What are “skins” and “loot boxes?”
Understanding loot box gambling requires an explanation of skins, a concept found in many multiplayer video games.
Many games contain “skins”, aesthetically different versions of in-game items. These are most common in online multiplayer games, as rare items can be seen by other people playing the game. They can be costumes for a character to wear, weaponry which has a particular visual style, or effects that follow a character such as patterns or colours. These “skins” vary in terms of appeal both between and within games, with some items being particularly appealing to young people, such as brightly coloured guns, unicorn costumes or golden frying pans.
Skins may be given to the player for completing a certain part of the game, or “unlocked” from loot boxes. Loot boxes, also known as loot crates, are items that result in a random chance of gaining a certain item from a range of available skins, with rare skins and items having low odds of being “contained” in the box. “Keys” for these loot boxes may be unlocked through play of the game, success, or commonly through purchase of keys with real currency. The items within them may be common, and have little real world value, or rare, with a high value (what we may consider a “win”). The purchase of loot box keys is not directly through real world currency in most cases, as real money must first be turned into in-game currency, and then further into keys for the boxes, before it can be used to open the box. Differences in currency values further obfuscate the true cost of the purchase.
Who is playing loot box games?
Many of those who play games with loot boxes are young people. The targeting of young people and children for in-app purchases and microtransactions is well-documented, and occurs in many games, particularly mobile games. Loot box or loot box-like mechanics occur in games which are particularly designed to appeal to children and young people, and which utilise popular characters and bright colours to do so. A notable example which is currently culturally relevant is Pokemon: Unite. In games which do not have particular appeal to children, there is often still a large teen or underage player base – for example, many of the people involved in the Counterstrike: Global Offensive community are underage – in one study, of 255 respondents, 46.2% of players said that they played CS:GO and were underage.  This, along with the ability to easily bypass age restrictions or a lack of age restrictions at all, means that many young people engage in loot box opening.
Dangers of loot box gambling
Many of the rarer items which may be acquired from loot boxes have high trade value, being sold on third-party trading sites for thousands of pounds. This kind of money may be especially appealing to a young person, as trading items online can be a rare source of income for a young person who may not be able to find work. Sometimes, in games such as FIFA, the unlockable items confer advantages to playing the game and are not simply cosmetic, offering another incentive to own more of them. This means that loot box opening is psychologically and operationally very similar to gambling, and has been considered as such in some of the literature surrounding it.
This gambling exposure has many worrying hallmarks and can have a devastating effect on players, particularly vulnerable youth players. Links have been found with gambling exposure as a youth, and gambling problems as an adult. The constant arousal associated with gambling activities leads participants in loot box gambling to require the same levels of stimulation more frequently, leading to a disordered and excessive pattern of use. Most video games analysed in one study showed most of the characteristics of gambling, and almost half of them fulfilled all criteria
In one study of gamers aged 18 and over,  there was a strong link between loot box spending and severity of their problem gambling. This link was stronger than other common risk factors for problem gambling, such as drug abuse. In another study of 618 gamers, two thirds of those who gambled had spent money on loot boxes in the past year, and that loot box purchasing was directly related to increased problem gaming and problem gambling. 
There is an active social network of peers which provides social incentive to gamble on loot boxes, an integration of social media channels, and the use of unrestricted purchase limits and microtransactions. Microtransactions are a particularly concerning area of gambling risk – as each purchase of a loot box is low-cost, it encourages more and more bets, and there is often no way to track how much a person has spent on loot boxes without going through several different purchase records. There are no options for self-exclusion for a player who is experiencing addiction to loot box gambling, and a player may spend far more than they are aware of.  Additionally, gamers who spend money on in-game purchases, spend more total money on games than those who do not. This is contrary to the idea that since many games which utilise loot boxes and microtransactions are free-to-play, there will be a balancing between the two factors. 
Legislation surrounding loot box gambling
Loot boxes lie in a grey area legally, as spending of real-world currency on the boxes is not technically “necessary” as keys can be obtained via play, and therefore the gambling is “simulated.” As the prizes are virtual, they are sometimes considered to have no value, despite the trading of items which occurs on third party sites. Another reason that loot boxes are not regulated is the assertion that no player makes a loss – they are guaranteed to contain one item, and it simply differs in rarity. However, according to studies which analysed Steam Marketplace purchases and sales of loot box items, around 93% of sales of items acquired from loot boxes recouped less than purchase price, and a rare few items accumulate immense value due to the demand. The most expensive item to ever sell in Team Fortress 2’s online trading platform, a Burning Flame Team Captain (hat), sold for approximately $14k. Players can cash out their items through third-party sites which facilitate conversion of these items, or profits from their sales, into real-world currency.
The market has gone and remains unregulated in many places. The growing gap between regulation of the digital space and the activities which occur in it is visible when we see politicians and legislators state that digital items do not hold real value. This not only poses risks to young people who are engaging in gambling activities for the first time, but presents people affected by gambling harm to a novel and unregulated system which closely approximates gambling.
However, there is an increased understanding of loot box gaming as something that can cause harm . in 2018, Belgium ruled that randomised loot boxes constituted illegal gambling, which means that several aspects of games are not available in the country. Some games, such as Fortnite, have removed their loot box aspect in all countries due to class-action lawsuits and campaigning to remove them; with Fortnite repaying in-store credit to anyone who had purchased their loot box-like mechanic and settling further cases with anyone who stated they had experienced harm.
We believe there is a need for further review of loot box practices and the way they are implemented in video games, especially those which may have particular appeal to children, such as Pokemon Unite. Responsible gambling practices should be implemented, such as displaying the chances for each item to be acquired individually, implementing self-exclusion strategies, and allowing gamers to check how much they have spent on their gambling.
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