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 thirdparty 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.