accessed through phone apps, consoles such as a playstation, and on home computers, which are frequently tied to credit cards or apple accounts which means purchases can be made at the click of a button without additional authorization. In addition, young adults often use cash to purchase gift cards or game credit which can be used to make purchases in online games.
This makes in-game microtransactions extremely difficult for parents to prevent their children from purchasing unless they can monitor every second of game play at home, as well as monitor access to mobile phones, gaming consoles, or computers everywhere else. As most parents will explain this is simply not possible in today’s technologically driven world.
While Casino games and slot machines are heavily regulated to protect underage youth and ensure that casinos are not exploiting consumers, in most places there is zero oversight of online gaming practices and their similar dangers. In these online games the odds of actually winning something of real value are almost never disclosed. There is also no oversight to ensure game developers aren’t manipulating the odds in real time to hold back rewards from people a game algorithm may identify as likely to keep spending money. This type of manipulative practice has already been documented in the gaming industry.
I’m writing to ask for your help.
The online gaming industry has been growing at an exponential rate and now reaches into every community. It now collects $30 billion from consumers annually - closing in on the traditional casino industry which now collects $38 billion annually.
Unlike carnival games, collecting cards, or similar purchases of chance, video games require active, lengthy participation during which consumers are exposed to psychological manipulation techniques which can result in real addiction and harm. The scale and ease of access to these games make addressing these concerns critical. Casinos have long been criticized for building a business model around the exploitation of psychological vulnerabilities in many people. These business models are now being replicated by the online gaming industry to do the same, right on the phones and in the homes of countless families around the country.
Most significantly, there is no barrier to accessing these games for underage youth. In fact, a significant portion of gaming industry marketing and advertising specifically targets a younger demographic which child psychologists identify as particularly vulnerable to psychological manipulation. These factors have led to a proliferation of addictive behavior and excessive micro transaction spending, especially amongst youth and young adults.
Game developers in the gaming industry are represented by their trade group, the Entertainment Software Association (ESA). In 1994 the ESA created the Entertainment Software Ratings Board (ESRB) to provide video game ratings for consumers. Unsurprisingly, the ESA and ESRB have taken a position defending the lucrative revenue streams generated by these predatory mechanisms, claiming that predatory loot boxes do not fall under the current definition of gambling.
However, the issue is not whether predatory loot boxes fit into the existing 20th century legal definition of gambling which typically requires the possibility of players receiving currency in return for risking their money. Rather, the issues is the fact that predatory loot box mechanics present the same psychological and social dangers as gambling, and that youth and young adults are specifically targeted and exposed to these exploitive practices.
As a result, regulators from countries around the world such as Belgium, Australia, France, and the Netherlands have already begun to investigate and intervene. US regulators may also need to rein in these predatory practices, and I am writing to ask for your consideration to take action. These are some suggested next steps:
1. Ensure that games employing loot boxes or similar variable reward mechanisms which can be purchased receive a 21 years of age and older “Adults Only” rating to warn consumers before they purchase or download a new game.
2. Consider prohibiting the sale of games employing loot boxes or similar variable reward mechanisms which can be purchased to those under 21 years of age.
3. Expand the mission of regulatory oversight bodies such as gaming commissions—which already oversee slot machines—to encompass loot boxes or similar variable reward mechanisms which can be purchased in video games.
4. Require the clear disclosure of the odds of winning items in loot boxes or similar variable reward mechanisms which can be purchased on screen at the time of purchase.
5. Enable regulators to audit the game mechanics of loot boxes or similar variable reward mechanisms which can be purchased to ensure consumers are treated fairly.
Thank you for your help to address this critical issue. The health and well being of the people, families, and youth in our community is important and I strongly urge you to take action to protect against these growing predatory gaming practices.