Pandora's Loot Box
90 George Washington Law Review 376 (2022)
St. John's Legal Studies Research Paper No. 20-0015
70 Pages Posted: 23 Nov 2020 Last revised: 13 May 2024
Date Written: November 20, 2020
Abstract
The emerging trend of loot boxes in video game platforms continues to expand the shifting boundaries between the real and virtual world and presents unique insights into the impact each world should have on the other. Borrowing their design from the gambling industry, loot boxes operate as a hybrid between slot machines and trading cards. A consumer pays real-world money to buy a virtual box without knowing its contents. Upon opening the box, the consumer receives a virtual good that may be of great value, but more commonly is of little or no value.
This Article contributes a novel theory of virtual valuation that reframes how we should think about loot boxes, but also more generally about the influence that virtual goods have in the real world. Scholars have presented differing views regarding the ownership, sale, and taxation of virtual goods, but have always relied upon virtual goods’ real-world value to determine their real-world significance. This Article rejects this dominant value construct by tailoring the economic principal of perceived value for the virtual world. By valuing a virtual good based on the perceived benefit it can bring in the virtual world—irrespective of any real-world value—it becomes clear that consumers are driven to gamble for virtual goods in loot boxes based on the potential prizes’ perceived value. Using this new framework, this Article argues that loot boxes should be regulated similarly to the gambling industry they mimic. After considering the policy ramifications of loot box regulation, this Article concludes by exploring the contribution that perceived virtual value can have in the many legal contexts that also rely upon the value of virtual goods to determine real-world significance.
Keywords: cyberlaw, video games, gambling, regulation
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