Microtransactions and Gambling in the Video Game Industry

Abstract

The beginning of the 21st century has had a drastic effect on the video game industry. The advent of almost universal Internet access, the release of inexpensive broadband-enabled consoles, and the availability of mobile gaming have led to game developers and publishers heavily relying on premium in-game currencies, exclusive paid items, and loot boxes to subsidize or even replace profits from traditional video game business models. By 2020, in-game purchases made up a market of $92.6B worldwide and, in the US, experienced growth of over 30%.[1] In this highly lucrative market, the legal and ethical landscape is constantly bubbling with claims of unlicensed gambling, unfair pay-to-win mechanics, and extortion of minors. In the first part of this paper, we will explore the historical context of microtransactions from the first examples to modern ubiquity. In the second half of this paper, we will examine some relevant scandals and legal cases regarding the connection between microtransactions and gambling.