U.S. Senator Calls on ESRB to Review Ratings Process in Light of Loot Boxes

The request comes with a threat of FTC involvement

U.S. Senator Calls on ESRB to Review Ratings Process in Light of Loot Boxes

A United States Senator is calling on the Entertainment Software Ratings Board to review the ratings process as it relates to loot boxes, examine the marketing of loot boxes to children and develop best practices for developers around the toxic form of microtransactions. The Senator also asked the board to conduct a study that further delves into the reach and impact of loot boxes in games.

The letter from Senator Maggie Hassan (D-NH) to ESRB president Patricia Vance comes the same day that Senator Hassan brought up the issues of video game addiction and loot boxes during a Senate Commerce, Science and Transportation Committee hearing. The committee has oversight of the Federal Trade Commission.

Senator Hassan asked four FTC nominees if they belive “that children being addicted to gaming - and activities like loot boxes that might make them more susceptible to addiction - is a problem that merits attention?” and if the FTC would be willing to look at loot boxes as an issue independently, depending on the ESRB's response to the senator.

Specifically, Hassan says she is talking about in-game microtransactions that lead to surprise winnings, which she says in many cases are being marketed to children. She also pointed out that last month the World Health Organization's call to recognize gaming disorder as a diagnosable disorder. "We should be doing all that we can to protect our children and to inform parents about their options when it comes to these types of games," she says.

All four nominees agreed this is an issue they will address if confirmed.

An ESRB spokesperson confirmed that the board received the letter from Hassan adding that they "appreciate her confidence in and support of the ESRB rating system.

"For more than two decades we have earned the trust of parents around the country by helping them make informed decisions about the games their children play. As the industry evolves, so does our rating system, and we will continue to make enhancements to ensure parents continue to be well-informed. We will also continue to provide information about additional tools, including parental control guides, that help parents set spending and time limits and block potentially inappropriate games based on the ESRB-assigned age rating."

You can read the full letter to Vance below and watch Senator Hassan's questions in the video above.

Patricia Vance
Entertainment Software Ratings Board

Dear Ms. Vance:
I write to today regarding an important gaming issue that was recently brought to my attention by a constituent.

The Entertainment Software Ratings Board (ESRB) has an important mission in both providing parents with the necessary information to make decisions about the suitability of games, and their content, for children, as well as ensuring that the industry is following responsible marketing practices.

The ESRB rating system is of great value to parents across the country, empowering parents to make informed decisions on behalf of their children. As technology advances, ESRB must work to keep pace with new gaming trends, including the in-game micro-transactions and predatory gaming tactics, particularly as they are deployed on minors.

The prevalence of in-game micro-transactions, often referred to as ‘loot boxes,’ raises several concerns surrounding the use of psychological principles and enticing mechanics that closely mirror those often found in casinos and games of chance. The potential for harm is real. Recently the World Health Organization classified “gaming disorder” as a unique condition in its recent draft revision of the 11th International Classification of Diseases. While there is robust debate over whether loot boxes should be considered gambling, the fact that they are both expensive habits and use similar psychological principles suggest loot boxes should be treated with extra scrutiny. At minimum, the rating system should denote when loot boxes are utilized in physical copies of electronic games.

To that end, I respectfully urge the ESRB to review the completeness of the board’s ratings process and policies as they relate to loot boxes, and to take into account the potential harm these types of micro-transactions may have on children. I also urge the board to examine whether the design and marketing approach to loot boxes in games geared toward children is being conducted in an ethical and transparent way that adequately protects the developing minds of young children from predatory practices.

Further, I urge the ESRB to consider working with the relevant stakeholders – including parents – to collect and publish data on how developers are using loot boxes, how widespread their use is, and how much money players spend on them.

Finally, I ask that you develop best practices for developers, such as ethical design, tools for parents to disable these mechanisms, or making them less essential to core gameplay.

Earlier this week, four new bills were introduced in Hawaii to change the way video games with loot box mechanics are bought and sold in that state.

The first set of bills, House Bill 2727 and Senate Bill 3025, would require video game publishers to prominently label a game with loot boxes – similar to how the tobacco industry has to display the risks of smoking on cigarette packaging and advertising. According to the bill, a game's label will read: "Warning: contains in-game purchases and gambling-like mechanisms which may be harmful or addictive." Should the game be purchased online, the game's key art would need to also prominently display the same warning.

Additionally, should the bill pass, publishers will be prohibited from updating a game post-release to feature loot box mechanics.

The second set of bills, House Bill 2686 and Senate Bill 3024, go one step further, looking to prohibit the sales of games with loot boxes to anyone under the age of 21 – the current minimum age to gamble in the state. Should the bill pass, as detailed by the lawmakers: "It shall be unlawful for any retailer to sell to any person under twenty-one years of age a video game that contains a system of further purchasing that includes a randomized reward.

While the specter of government intervention into video games continues to threaten the game industry's long-fought independence from government oversight, the industry's major publishers and organizations all remain relatively quiet about any form of self-regulation when it comes to the use of microtransactions in video games. That could be in part because microtransactions represent such a large portion of the video game industry's income. Analysis group Superdata estimates that the transactions tied to free-to-play PC games accounted for $19 billion dollars of the industry's revenue in 2016, while traditional PC and console game sales only accounted for $8 billion.

Electronic Arts found itself at the heart of the controversy earlier last year when it released a beta for Star Wars Battlefront II that contained what players believed was an overly aggressive use of microtransactions. 

While the game sells as a full-priced retail title, it was originally set to have a microtransaction system that asked players to invest extra time or money to unlock major playable heroes. The outcry, which resulted in the most downvoted comment (by EA) in the history of Reddit, led the company to temporarily pull the microtransaction system on the eve of the game's launch. It also led to comments from both LucasFilm and Disney, seemingly condemning EA’s approach to microtransactions in the game.

At the time, EA said that microtransactions would "become available at a later date, only after we've made changes to the game." 

Also last year, Activision drew some heat after it came to light that it had investigated systems to help empower microtransaction purchases through matchmaking.

Update: We've added the ESRB's comment to this story.