Loot-boxes as a regulatory object of the German Interstate Treaty on Gambling?

By Robert Schippel LL.M., Senior Associate at Hambach & Hambach law firm

Loot boxes (this means virtual boxes) are like virtual items popular within online games. The background to the additional purchase of virtual items is the desire of many players to acquire equipment or skills and save time with it.

However, in contrast to other virtual items, the acquisition of loot-boxes is moved in the vicinity of the gambling law, due to two characteristics: first, an element of chance is assumed, because only by opening the virtual box a player finds out which virtual item he has just purchased. Second, an element of gambling is presumed, because the acquisition of individual outstanding virtual goods (through the acquisition of loot-boxes) is dependent on appropriate probabilities.

Therefore loot-boxes have no appreciation with games of chance and gambling law, because of the following:

  • In the first place it is to be determined that loot-boxes cannot fulfill the first condition for a game of chance, because the prospective asset (the box with its virtual item) is not a prize with a (real world) value.
  • Because of sales (of virtual items or in-game currency) with real-world currency (as part of real money trading) there can be a stake (as a part of a game of chance), especially when the used real-world currency is more than 0,50 EUR or due to multiple missions a multiple of this amount results. But this is the only possible fulfilled condition for loot-boxes as games of chance.
  • Games of chance are characterised by the fact that there is a hope to receive an equal or higher quality performance in return. It is customary that loot-boxes contain at least one virtual item. But as long as a commitment is made, according to which which one item is always included in the virtual box, the condition of the complete loss of the stake is not present.
  • If there is at least one virtual item included, there is also no coincidence, which means that the last condition for a qualification as a game of chance is missing.

Due to the aforementioned arguments loot-boxes cannot be a game of chance. However, even though to date mostly reasons speaking against the applicability of gambling law are visible, there are still voices, who want to attain virtual contents by means of loot-boxes as gambling due to the probabilities. But such chances of winning appear at the second stage of a gambling procedure, after the previous first stage, namely the clarification of the question whether there is a game of chance at all. Therefore, these voices pass the discussion.

Regarding these arguments loot-boxes cannot be a regulatory object of the German gambling regulation. But this depends on a case-by-case analysis of the design of every individual online game.

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