Regulation of Video Gaming Loot Boxes: Lessons for South Africa from Abroad

Abstract

To optimise income, video game developers incorporate microtransactions into their games. One such microtransaction is a loot box. This is a container that a gamer in certain instances can win or purchase to take a chance on the unknown contents in the hope of obtaining an item that may be useful in the progression of the game. In the case of tradable loot boxes, these items won can also be traded or sold for cash either during the game or on a third-party marketplace. Research has shown that loot boxes are potentially harmful to minors and that there is possibly a link between loot boxes and problem gambling. The labelling of the games seems inadequate as it does not always warn gamers and/or parents of the potentially harmful content. It has also been argued that these loot boxes are an example of the convergence between gambling and gaming in that gambling and gambling-like opportunities are becoming more prevalent in video games. Notwithstanding existing research, the industry has not been forthcoming in addressing these problems. There are some exceptions where the developers amended their games after the gaming community reacted negatively to the introduction of loot boxes or when forced to do so by regulations or other third-party service providers. The call for self-regulation by the industry to adopt a set of ethical guidelines to address these concerns has not yielded the desired results. As a result of the lacklustre actions of the industry, some jurisdictions have addressed these problems through regulation. The mechanisms used by these jurisdictions differ, ranging from the banning of loot boxes to a mere acknowledgement of the potential problems without taking any action. Even where (tradable) loot boxes fall within the legal definition of gambling in national legislation, enforcement has been inconsistent as some argue that using gambling regulatory frameworks to protect vulnerable groups is inappropriate. After discussing these debates and global developments, the article concludes with a discussion of the current South African legal situation vis-à-vis loot boxes with specific reference to the constitutional and international law imperatives, the Film and Publications Board classifications, the consumer protection legislation, and the gambling regulatory framework. It finally provides suggestions for legal changes that may be feasible considering the lessons learnt from abroad.