A motion in Germany wants loot boxes in video games banned

The ruling coalition in Germany’s smallest state, Bremen, is pushing for a nationwide ban on loot boxes in video games, expressing concerns about potential addiction among children. Should this become the norm? Experts disagree on this controversial topic.

The governing coalition of three parties in Bremen, the SPD (Social Democratic Party), the Greens, and the Left, agreed on a resolution calling for a broader ban on loot boxes, social casino games, and even the livestreaming of games featuring loot boxes.

A loot box is a random assortment of virtual items that can be purchased in-game. Its contents, such as skins, weapons, emotes, or others, vary in rarity and are determined by chance. Players do not know what they will receive before making a purchase, resembling gambling.

Bremen’s Parliament is urging a ban on game mechanics in computer and video games that represent paid virtual containers or packages, so-called loot boxes or packs, awarding in-game items randomly. According to the motion, mechanics similar to a Wheel of Fortune or slot machine should also be banned.

The proposal also includes obligating game developers to disclose probabilities for the distribution of randomly generated items after game events, such as winning a round or reaching a certain milestone.

The proposal also includes banning virtual paid currencies within video games designed exclusively for acquiring additional in-game content that “cannot be exchanged for real currency.”

Streams of games that do not comply with the proposed regulation could not be accessed in Germany.

“This model, in the 2000s, led many, especially young people, into addictive behavior through this gambling-like principle. Even adults developed gambling dependencies in pursuit of the best cards, incurring significant financial losses,” the urgent motion reads.

The opposing party, CDU, has advocated for a more nuanced approach, calling for stricter regulations rather than outright bans, Leon Y. Xiao, PhD Fellow at IT University of Copenhagen, shared on Mastodon.

“Computer and video games should be a source of joy and entertainment, not a backdoor form of gambling or an opaque financial trap. Especially concerning children and teenagers, effective protective measures are necessary to shield them from potential negative impacts,” the rejected opposition proposal reads.

Experts divided into two camps

Kirk Sigmon, a US-based lawyer specializing in, among other things, video game law, argues that a well-intentioned idea is generally a bad idea for a law. He wouldn’t agree to introducing wider bans on lootboxes.

“There are a lot of reasons to dislike loot boxes – notably, they're often little more than an indirect form of gambling that trick gamers into spending large sums of money on ridiculously small chances at non-tangible in-game awards. With that said, depending on how the concept of a loot box is defined, it could easily be circumvented (or, worse, ban totally innocent gameplay mechanics),” he told Cybernews.

Sigmon noted that this approach also singles out one form of gambling – loot boxes – while not banning other forms of betting, e.g., on sports. Instead of bans, Sigmon would call for smarter, more nuanced approaches

“For example, many commentators have instead advocated for age limits (e.g., you can't buy loot boxes unless you're over 18), disclosure requirements (e.g., requiring that games disclose the odds of winning desired items), and the like. All of those are far better options than a blanket ban. This nuanced approach would also allow regulators to target what they really care about (e.g., children gambling, people being duped into bad odds),” the attorney concluded.

Meanwhile, Jonathan Rosenfeld, Founder of Rosenfeld Injury Lawyers, shared the opposite view.

“As someone deeply committed to advocating for the most vulnerable members of society, I wholeheartedly support the Bremen Senate's proposal to ban loot boxes in video games. These digital features often prey on the vulnerabilities of young players and those prone to addiction. They tantalize with uncertain rewards, leading to potentially harmful behaviors and financial strain,” Rosenfeld said.

He believes that banning loot boxes would help protect affected individuals from the negative impacts associated with gambling-like practices. Minors are particularly susceptible to loot boxes' allure, and eliminating them would create a safer gaming environment.

“Loot boxes aren't just harmless in-game extras, they share troubling similarities with traditional gambling. This poses serious risks to players' financial and mental well-being. As advocates for fairness and justice, it's crucial that we confront these concerns head-on. Banning loot boxes is a proactive measure to mitigate the dangers of addiction and financial hardship,” Rosenfeld continued.

Jon Morgan, CEO of Venture Smarter, thinks that it’s crucial to strike a balance between consumer protection and fostering a vibrant gaming industry

I understand the importance of promoting responsible gaming and protecting consumers, especially considering the diverse age groups engaging in video games. However, an outright ban might not be the silver bullet. The gaming industry is a significant contributor to the economy and a hub for innovation. Instead of a blanket ban, I'd advocate for a comprehensive regulatory framework that ensures transparency, age-appropriate access, and responsible monetization practices,” Morgan concluded.

He believes that there may be solutions that safeguard consumers without stifling creativity in the gaming sector.

According to Xiao, no country has banned loot boxes so far. Loot boxes are banned in Belgium by implication because of a very widely drafted pre-existing gambling law. However, there has been no enforcement.

“The Netherlands’ gambling regulator only took action against certain types of loot boxes, and that enforcement action has since been deemed to be illegal by the court,” Xiao explained.

Xiao wouldn’t expect that the motion in Germany will come into force any time soon.