By Carmen Palumbo, GW Law 2L
(Editor’s Note: The following appears in Esports and the Law, a periodical produced by Hackney Publications.)
Take-Two Interactive Software Inc., the parent company of 2K sports, is facing a class-action lawsuit over the sale of loot boxes in its high-grossing game NBA 2. An Illinois minor and her guardian filed the suit on January 11, 2022, seeking $5 million dollars in relief citing, “Defendant’s unfair, deceptive, and unlawful practices, including illegal gambling practices, deceive, mislead, and harm consumers.”[1]
The plaintiff is not alone in feeling deceived by the hidden microtransactions embedded in the game. Earlier this year California parents filed two separate lawsuits against Apple and Google for their role in promoting the use of loot boxes[2]. The parents asserted that loot boxes were a form of illegal gambling, and that Apple and Google should be held responsible for the part they played in promoting the sale to children. Apple was sued for working with app developers to publish games containing loot boxes in their app store. Apple’s role was driven by an incentive paid on a percentage of all in-game transactions. Google was sued for strategically marketing games containing loot boxes. They too were paid based on a percentage of all in-game transactions. The lawsuits ended in favor of both Apple and Google after the courts concluded that: “Loot Box prizes are not things of value under California gambling laws, and absent any case law holding to the contrary, the Court concludes that Loot Boxes are not illegal slot machines under California law.”[3]
The California parents, like the Illinois parents’ herein have similar goals in mind, to protect their children and pocketbooks from excessive in-game microtransactions. In this recent matter, the NBA 2K game costs $59.99, as a with endless microtransactions that allow the gamer to make additional in-game currency purchases which unlocks players, upgrades a player’s skill level, and allows access to unique clothing. Although players have a chance to earn this in-game currency as they master the game, achieving this skill level is difficult and time consuming. Thus, most players resort to using cash to access these special offerings. One such offer is the popular loot box. Loot boxes are mystery boxes of random clothing and skills[4]. The odds that an individual receives a “good” loot box are hidden, making the appeal or lure to buy the box, again and again, even more enticing[5].
Purchases of loot boxes are made through a credit card the player attaches upon installation of the game. This connection allows for purchases of in-game currency with just a few clicks. The suit asserts that this effortless process leaves minors, “psychologically distant” from the real-life implications of the purchase[6]. Furthermore, the purchases are non-refundable, arguably leaving the actions of minors, caught up in the game, irreversible. The suit argues that these unmonitored, in-game purchases leave the parent or owner of the credit card liable for hefty bills and negatively impact the disposition of the minor. Furthermore, the claim raises a comparison between the appeal of a loot box purchase, such as luck and reward and its similarities to gambling. In sum, the possibility of getting rare or lucrative game materials becomes a contest of its own, tempting minors to buy more loot boxes without a consideration for the real-life cost. Proving that NBA 2K stands to benefit from the deceit and temptation of minors is the crux of the case.
There are two common arguments gaming companies put forth in favor of loot boxes. First, they ‘enhance’ game play. They allow someone who is not as skilled as other players or who lacks the time required to master the game, to acquire them through purchases. Second, it’s a revenue source for game developers. According to many reports loot boxes will account for over 20 billion dollars in sales by 2025[7].
Although these defenses have protected the game publishers, to date, Belgium has decided to take the lead on this matter and protect their youth. In 2018, they ruled that loot boxes were analogous to gambling and would be banned from all games[8]. Following suit, the Netherlands ruled the same and forced all gaming manufacturers to remove all mechanics (like loot boxes) from the games. As for the U.S., in 2019, Senator Josh Hawley proposed a bill banning the sale of loot boxes to minors stating, “Social media and video games prey on user addiction, siphoning our kids’ attention from the real world and extracting profits from fostering compulsive habits”[9]. Furthermore, “…when kids play games designed for adults, they should be walled off from compulsive microtransactions. Game developers who knowingly exploit children should face legal consequences”.[10] Although this bill seemed to gain traction with both sides of congress and parents across the country, it has not passed the introductory stage. If the class action is won by the Illinois parent, it could pave the way for legislation against similar mechanisms in games to finally move forward.
[1] Cecilia D’Anastasio, Take-Two Faces Lawsuit Over Controversial ‘Loot Boxes’ in NBA 2K Bloomberg.com, https://www.bloomberg.com/news/articles/2022-03-03/take-two-faces-lawsuit-over-controversial-loot-boxes-in-nba-2k (last visited May 31, 2022).
[2] Recent rulings suggest defendant wins in loot box cases are common, appeals all pending, Wilson
SonsiniGoodrich & Rosati Professional Corporation Home Page – Palo Alto, Silicon Valley, San
Francisco, New York, Seattle, San Diego, Washington, D.C., Shanghai, Hong Kong, Brussels – Recent
Rulings Suggest Defendant Wins in Loot Box Cases Are Common, Appeals All Pending,
all-pending.html#6 (last visited Jun 4, 2022).
[3] Coffee v. Google LLC, No. 20-cv-03901-BLF, 2022 U.S. Dist. LEXIS 4791, at *40-41 (N.D. Cal. Jan. 10, 2022).
[4] Loot boxes linked to problem gambling in new research, BBC News (2021), https://www.bbc.com/news/technology-56614281 (last visited May 31, 2022).
[5] Loot boxes linked to problem gambling in new research, BBC News (2021), https://www.bbc.com/news/technology-56614281 (last visited May 31, 2022).
[6] Cecilia D’Anastasio, Take-Two Faces Lawsuit Over Controversial ‘Loot Boxes’ in NBA 2K Bloomberg.com, https://www.bloomberg.com/news/articles/2022-03-03/take-two-faces-lawsuit-over-controversial-loot-boxes-in-nba-2k (last visited May 31, 2022).
[7] Matt Gardner, The gaming industry’s Loot Box problem is about to get worse Forbes (2021), https://www.forbes.com/sites/mattgardner1/2021/03/11/the-gaming-industrys-loot-box-problem-is-going-to-get-worse/?sh=68aa5ff94425 (last visited May 31, 2022).
[8] Cecilia D’Anastasio, Take-Two Faces Lawsuit Over Controversial ‘Loot Boxes’ in NBA 2K Bloomberg.com, https://www.bloomberg.com/news/articles/2022-03-03/take-two-faces-lawsuit-over-controversial-loot-boxes-in-nba-2k (last visited May 31, 2022).
[9]Senator Hawley to introduce legislation banning manipulative video game features aimed at children, Senator Josh Hawley (2019), https://www.hawley.senate.gov/senator-hawley-introduce-legislation-banning-manipulative-video-game-features-aimed-children#:~:text=Senator%20Josh%20Hawley%2C%20a%20fierce,by%20the%20video%20game%20industry. (last visited May 31, 2022).
[10] Senator Hawley to introduce legislation banning manipulative video game features aimed at children, Senator Josh Hawley (2019), https://www.hawley.senate.gov/senator-hawley-introduce-legislation-banning-manipulative-video-game-features-aimed-children#:~:text=Senator%20Josh%20Hawley%2C%20a%20fierce,by%20the%20video%20game%20industry. (last visited May 31, 2022).
