Beyond loot boxes: Research finds deeper link between gambling and video games

Video game loot boxes are seen by many as a form of gambling. A new study, however, indicates that other mechanics that publishers use to monetize their games also have significant links to problem gambling.

The study was authored by Dr. David Zendle from the University of York’s Department of Computer Science. If Zendle’s name sounds familiar, it’s because he was also behind a previous study that clearly linked loot boxes to problem gambling.

Publishers looking for alternatives to loot boxes

Since Zendle’s original study came out in 2018, many governments and regulatory bodies have made moves to classify loot boxes and gambling with the aim of either regulating or outright banning them.

The latest to do so is the U.K. government where Parliament has made moves to classify loot boxes as such with the intention of eventually regulating the practice. Prior to this, Zendle had also contributed to a House of Commons select committee that also recommended that loot boxes be regulated.

Meanwhile, many countries in Asia, including some of gaming’s biggest markets such as China, have long since passed laws regulating loot boxes.

These and other regulatory moves have led to video game publishers looking for other ways to monetize their games. These include mechanics such as token wavering, real-money gaming and social casino spending.

Zendle’s latest study, however, also links these mechanics with problem gambling.

“When we go beyond loot boxes, we can see that there are multiple novel practices in gaming that incorporate elements of gambling,” says Zendle. “All of them are linked to problem gambling, and all seem prevalent. This may pose an important public health risk.”

For the study, a group of around 1,100 volunteers was asked about their gaming and gambling habits. From this, the study found that a significant portion of the participants—18.5 percent—had engaged in behavior that related to both gambling and gaming. These included playing a social casino game or spending money on a loot box.

“There are currently loopholes that mean some gambling-related elements of video games avoid regulation,” Zendle pointed out. “For example social casinos are ‘video games’ that are basically a simulation of gambling: you can spend real money in them, and the only thing that stops them being regulated as proper gambling is that winnings cannot be converted into cash.”

Zendle then recommended that governments look into regulating these loopholes in the future.

“We need to have regulations in place that address all of the similarities between gambling and video games. Loot boxes aren’t the only element of video games that overlaps with gambling: They’re just a tiny symptom of this broader convergence.”

Gambling-like practices contribute a significant amount of revenue for publishers

As regulations begin to come into play for loot boxes, publishers have begun to look for other ways to monetize their games, especially free-to-play ones.

Part of the issue comes from the move from traditional retail games to the games-as-a-service model. With most games, especially free-to-play ones, requiring continued support—content, patches, updates on top of maintenance costs—publishers and developers need a steady stream of revenue just to keep the game running.

The other issue is just how much money video game publishers are making from what are termed “recurrent purchases” such as loot boxes and microtransactions. Take for example 2K Games, publisher of well-known sports titles such as the NBA 2K. According to their financials for 2019, a little over $410 million of the $760.5 million that the company made in 2019 came from recurrent purchases such as microtransactions.

2K games, specifically the aforementioned NBA 2K series are particularly known for these. The latest installment, NBA 2k20 has a mode called My Team that has various casino-like ways for players to “earn” players for their custom team. This feature was cited as having helped significantly grow recurrent spending.

With this much being made through recurrent purchases, it’s plain to see why publishers would rather look for loopholes instead of subjecting them to regulatory oversight.

It’s highly likely that even if other practices are regulated as gambling, publishers will continue to find other ways to get around the regulations to make money.