Regulation of Video Gaming Loot Boxes: Lessons for South Africa from Abroad
DOI:
https://doi.org/10.17159/1727-3781/2023/v26i0a13364Keywords:
Loot boxes, Video games, consumer protection, Video game developers, addiction, minors, age classification, gamblingAbstract
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.
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Author Biographies
Eduard van der Westhuizen, NWU
Eduard van der Westhuizen. LLB (NWU). Registered student NR 30400783 (2022) LLB PGDip in Business Management (NWU).
Marita Carnelley, Faculty of Law at the North-West University
Professor Faculty of Law, NWU
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Xiao LY and Newall P "Probability Disclosures are not Enough: Reducing Loot Box Reward Complexity as a Part of Ethical Video Game Design" 2022 JGI 1-18 DOI: https://doi.org/10.4309/LDOM8890
Xiao LY, Henderson LL and Newall P "What are the Odds? Lower Compliance with Western Loot Box Probability Disclosure Industry Self-Regulation than Chinese Legal Regulation" 2021 SSRN Electronic Journal 1-62 DOI: https://doi.org/10.2139/ssrn.3934941
Xiao LY et al "Regulating Gambling‑Like Video Game Loot Boxes: A Public Health Framework Comparing Industry Self‑Regulation, Existing National Legal Approaches, and Other Potential Approaches" 2022 Current Addiction Reports 163-178 DOI: https://doi.org/10.1007/s40429-022-00424-9
Xiao LY, Fraser TC and Newall PWS "Opening Pandora's Loot Box: Weak Links between Gambling and Loot Box Expenditure in China, and Player Opinions on Probability Disclosures and Pity‑Timers" 2022 J Gambl Stud 1-24 DOI: https://doi.org/10.31234/osf.io/837dv
Yin M and Xiao R "The Reward for Luck: Understanding the Effect of Random Reward Mechanisms in Video Games on Player Experience" in Association for Computing Workshop, CHI Conference on Human Factors in Computing Systems (30 April – 6 May 2022 New Orleans) 1-14 DOI: https://doi.org/10.1145/3491102.3517642
Yokomitsu K et al "Characteristics of Gamers who Purchase Loot Box: A Systematic Literature Review" 2021 Current Addiction Reports 481-493 DOI: https://doi.org/10.1007/s40429-021-00386-4
Zendle D "Problem Gamblers Spend Less Money when Loot Boxes are Removed from AaGame: A Before and After Study of Heroes of the Storm" 2019 PeerJ 1-14 DOI: https://doi.org/10.31234/osf.io/a3kp2
Zendle D "Beyond Loot Boxes: A Variety of Gambling-Like Practices in Video Games are Linked to Both Problem Gambling and Disordered Gaming" 2020 PeerJ 1-26 DOI: https://doi.org/10.7717/peerj.9466
Zendle, D "Response to Xiao et al: If Everything is a Loot Box, Nothing is" 2021 Addiction 2555-2556 DOI: https://doi.org/10.1111/add.15976
Zendle D and Bowden-Jones H "Loot Boxes and the Convergence of Video Games and Gambling" 2019 Lancet 724-725 DOI: https://doi.org/10.1016/S2215-0366(19)30285-8
Zendle D and Cairns P "Video Game Loot Boxes are Linked to Problem Gambling: Results of a Large-Scale Survey" 2018 Plos ONE 1-12 DOI: https://doi.org/10.31234/osf.io/7ntjk
Zendle D and Cairns P "Loot Boxes are Again Linked To Problem Gambling: Results of a Replication Study" 2019 Plos ONE 1-13 DOI: https://doi.org/10.1371/journal.pone.0206767
Zendle D, Meyer R and Ballou N "The Changing Face of Desktop Video Game Monetisation: An Exploration of Exposure to Loot Boxes, Pay to Win, and Cosmetic Micro Transactions in the Most-Played Steam Games of 2010-2019" 2020 Plos ONE 1-13 DOI: https://doi.org/10.31234/osf.io/u35kt
Zendle D, Meyer R and Over H "Adolescents and Loot Boxes: Links with Problem Gambling and Motivations for Purchase" 2019 RSOS 1-18 DOI: https://doi.org/10.31234/osf.io/wdc2u
Zendle D et al "The Prevalence of Loot Boxes in Mobile and Desktop Games" 2020 Addiction 1768-1772 DOI: https://doi.org/10.1111/add.14973
Zendle D et al "Paying for Loot Boxes is Linked to Problem Gambling, Regardless of Specific Features like Cash-Out and Pay-To-Win" 2020 CHB 181-191 DOI: https://doi.org/10.1016/j.chb.2019.07.003
Case law
Netherlands
Uitspraak 202005769/1/A3 (2022) Afdeling Bestuursrechtspraak Raad van State (9 March 2022)
South Africa
AK Entertainment CC v Minister of Justice 1994 SA 736 (E); 1995 1 SA 783 (EC)
AK Entertainment CC v Minister of Justice and Minister of Law and Order 1994 1 SACR 362 (E)
Astraton Investments CC v Premier of KwaZulu-Natal (NPD) (unreported) case number 2795/00 of 2 October 2000
Casino Enterprises (Pty) Ltd v Gauteng Gambling Board 2011 6 SA 614 (SCA)
Murray v National Consumer Commission NCT/4570/2012/101(1)(P) [2012] ZANCT 17 (30 July 2012)
Print Media South Africa v Minister of Home Affairs 2012 6 SA 443 (CC)
S v Makwanyane 1995 3 SA 391 (CC)
S v Ramos 2005 2 SACR 459 (C)
Van Wyk v Lottoland South Africa (Pty) Ltd) ARB Ruling 2236 of 1 November 2022
Legislation
The Netherlands
Wet op de Kansspelen (Wet van 10 december 1964, Stb1964, 483)
Japan
Act Against Unjustifiable Premiums or Unexpected Benefits and Misleading Representations Act 134 of 1962
South Africa
Constitution of the Republic of South Africa, 1996
Consumer Protection Act 68 of 2008
Eastern Cape Gambling and Betting Act 5 of 1997
Electronic Communications and Transactions Act 25 of 2002
Films and Publications Act 65 of 1996
Free State Gambling, Liquor and Tourism Act 6 of 2010
Gauteng Gambling Act 4 of 1995
KwaZulu-Natal Gambling Act 10 of 1996
Limpopo Gambling Act 3 of 2013
Lotteries Act 57 of 1997
Mpumalanga Economic Regulator Act 2 of 2017
National Gambling Act 7 of 2004
National Gambling Act 33 of 1996
National Gambling Amendment Act 10 of 2008
North-West Gambling Act 2 of 2001
Northern Cape Gambling Act 3 of 2008
Western Cape Gambling and Racing Act 4 of 1996
South Korea
Youth Protection Revision Act 11048 of 2011
Government publications
South Africa
GN R1514 in GG 19503 of 20 November 1998
GN R348 in GG 19848 of 15 March 1999
GN 83 in GG 36123 of 8 February 2013
GN 1174 in GG 43872 of 6 November 2020
GN 2218 in GG 46649 of 1 July 2022
GN R2432 in GG 46839 of 2 September 2022
GN 2682 in GG 47373 of 28 October 2022
International instruments
Convention on the Rights of the Child (1989)
General Comment 25 on Children's Rights in Relation to the Digital Environment UN Doc CRC/C/GC/25 (2021)
Internet sources
Australian Classification date unknown Australian Classification – Search Title: Babylon's Fall https://www.classification.gov.au/search/title?search=Babylon%27s+fall&sort_by=search_api_relevance accessed 2 March 2023
Australian Classification date unknown Latest Classification Decisions https://www.classification.gov.au/classification-ratings/latest-classification-decisions?f%5B0%5D=latest-decision-category%3AC accessed 4 March 2023
Australian Government 2019 Response Senate Environment and Communications References Committee Report: Gaming Micro-Transactions for Chance-Based Items https://www.aph.gov.au/
Parliamentary_Business/Committees /Senate/Environment_and_Communications/Gamingmicro-transactions/ Government_Response accessed 2 February 2023
British Board of Film Classification 2019 What is Classification? https://www.bbfc.co.uk/about-classification/classification-guidelines accessed 2 March 2023
Belgium Gaming Commission 2018 Research Report on Loot Boxes https://gamingcommission.be/sites/default/files/2021-08/onderzoeksrapport-loot-boxen-Engels-publicatie.pdf accessed 28 February 2023
Danish Gambling Authority 2017 Statement about Loot Boxes/Loot Crates https://www.spillemyndigheden.dk/en/news/statement-about-loot-boxes-loot-crates accessed 2 February 2023
Danish Gambling Authority 2019 Danish Gambling Authority has 25 Illegal Gambling Websites Blocked https://www.spillemyndigheden.dk/en/news/danish-gambling-authority-has-25-illegal-gambling-websites-locked#:~:text=On%20March%2025%2C%202019%2C%20City, block%2025%20illegal%20gambling%20websites accessed 2 February 2023
Danish Gambling Authority 2021 Skin Betting and Loot Boxes – Video Gaming or Gambling? https://www.spillemyndigheden.dk/en/skin-betting-and-loot-boxes-video-gaming-or-gambling#-skin-betting-and-loot-boxes-video-gaming-or-gambling?- accessed 2 February 2023
Dos Santos S 2019 Loot Box System: Is it Gambling? https://www.itweb.co.za/content/Pero37ZgzdEMQb6m accessed 2 February 2023
European Games Developer Federation 2020 There is No Single Loot Box Model https://www.egdf.eu/documentation/7-balanced-protection-of-vulnerable-players/consumer-protection/lootboxes/ accessed 2 February 2023
Esports News UK 2019 Countries that Have Banned the New GTA Casino and Why https://esports-news.co.uk/2019/08/26/countries-that-have-banned-the-new-gta-casino-and-why/ accessed 2 March 2023
Film and Publication Board date unknown Outreach and Public Education https://www.fpb.org.za/what-we-do/outreach-public-education-2/ accessed 2 March 2023
Film and Publication Board 2022 Classification Decisions https://www.fpb.org.za/classification-decisions/ accessed 4 March 2022.
Frascarelli V 2021 Brazilian Justice Opens Process to Ban Loot Boxes https://archive.esportsobserver.com/brazilian-justice-loot-boxes/ accessed 2 February 2023
Garou 2019 Konami Removes MyClub-Coin Microtransactions from Pro Evolution Soccer 2019 in Belgium https://www.resetera.com/threads/konami-removes-myclub-coin-microtransactions-from-pro-evolution-soccer-2019-in-belgium.99210/ accessed 6 March 2023
Games Industry Africa date unknown About https://gamesindustryafrica.com/about/ accessed 2 March 2023
Gambling Regulators European Forum Declaration of Gambling Regulators on their Concerns Related to the Blurring of Lines Between Gambling and Gaming https://www.spillemyndigheden.dk/uploads/2018-11/Declaration%20of%20gambling%20regulators%20on%20their%20concerns%20related%20to%20the%20blurring%20of%20lines%20between%20gambling%20and%20gaming%20%28002%29.pdf accessed 2 February 2023
International Age Rating Coalition 2023 About IARC https://www.globalratings.com/about.aspx accessed 2 March 2023
Interactive Entertainment South Africa date unknown Comment on the Films and Publications Amendment Bill [B37-2015] https://pmg.org.za/files/160830iesa.pptx accessed 2 February 2023
International Game Developers Association2019 IGDA Presents to FTC about Loot Boxes and ESA Adopts IGDA Recommendations https://igda.org/news-archive/igda-presents-to-ftc-about-loot-boxes-and-esa-adopts-igda-recommendations/ accessed 2 February 2023
Interactive Games and Entertainment Association date unknown Parental Controls and Classification https://igea.net/useful-links/parental-controls accessed 2 February 2023
Interactive Games and Entertainment Association 2019 Statement on the Australian Government's Response to the Senate Environment and Communications References Committee Report on Gaming Micro-Transactions for Chance-Cased Items (Loot Boxes) https://igea.net/2019/03/igea-statement-on-the-australian-governments-response-to-the-senate-environment-and-communications-references-committee-report-on-gaming-microtransactions-for-chance-based-items-loot-boxes/ accessed 2 February 2023
Interactive Games and Entertainment Association 2021 Policy Brief. De-Mystifying In-Game Spending and Loot Boxes https://igea.net/wp-content/uploads/2021/06/IGEA-Policy-Briefs-Promoting-a-safe-and-responsible-industry-1.5.pdf accessed 2 February 2023
Kersley A 2021 Loot Boxes are Dead. What Comes Next Will Be Worse https://www.wired.co.uk/article/loot-boxes-new-gambling accessed 2 February 2023
McNulty T 2021 Games with Loot Boxes to be Officially Banned from Minors in Germany https://screenrant.com/loot-boxes-banned-games-minors-germany/ accessed 2 February 2023
New Zealand Government Classification Office 2023 Classification Labels https://www.classificationoffice.govt.nz/classification-info/classification-labels/ accessed 2 March 2023
Pan European Game Information date unknown What Do Labels Mean? https://pegi.info/what-do-the-labels-mean accessed 2 February 2023
Powers S 2021 South African Gamers Still Can't Access the GTA Online Diamond Casino https://www.vgr.com/south-african-gamers-still-cant-access-the-gta-online-diamond-casino/ accessed 2 February 2023
PricewaterhouseCoopers 2022 Africa Entertainment and Media Outlook: 2022-2026 https://www.pwc.co.za/en/assets/pdf/entertainment-and-media-outlook-2022-26.pdf accessed 2 February 2023
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Vance PE 2019 What Parents Need to Know About Loot Boxes (and Other In-Game Purchases) https://www.esrb.org/blog/what-parents-need-to-know-about-loot-boxes-and-other-in-game-purchases/ accessed 3 March 2023
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Copyright (c) 2023 Mr Eduard van der Westhuizen, Marita Carnelley
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