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Anti-loot box bill could radically change how video games are sold

U.S. senators propose strict rules on pay-to-win microtransactions and loot boxes

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Senator Josh Hawley (R-Mo.), who introduced legislation targeting “pay-to-win” and “loot box” transactions.
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Charlie Hall is Polygon’s tabletop editor. In 10-plus years as a journalist & photographer, he has covered simulation, strategy, and spacefaring games, as well as public policy.

Democratic and Republican senators can hardly agree on what to order for lunch, but as of Thursday they seem to agree that the video game industry requires additional government oversight. Proposed legislation could ban loot boxes and other kinds of microtransactions, and its co-sponsors include members from both major parties. The devil is in the details, of course, and the bill itself could have far reaching implications for the game industry.

The full text of the proposed bill is available online. Its intention is to “regulate certain pay-to-win microtransactions and sales of loot boxes.” In order to do so, it first has to define what those things are.

According to the proposed bill, a pay-to-win microtransaction means:

An add-on transaction to a interactive digital entertainment product that [...] eases a user’s progression through content otherwise available within the game without the purchase of such transaction; assists a user in accomplishing an achievement within the game that can otherwise be accomplished without the purchase of such transaction; assists a user in receiving an award associated with the game that is otherwise available in association with the game without the purchase of such transaction; or permits a user to continue to access content of the game that had previously been accessible to the user but has been made inaccessible after the expiration of a timer or a number of gameplay attempts; or with respect to an interactive digital entertainment product that, from the perspective of a reasonable user of the product, is a game featuring competition with other users, provides a user with a competitive advantage with respect to the game’s competitive aspects over users who do not make such a transaction.

The only exclusions listed in the bill are additional difficulty modes, cosmetic items, and downloadable expansions. So, if a company wanted to charge for a new game plus mode, they could do that. Also, the sale of skins in Fortnite and new content expansions for The Elder Scrolls Online would be perfectly acceptable.

But, these guidelines as written leave a lot open to interpretation. Would it call into question selling experience point boosters in games like Anthem, Destiny 2, and World of Tanks? What about the practice of selling access to characters in Mortal Kombat 11 and Apex Legends, and even new Champions in League of Legends? Do we get to the point where, somewhere in the future, senators are arguing whether or not a particular weapon or perk is overpowered and should not be for sale?

Loot boxes are somewhat more narrowly defined:

An add-on transaction [...] that in a randomized or partially randomized fashion unlocks a feature of the product; adds to or enhances the entertainment value of the product; or allows the user to make 1 or more additional add-on transactions that the user could not have made without making the first add-on transaction; and the content of which is unknown to the user until after the user has made the first add-on transaction.

So the loot boxes from Star Wars Battlefront 2, the ones which were so controversial that Electronic Arts voluntarily removed them from the game, would be straight out. But that language also calls into question the practice of selling randomized packs of cards in games like Hearthstone and Magic: The Gathering — Arena.

The wrinkle is that these prohibitions don’t apply to everyone, necessarily. The bill pokes at a soft spot in the industry’s underbelly: how it targets children.

The bill would specifically prohibit pay-to-win microtransactions and loot boxes “in minor-oriented games,” meaning games that are geared toward children under 18. That seems fair enough. But the proposed bill would go even further than that. It would also prohibit pay-to-win microtransactions and loot boxes in games “where the publisher or distributor has constructive knowledge that any users are under age 18.”

Constructive knowledge, as it turns out, is very different from actual knowledge, according to Georgetown Law professor Angela Campbell.

“Actual knowledge is a subjective test,” Campbell tells Polygon via email. “It asks whether the company in fact knew that minors were using the service. Constructive knowledge is an objective standard. It asks whether the operator knew or should have known that minors were using the service.”

Essentially, if children can get access and play a video game, then there is a real risk that this bill would force developers, publishers, and distributors to grapple with the fact that children are playing that video game. And it would allow the Federal Trade Commission, who would be chartered with enforcement on this bill, to force those companies to do the grappling on the public stage.

The FAQ document that was released alongside the proposed bill puts it quite plainly: “The onus should be on developers to deter child consumption of products that foster gambling and similarly compulsive purchasing behavior,” it says, “just as is true in other industries that restrict access to certain kinds of products and forms of entertainment to adult consumers.”

Applying the constructive knowledge test to video games has the real potential to throw up barriers between consumers and the games they want to play. But those barriers may need to be strengthened in order to verifiably keep children out.

“Constructive knowledge requires the operator to make reasonable inferences and at least in some cases, investigate,” Campbell continues. “For example, the operator of a social media service that says in its terms of service that it is only for use by persons over age 13, and yet anyone who uses the service can see that many young children use it to post videos of themselves, would have constructive knowledge that children were on the service. It probably would have actual knowledge as well, but actual knowledge is harder to prove.”

The Entertainment Software Association is understandably up in arms over this. When Polygon specifically asked about the concept of constructive knowledge, the ESA offered a previously prepared statement, attributed to CEO Stanley Pierre-Louis.

This legislation is flawed and riddled with inaccuracies. It does not reflect how video games work nor how our industry strives to deliver innovative and compelling entertainment experiences to our audiences. The impact of this bill would be far-reaching and ultimately prove harmful to the player experience, not to mention the more than 220,000 Americans employed by the video game industry. We encourage the bill’s co-sponsors to work with us to raise awareness about the tools and information in place that keep the control of video game play and in-game spending in parents’ hands rather than in the government’s.

The bill right now is just a proposal, but bipartisan support gives it momentum that few things in Washington, D.C. have at the moment. It casts a spotlight on the industry, and even discussing the details of the bill could have implications for how video game makers earn their money in the future. The industry may need to consider more strict age verification, which could potentially limit the audience for its games. Otherwise, both pay-to-win microtransactions and loot boxes may need to go.

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