Loot boxes are in-game containers that contain one or more digital items that are unknown to the player in advance. They function as virtual “mystery boxes”,each offering a random set of rewards. This unpredictability and element of surprise make the mechanics of loot boxes similar to those of lotteries, which is one of the reasons they are often compared to gambling.
Players can access loot boxes in various ways. In some games, they are provided free of charge as part of progress or as rewards for completing in-game tasks. However, they are most often purchased with real money or in-game currency, which can also be bought with money or earned during the game. Sometimes, a special “key” must be purchased to open a loot box. This system encourages constant player engagement and creates a sustainable game economy.
The contents of loot boxes are divided into two main categories: decorative and functional items. Decorative items do not affect gameplay. These include skins, visual effects, or animations that change the appearance of a character or weapon. Functional items, on the other hand, provide a gameplay advantage, such as power-ups, new equipment, rare weapons, or special abilities that can influence the course of the game.
Loot boxes have become an integral part of the modern video game monetization system. They allow developers to generate revenue even from free projects, expanding the microtransaction model. Thanks to the element of chance and the possibility of obtaining rare items, loot boxes are often particularly attractive to players, making them an effective revenue tool for the industry. However, due to their random nature and similarity to gambling, they have become the subject of legal and ethical debates, attracting the attention of regulators around the world.
Are Loot Boxes Gambling?
Whether loot boxes are a form of gambling is a question that is actively debated and has attracted the attention of regulators in many countries. This is because the mechanics of loot boxes are very similar to traditional gambling.
In the classic sense, gambling includes three key elements:
If all three elements are present, loot boxes may be considered gambling in most jurisdictions. However, if one or more elements are missing — for example, items cannot be cashed out or sold — the legal classification may be different.
When is a loot box considered gambling
A loot box may be considered gambling in the following cases:
1.
There is the possibility of cashing out or exchanging.
If in-game items obtained from a loot box can be sold for real money or used in betting (as is the case with skins in CS: GO).
2.
The awarded items carry discernible economic value to winning.
If digital items in loot boxes have different market values and the user can receive both “cheap” and “expensive” gifts, there is an analogy with winning or losing.
3.
It functions as a lottery.
For example, if random components must be collected to obtain the desired item, as in Compu Gacha, which is banned in Japan.
4.
There is no control over the secondary market.
If items from loot boxes are freely traded on external platforms and participate in gambling activities (roulette, betting, etc.).
In such cases, loot boxes may be classified as gambling, which requires obtaining the appropriate license and complying with the requirements of the legislation in a particular jurisdiction. For example, in Belgium, the Netherlands, and some other countries, such mechanics have already been recognized as gambling.
When loot boxes are not considered gambling
In many countries (e.g., the Czech Republic, Poland, Finland, and France), loot boxes are not yet officially classified as gambling unless all three key characteristics are present.
Loot boxes are generally not considered gambling if:
All content is limited to use within the game and cannot be exchanged or sold for real money.
The value of the content is known in advance or is the same as the price of the loot box (e.g., when sold as a “random gift shop”).
There is no external market, and the entire economy is limited to the game ecosystem (e.g., FIFA packs or cosmetics that cannot be transferred to other players).
A legal analysis in the context of the legislation of the country where the product is sold is always necessary to assess a specific project.
Regulation of lootboxes as a form of gambling
In recent years, loot boxes have come under intense scrutiny from regulators around the world. In many jurisdictions, they are considered a potential form of gambling, especially when players spend real money without a guarantee of receiving the desired item. The main risks are related to the involvement of minors, the development of addictive behavior, and the lack of transparency in the mechanics of prize distribution. This has triggered a wave of legislative initiatives aimed at restricting or completely banning loot boxes or introducing a strict system of information disclosure.
Different countries have significantly different approaches to this issue. Regulators differ in their assessment of whether loot boxes fall under the definition of gambling and in their approach to the control of microtransactions. Most often, their analysis and decisions are based on the application of existing regulations governing the gambling industry.
Regulation of loot boxes in EU countries
In 2023, the European Parliament noted in its report that the EU has strict consumer protection laws that also apply to video games. However, to avoid fragmentation in the single market, member states need to harmonize their approaches. Particular attention should be paid to the protection of minors and children, as they are at increased risk.
The 2023 report essentially repeats the provisions of the 2020 report, calling for a unified approach to regulation. However, it does not contain any new legislative proposals for regulating loot boxes. This means that in 2025, game developers and publishers will still have to take into account individual rules on the use of loot boxes in each individual EU member state.
The Netherlands and Belgium have taken the toughest stance in the EU. In the Netherlands, loot boxes whose prizes have market value and can be sold outside the game are banned because they fall under local gambling laws. Belgium has gone even further, recognizing any loot boxes as a form of illegal gambling and securing the removal of such mechanics from popular games. Some companies, such as Nintendo, have even refused to distribute their products in the country.
In Germany, an amendment to the Jugendmedienschutz-Staatsvertrag (JMStV) has been in force since 2021, requiring games with loot boxes to be labeled as potentially harmful to children. France, Spain, and Austria have also initiated studies or discussions but have not yet introduced clear bans.
Legislative regulation of loot boxes in the UK
In the UK, loot boxes are not yet classified as gambling under the Gambling Act 2005, as their contents have no monetary value outside the game. However, the authorities are considering legislative changes. In 2022, the government recommended that the industry take self-regulatory measures, including restricting children’s access to loot boxes. The British Games Developers Association has developed a voluntary regulatory code, however, if self-regulation fails, legislative measures may be imposed.
How are loot boxes regulated in the US
In the US, a draft bill was introduced in 2019 to ban loot boxes and certain microtransactions in games intended for minors. In addition, attempts have been made at the state level in Hawaii, Washington, and Indiana to equate them with gambling. Although none of the relevant bills have been passed, and loot boxes are not recognized as gambling at the federal level, the ESRB considers them analogous to trading cards and labels them as “In-Game Purchases” / “Includes Random Items.” Many publishers, including EA and Activision, have also voluntarily introduced displays of the odds of obtaining items.
Regulation of loot boxes in other countries
Japan was one of the first countries to address the issue. Back in 2012, the authorities declared the “kompu-gacha” mechanic, in which players had to collect certain sets of random rewards to advance in the game, illegal. This was the first precedent for banning such practices.
In China, since 2017, mandatory disclosure of the probability of items appearing in loot boxes and restrictions on their purchase during the day have been introduced. These measures are aimed at increasing transparency and protecting players.
In Australia, the Senate recommended classifying games with loot boxes as age-restricted products.
In New Zealand, authorities have acknowledged that loot boxes have characteristics of gambling but are not yet regulated separately.
The table below shows the main legal positions and features of loot box regulation in several key jurisdictions:
| Country / Region | Legal status of loot boxes | Notes |
|---|
| EU countries (overview) | Loot boxes are viewed differently depending on the country; there is no single approach. | Regulation varies from strict prohibitions to partial or no regulation. |
| Belgium | Recognized as a form of gambling and prohibited without a license | One of the toughest stances; led to the removal of loot boxes from a bunch of video games |
| Netherlands | Qualifies as gambling if the content has monetary value |
|
| Austria | May be subject to gambling regulations depending on value and randomness | Assessed individually; enforcement is uneven |
| Germany | Not prohibited, but the presence of loot boxes is taken into account in age ratings | Part of the strategy for protecting minors |
| Poland | Loot boxes are not yet regulated as gambling | The authorities are monitoring the situation, and changes in legislation are possible in the future. |
| United Kingdom | Not yet regulated as gambling; self-regulation and parental control recommended |
|
| United States | No federal regulation; state-level lawsuits, ESRB labeling | The Federal Trade Commission has held discussions, but the legal status remains unclear. |
| China | Required disclosure of item drop rates and purchase restrictions | The main focus is on transparency and consumer protection. |
Thus, despite the lack of a unified international position, the regulation of loot boxes is gradually gaining momentum. Some countries are introducing bans, others are imposing transparency requirements, and still others are discussing legislative measures. Regulation in this area continues to evolve, and there is no unified approach yet, which requires constant monitoring of legislation and consultation with lawyers.
Is the business of using loot boxes legal?
The sale and purchase of loot boxes in games is not a direct violation of the law in most countries, provided that these elements remain part of the game itself and do not allow for the exchange of in-game items for real money or value. The main criterion for legality is the absence of signs of gambling, which include the probability of receiving an item worth more or less than the price of the loot box and the possibility of converting winnings into real money. If such signs are present, the project must obtain a gambling license, which requires compliance with a number of regulatory requirements.
The legal status of in-game items and skins in most jurisdictions also remains unclear and is regulated by license agreements between the developer and the player. However, in the secondary market, where skins are used as a means of exchange or payment, legal risks arise, especially if the platform allows them to be traded outside the game and used in gambling schemes. In such cases, law enforcement agencies and regulators may classify the activity as illegal gambling.
Thus, the legality of trading loot boxes and game items depends heavily on the specific implementation model and jurisdiction. To avoid legal problems, companies are advised to specify the value and content of loot boxes, prevent them from being exchanged for real money, and engage experts to assess the project’s compliance with legal requirements.
Why do loot boxes cause controversy?
Loot boxes are controversial primarily because of their similarity to gambling and their potential negative impact on players, especially young people. Their random nature essentially mimics slot machines, which creates a risk of gambling addiction. A lack of transparency — for example, when developers hide or distort the probability of obtaining valuable items — exacerbates concerns, as players cannot objectively assess their chances and risks.
In addition, opponents consider the sale of loot boxes to be a form of consumer exploitation. Developers often use psychological tricks and aggressive marketing to encourage purchases by misleading players about the odds of winning. The use of multiple virtual currencies and complex algorithms masks real money spending, while targeting minors raises additional ethical questions. These factors fuel criticism and calls for stricter regulation, especially from consumer protection organizations.
Finally, the controversy surrounding loot boxes is exacerbated by the lack of uniform and clear regulatory rules. While some countries and organizations view loot boxes through the prism of gambling, others propose using consumer protection regulations to regulate them. This shows that the debate surrounding loot boxes continues, and new legislative initiatives that will affect the future of this area may emerge in the coming years.
Conclusion
Loot boxes are a popular monetization feature in video games that raise many legal and ethical questions due to their similarity to gambling. Legal approaches to them vary significantly from country to country — in some places, they are equated with gambling with corresponding restrictions, while in others, loot boxes remain outside the scope of regulation.
Despite the lack of a unified international position, there has been a trend in recent years toward tighter controls and the introduction of transparency and child protection requirements. European countries demonstrate a wide range of approaches, from outright bans (e.g., Belgium and the Netherlands) to voluntary self-regulation (the United Kingdom).
It is essential for developers and publishers to carefully study local legislation and consult with experts to create legal and ethically correct monetization models that take into account the regulatory features of each jurisdiction. Gofaizen & Sherle specialists are always ready to assist you in this matter.