Class Actions Claim Apple, Google Facilitate Illegal Gambling Through In-Game ‘Loot Box’ Purchases [UPDATE]

Nearly identical lawsuits filed this week in California claim Apple, Inc. and Google LLC have knowingly allowed both adults and children to engage in illegal gambling through mobile games available on the App Store and Google Play.

More specifically, the lawsuits claim the defendants promote and generate revenue from customers’ in-app purchases of “loot boxes.” According to the cases, loot boxes—which are purchased using real money and offer the gamer a randomized chance of obtaining better weapons, player appearance (“skins”), or other in-game feature designed to enhance gameplay—operate as gambling devices that can create and reinforce addictive behaviors in players, particularly adolescents.

Loot boxes or loot crates “have all the hallmarks of a Las Vegas-style slot machine,” the lawsuits state, stressing that even though Apple and Google are not responsible for creating the games, both companies “profit[] handsomely” by marketing and selling the apps through their online app platforms, acting as agents for the developers, and taking a 30-percent cut of all the money spent by gamers.

What Are Loot Boxes?

Loot boxes, according to the suits, are in-app mechanisms that allow a gamer to purchase randomized virtual items. Typically, the best items, which can help a player advance in the game or enhance the game-playing experience, are the most difficult to obtain and the least likely to be received from the purchase of a loot box, the cases explain. Conversely, the suits say, most items obtained through loot boxes are “common” or undesirable because they are easy to obtain or because the player already has them.

In most cases, the suits explain, gamers must purchase loot boxes with real-world currency using a gift card or credit card on file with the player’s Apple or Google account. Minors can easily initiate and confirm a purchase without parental consent or knowledge, the cases add.

To further distance gamers from their use of real-world currency, many games require that players purchase virtual, in-game currency with “expensive-sounding” names such as gems or gold coins that can then be used to purchase loot boxes, the lawsuits say. Virtual currency, according to the complaints, is designed to disconnect players from the fact that they are spending real money and cause them to “lose contact with the real value” of what they’re buying.

Cases Claim Loot Boxes Rely on “Psychology of Gambling”

According to the cases, governments, regulators, and psychologists agree that loot boxes constitute gambling and reinforce addictive behavior, especially in children. The suits cite a paper titled “Predatory monetization schemes in video games (e.g. ‘loot boxes’) and internet gaming disorder,” in which professors Daniel King and Paul Delfabbro include the following description of loot boxes:

A loot box refers to an in‐game reward system that can be purchased repeatedly with real money to obtain a random selection of virtual items. The low probability of obtaining a desired item means that the player will have to purchase an indeterminate number of loot boxes to obtain the item. Loot boxes resemble gambling slot machines because they require no player skill and have a randomly determined outcome (i.e. prize).”

The lawsuits note that the mechanism of in-game loot boxes “relies heavily on the psychology of gambling,” with a build-up of anticipation, triumphant music, and bright lights and colors. Even after consistently receiving “disappointing” results, players maintain a belief that loot boxes will contain a desired item, the cases state, describing the experience as “a slot machine effect.”

The principle by which loot boxes manipulate the human mind, the suits say, is called “variable rate enforcement.” According to the complaints, “[i]t results in people quickly acquiring behaviors and repeating these behaviors frequently in hopes of receiving a reward.” The lawsuits explain that adolescents are especially vulnerable to this type of manipulation given they have low impulse control, are more inclined to risk-taking behaviors, are prone to addiction, and have little understanding of money and financial management. As the complaints put it:

Opening a Loot Box gives the player a rush; the moment of anticipation followed by release. The Loot Box mechanism has been proven to be effective on adults, and its effects are only intensified when used on minors who are more prone to engage in risk-taking behaviors, more prone to gambling addiction, and ‘are less equipped to critically appraise the value proposition of these schemes.’”

The cases stress that although Apple and Google are required to disclose the odds of winning a desirable item through a loot box, such disclosures are either not readily visible or are not understood by younger gamers. Moreover, the suits claim both Apple and Google are aware that the publication of the odds of winning is unlikely to deter slot machine users, much less the gamers using the defendants’ platforms.

According to the case, the odds of winning some of the best items are so low that a gamer may end up purchasing hundreds of loot boxes at a cost upward of $100 before obtaining such an item, and even then, “there is no guarantee.”

Examples of Loot Boxes

The two lawsuits detail the following examples of loot boxes within popular games:

The lawsuits claim that while many of the games on the defendants’ platforms are advertised as “free,” players are enticed to spend hundreds or even thousands of dollars on loot boxes. The cases cite one example of a married, middle-aged man who reported on Reddit that he spent $1,500 in one day to obtain a Final Fantasy Brave Exvius character. According to another report, FIFA maker EA Sports had apparently generated over $1 billion by the end of 2018 from its free-to-play mobile games, with 36 percent of that amount from FIFA.

As for Apple and Google, the lawsuits claim the tech giants have made “huge profits” from gamers’ loot box purchases, with each company relying on such for a “substantial” portion of its revenue.

Loot Boxes Violate Gambling Laws, Lawsuits Claim

The cases argue that loot boxes are a form of gambling and therefore violate California anti-gambling laws. Just in the past two years, several countries—including Belgium, the Netherlands, and Japan—have banned the use of loot boxes over gambling concerns, while others have opened investigations into the practice, the suits add. Domestically, lawmakers in Hawaii, Minnesota, and Washington have reportedly introduced legislation aiming to ban loot boxes in video games.

The lawsuits stress that both Apple and Google’s ratings of games containing loot boxes make no mention of either loot boxes or gambling, instead only noting that the game “offers in-app purchases.”

“Thus,” the cases state, “there is no notice – and no requirement of any notice by [Apple and Google] – to the parent or the child that a game contains Loot Boxes or other gambling mechanisms.”

Who Do the Lawsuits Look to Cover?

The cases look to cover anyone who paid to receive randomized virtual items within an app downloaded from either the Apple App Store or the Google Play store.

How Do I Join the Lawsuits?

At this time, there’s nothing you need to do to join these lawsuits. If either of the suits moves forward and settles, anyone affected should be able to claim whatever compensation the court deems just.

In the meantime, you can keep up with class action news by signing up for ClassAction.org’s newsletter here. 

The full complaints filed against Apple and Google can be read below.