Experts Call for Regulation of Real Money Games as Paid In-App Features Find New Niches, Demographics: In-app betting is seen more often in online and mobile games, industry reports suggest. The so-called “loot boxes” end up engaging players in a form of betting without any rules, limits or protection for minors. Global best practices suggest that the entire online gaming sector should be carefully regulated to mitigate risks and social costs.
Loot Boxes a Casual Form of Unregulated Gambling
In India, where half the nation has internet access, there are over 71 million children under 12 years of age using their parent’s devices. In such a context, media outlets have started noticing the way some video games tend to include real-money features without openly branding themselves as gambling. Legal experts and consumer protection groups have already sounded the alarm about the elusive nature and potential high social costs of closing an eye to in-game betting.
The online gaming industry is among the sectors enjoying robust growth over the past couple of years. Online gaming was valued at $21 billion globally pre-Covid and it kept growing at an estimated 22% rate throughout. It outpaced all other entertainment segments and became a stable presence in people’s daily routines and on their mobile devices.
Real-money games like rummy, poker and online baccarat have brought stable monetization, while casual, fantasy and multiplayer games raised the industry’s visibility among all demographics. India alone has over 400 million players, a third of whom play real-money games online. The desi market is mostly mobile-based (86%) and is expected to triple by 2025 from its current levels (around $2 billion).
Much of that growth in value has been attributed to the gradual introduction of in-app purchases and casual betting forms like loot boxes. This is an add-on content that players can download, achieve or simply buy. It may be bonus coins, clothes, weapons, vehicles and anything else that enhances gameplay, making the experience more engaging and satisfying.
These objects are typically hidden within the game or, when in plain sight, are closed within a container. By generating the random contents of the “loot box” the game sets up an uncertain reward. But when players pay real-world money for that reward, there is no other way of looking at their behavior than wagering or betting upon an unknown prize.
Felicia Wijkander, the Chief Editor at one of India’s biggest online casino comparison platforms, states in an editorial that loot boxes are a huge loophole from a legal and social perspective. While many of the top online casinos in the world need to pass strict licensing procedures, many of these real-money gambling features remain completely unregulated and easily available in some of the most popular online games.
These games are easily accessible by minors and anyone with a smartphone. They are also without spending limits or any other rules to protect consumers. And they are often based offshore, avoiding paying any taxes to the Indian treasury.
Mature Markets Show the Way
The above situation is not uncommon in many of the world’s better regulated online markets. As much as 40 percent of UK children open or purchase loot boxes. Young men do that more often, with young age and lower education both revealed as major factors in the propensity to wager on in-game features.
European countries have started addressing the issue in the past few years. Belgium was among the first jurisdictions to place loot boxes in its gambling regulation, back in 2018. Germany requires all in-app purchases and paid features to be categorized “18 and over”. The UK House of Lords promotes classifying loot boxes as games of chance, with laws still to be formally passed. Similar political and legislative procedures have been initiated in France, Sweden and Poland.
A larger public debate is definitely needed to address the matter. The implications are economic, social and India’s own gaming studios would welcome a stricter but clearer regulatory framework. Loot boxes must be treated for what they are but gambling should be regulated, taxed and confined to face age-restrictions, spending limits and a series of mature-market requirements.
