Talking Loot Boxes With Gambling Expert Brett Abarbanel

Jesse Collins,

January 31, 2018 12:30 PM

The Director of Research at the UNLV International Gaming (as in gambling) Institute talks about micro-transactions and what the gambling industry does and doesn't view as gambling in video games. You'd be surprised.

There’s a ton of controversy over EA recently, involving the inclusion of loot boxes in the recent Star Wars Battlefront II. Harmful as they may be, some countries have begun considering the label of “gambling” to this type of addition. I recently sat down with Brett Abarbanel, the Director of Research at the UNLV International Gaming Institute to discuss her thoughts on the scenario, from a gambling standpoint. To be honest, her responses weren’t what I expected going into this.

The gambling industry has a very different take on loot boxes than consumers do. “The industry is taking an interest in this,” Abarbanel explained. “But, it is currently largely a regulatory issue. The convergence of gambling and gaming has been a topic of discussion for several years now, as video games have included gambling mechanics in-game and gambling games have incorporated more gaming mechanics. The loot boxes are one example of this, and the interest is in how regulatory agencies are assessing loot boxes within the scope of current gambling law and regulation.”

She explained that jurisdictions are the key to unraveling the idea. Jurisdictions, as she told me, depend on the country. A single jurisdiction isn't always a country. For instance, in the United States, gambling is state-regulated, so there’s 50 jurisdictions total. The UK, however, is only a single jurisdiction. “The regulatory assessment is not always straightforward, either, it's dependent on the jurisdiction. Each jurisdiction defines gambling in its own way. Oftentimes, the definition and regulation of the activity is fairly uniform across jurisdictions, but that isn't always the case. So, when we look at ‘loot boxes’, they are assessed within the scope of that definition, same as any other game activity.”

Star Wars Battlefront II has recently come under fire for having
Star Wars Battlefront II has recently come under fire for having "loot boxes" and is a case of how they should not be handled.

The concept of “gambling” is incredibly vague, even within the gambling industries. I asked her if she had a “proper” definition. “Gambling is risking something of value on an event whose outcome is in doubt. So, from a definition like that, loot boxes are gambling. But then again, so are many, many things!” I asked for an example and she laughed and said “The most common joke is ‘Marriage’.”

Jurisdictions mean everything here

While cosmetic items don’t add to the gameplay, per say, Battlefront II focused on increasing gameplay mechanics and upgrades from theirs. I came out and asked what the gambling industry’s opinion on the matter of whether loot boxes in games are. “From a regulatory perspective, it depends on the jurisdiction. Usually, no - that's why we've seen several regulatory agencies, including the UK, Denmark, New Zealand, etc., declare that loot boxes are not considered gambling. If the items that come from loot boxes can be transferred to economic value (for instance, CS:GO skins), then they would typically fall under the gambling definition. I'll also note that just because the gambling authority declares that loot boxes are not gambling, it does not mean that this is a final statement on their assessment. It means that they do not fall under gambling regulations. They may fall under other state regulations.”

The question is in monetary gain, from what she explains. With the ability to trade and sell gun skins in games like Counter-Strike: Global Offensive, Battlefront II keeps their advancements to saving time. Where the loot boxes can garner better stats in-game, the question is if that is really gambling. “Time does not equal money, for example. So the ability to get items from loot boxes in Battlefront that may speed up time to end-game does not necessarily mean it's ‘money's worth’.”

I moved to a different topic, asking how items like Steam Trading Cards play into the concept of “gambling”, due to the randomized nature and the ability to be sold and traded, similar to the CS:GO gun skins. “Again, it depends on the jurisdiction! In jurisdictions where regulation covers a broader swath of the gambling/gaming crossover, I expect we'll see different decisions on loot boxes, as well. There has been a lot of interest in skins in the gambling world - both industry and regulatory. Skins, however, are treated the way we treat other currencies, and the ground rules have followed how we treat other currencies in gambling, for example, with regulations that restrict underage access.”

The question boils down to
The question boils down to "Is RNG in lootboxes considered gambling?"

But, how is this enforceable? Brett explained that it’s not so different than casinos and other forms of gambling, in this sense. “Because many regulations are tied to the money used in that location, there have been instances where more than one agency needs to contribute to the change. The Isle of Man Gambling Supervision Commission, for example, worked with the Island's financial regulator to ensure virtual currencies, like skins, would fall within current gambling regulations. Right now, it's quite difficult. Like with so many new technology applications, regulation and enforcement has lagged behind tech development.”

Not everything is as it seems

As someone that can walk into gas stations or the local bar and see video slots, I asked her how the technology is any different than playing a video game and how it’s treated. “These are considered video lottery terminals. Their underlying mechanics are as a lottery, with a game overlay for the gameplay mechanic. They are treated as lottery games, under the purview of the State Lottery Corporation. Playing is a full chance-based game, with the game's appearance being a conduit to the outcome.”

In addition to being the Director of Research at the UNLV International Gaming Institute, Brett is also a research scientist at the UCLA Gambling Studies Program. She runs the entire research arm of the International Gaming Institute. “My personal research focus covers gambling policy and behavior, esports and gambling, operations and technology use, as well as responsible and problem gambling. I'm a university professor, so I write papers and give talks on these topics. I do a lot of work globally, which is why so many of my answers are ‘well, it depends on the jurisdiction’.”

Additional Editor's Note: After a commenter asked for clarification, we asked Brett about the UK being technically four jurisdictions. Three of them, England, Scotland, and Wales, are all taken care of under a single overarching jurisdiction. She explained additional information on how it works. "The Gambling Commission calls itself the 'UK Gambling Commission' and it covers gambling regulation for Great Britain - England, Scotland, and Wales. The Gambling Commission is treated as one jurisdiction because they cover all three. So, the one commission covers all of Great Britain. Your commenter is correct in that there are 4 jurisdictions within UK, but when it comes to gambling regulation, 3 are grouped together under one body. Thus, my reference to 'one jurisdiction'."

She, then, explained that reference to "GB Gambling Commission", "UK Gambling Commission", and "Gambling Commission", all refer to the same regulatory body. Within most bodies, any additional sub-sets are all considered under the single jurisdiction as well, all in all.



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