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Some might recall searching for “pirate treasure” in their youth, hoping to come across an abandoned gold mine brimming with wealth, or even finding a path to candy land. Some who are older search for the golden city of El Dorado, the Fountain of Youth, or the Knights Templar treasure on Oak Island. But online, for those playing video games, “loot boxes” are the sought treasure.
Loot boxes are a virtual item that may be found, or purchased, within some video games. They result in a player receiving a fairly random assortment of items that could include armor, weapons, a cosmetic item to customize a player’s “character” in the game, or other similar treasures. So, in other words, a loot box is a virtual treasure chest filled with randomized virtual loot for a person’s virtual character. But these in-game bits of fun and make believe are under attack, by the same sort of people who likely oppose an un-regulated and un-taxed kid’s lemonade stand.
Some state legislators have argued that loot boxes are corrupting and even introduced legislation to restrict them as they would restrict those who stand in a casino pulling the arm of a slot machine, under the mistaken impression that somehow loot boxes were gambling. In Hawaii, legislation has been proposed that would disallow all retailers, brick and mortar as well as online, from selling games to anyone under twenty-one years old if the game includes loot boxes. Other legislation there would require video game companies to publicly disclose the odds of obtaining a vorpal blade or perhaps the “Road Hog” skin in Overwatch in a loot box. And just to make sure government can gain full regulatory power, the legislation would also give the state Department of Commerce the power to audit the game code to confirm the odds.
Legislators in the state of Washington were a bit more forthright in making clear that the real goal is merely to regulate video games. The author of the bill that would require the state gambling commission to examine loot boxes says, “What the bill says is, ‘Industry, state: sit down to figure out the best way to regulate this.’” In Indiana, legislation was introduced that pre-judged the outcome, requiring an examination of whether loot boxes were a form of “predatory gambling.” Other states to consider the issue have been California, Minnesota and New York.
So why would any state legislature be led to believe that a fun addition to a game that is not necessary for play of the game would be gambling? Hard to say, especially as loot boxes fail the three-part federal definition of gambling. To be considered gambling something of value must be staked for a chance to win something of value. For example, loot boxes return no prize as nothing of value in the real world is given, and because of the limitations of terms of service in the games, they cannot be converted to any real-world value. So, to the extent anyone finds the contents of a loot box valuable in the game, it is of value in a make-believe game, and therefore has pretend value.
Government has a tendency to keep growing, to expand into areas never considered as a place for regulation or taxation. Or as in this case, trying to define new activities to fit into existing regulatory models. Fueled by ignorance, attempts to regulate games is akin to legislatures wanting to bring expanded government to the land of make believe.
[Originally Published at ALEC]