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Loot Boxes

Loot Boxes – any kind of award that is presented to a player for playing a video game, or any kind of award that may be purchased by a player using either real currency or virtual currency. The content of a loot box may comprise a single item, or multiple items.  The content of a loot box may be randomized or static.  Loot boxes may be obtained or purchased both inside of game (while playing) and outside of a game.  Loot boxes may sometime be referred to as “loot crates” or “prize crates”[1].  An example of a loot box within the game NBA 2K[2] is a pack of virtual basketball cards, where the pack may contain players, shoes, balls, and/or attribute boosts[3].  Loot boxes have been banned by some nations, including The Netherlands and Belgium, due to their association with gambling[4].

Loot boxes evolved from the concept of free ‘loot drops’ that were first introduced in games like Diablo in the late 1990s[5].  A Massively Multiplayer Online Role-Playing Game (MMORPG) called Zhengtou Online (or “ZT Online”) released in 2007 was arguably the first game to introduce the concept of loot boxes[6].  Loot boxes first started showing up in consoles games in 2008 with the release of FIFA 09, a soccer simulation that allowed players to buy, sell, trade and auction players represented by virtual player cards[7].

A public backlash to loot boxes hit an apex in 2017 with the release of the game Star Wars Battlefront II[8].  The criticism was that a player was required to purchase loot boxes to be successful at the game, a scheme known as ‘pay-to-win’[9].  In response to this public criticism, the publisher of Star Wars Battlefront II (Electronic Arts) disabled the ability of players to purchase loot boxes in the game; after the update, players could only earn loot boxes through gameplay[10].

Loot boxes have been the subject of civil litigation in the United States and elsewhere[11].  Many of the cases focus on the argument that loot boxes encourage gambling by minors.  One such case was Zanca, et al. v. Epic Games, Inc.  In Zanca[12], a class action lawsuit was filed against the publisher of the popular games Fortnite and Rocket League alleging deceptive trade practices.  The case quickly settled with Epic Games agreeing to establish a 78 Million Dollar settlement fund for class members.  To date, no United States court has held that loot boxes are illegal per se, or violate civil consumer protection laws.

Outside the United States, loot boxes have met with stronger opposition.  As already noted, The Netherlands and Belgium have banned loot boxes entirely.  Japan closely monitors loot box sales in connection with its consumer protection laws, and China has monthly spending limits for persons aged under 18 years old[13].  Australia requires labeling of all games including loot boxes, indicating to consumers that they including gambling content[14].  Brazil opened a government investigation into loot boxes in 2021, and is seriously considering banning them[15].  The European Union issued a report on loot boxes in 2020 after an investigation; while the EU found that loot boxes were potentially addictive, no regulations have been promulgated to date[16].  The House of Lords Gambling Committee of the United Kingdom also issued a report on loot boxes in 2020, recommending legal regulations[17].  On the other side of the fence, the Polish Ministry of Finance issued a statement in February 2019 that loot boxes are not akin to gambling under Polish Law[18].

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[1] https://en.wikipedia.org/wiki/Loot_box.

[2] See https://nba.2k.com/NBA 2K is published by Take-Two Interactive Software, Inc. and has existed since 2000, with each new version garnering the year in which the current National Basketball Association (NBA) season concludes.  NBA 2K24, for example, was released in September 2023.

[3] See “From Gachapon To Video Game DLC: A Brief History of Loot Boxes, Gambling and the Law,” Darius C. Gambino, Saul Ewing LLP, Sept. 28, 2022, pp. 3-9 (https://www.saul.com/insights/article/gachapon-video-game-dlc-brief-history-loot-boxes-gambling-and-law).

[4] Id. at pp. 18-20.

[5] Id. at pp. 1-2.

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[6] Id.; see also “It’s Not Just Loot Boxes: Predatory Monetization Is Everywhere,” Will Bedingfield, Wired, Jul. 28, 2022 (https://www.wired.com/story/loot-boxes-predatory-monetization-games).

[7] See FN 3 supra, pp. 2-3.

[8] The Star Wars Battlefront series is published by Electronic Arts; See FN 3 supra, pp. 8-9.

[9] Id. at pp. 3, 8, 9.

[10] Id.

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[11] Id. at pp. 21-29.

[12] Id. at pp. 25-27.

[13] Id. at p. 15.

[14] Id. at pp. 15-16.

[15] Id. at pp. 16-17.

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[16] Id. at p . 19.

[17] Id.

[18] Id.

Author

  • Darius C. Gambino

    Darius Gambino has over 20 years of experience helping clients protect their intellectual property in the United States and abroad. Clients in industries ranging from technology and manufacturing to consumer goods and professional services rely on Darius to represent them in high stakes patent, trademark and copyright litigation. Darius also assists clients with managing global patent and trademark portfolios, and counsels clients on enforcement strategies. He also represents clients in connection with intellectual property licensing, trade secret disputes, and corporate diligence investigations. Image “Lawyers with Game” logo Darius is the creator and host of the firm’s “Lawyers With Game” video series on YouTube, where he and others from the firm’s Video Gaming and Esports Group discuss current legal issues in the gaming and esports industries. Show less Darius’ patent practice focuses mainly on the electrical and mechanical engineering disciplines. He has worked in various fields including computer software and hardware, consumer goods, medical devices, semiconductor manufacturing, telecommunications, sensors, computer memories and conditional access technologies. Before earning his law degree, Darius was a patent examiner for the U.S. Patent and Trademark Office. Darius is a frequent speaker, and has written extensively, on the topics of design patents and trade dress. Darius is the author of “Trade Dress: Evolution, Strategy and Practice” (2015) from LexisNexis.

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