Lawyers reject ban on loot boxes, but advocate for adjustments.

In February of this year, the National Association of Centers for the Defense of the Rights of Children and Adolescents (Anced) filed seven public civil actions against video game developers to request the suspension of sales of all products containing loot boxes. The Public Prosecutor's Office of the Federal District has already issued a favorable opinion on the prohibition of these mechanisms.

The concept is quite famous in the world of video games. Loot boxes are reward boxes inserted into games, which can be acquired through in-game resources, virtual currency, or even real money. They contain items that can be used by the player, but it's not possible to know exactly what they are.

In other words, the player is guaranteed to receive something, but only knows the details after buying and opening the loot boxes. Therefore, the reward can range from the rarest items available in the game to the most common items possible.

Initially, this type of feature was merely an optional element in games. But with the growth of the industry, loot boxes became increasingly used by developers, eventually dominating certain productions. The game Star Wars Battlefront II, released in 2017 by DICE, is considered the pinnacle of this phenomenon. Progression in the game depended entirely on the loot box system: the player could only advance if they received good items from the boxes, which didn't always happen.

From this, associations around the world began to question the validity of this mechanism and associate it with gambling. Now, this movement has reached Brazil. The class action lawsuits filed by Anced in the Children and Youth Court of the Federal District seek a total of R$ 19,5 billion in compensation for collective and individual moral damages. Even with a favorable ruling, prosecutor Luisa de Marillac Xavier dos Passos pointed out that the amount of R$ 1,5 billion in one of the lawsuits would be unrealistic.

Anced argues that loot boxes contribute to addiction or even personality disorders, especially in children and adolescents. But the legality of this concept involves a broad and complex legal debate.

Virtual lottery

João Pedro Ferraz Teixeira, a specialist in Law and Information Technology, points out similarities between the mechanics of loot boxes and gambling: “The prize to be received by the player is variable, both in terms of value and the quality of the item itself, which, in many cases, can also resemble the failure experienced in gambling, since there is a possibility that the prize will be significantly lower than the amount invested,” explains the lawyer, who is a partner at the firm COTS Advogados, specializing in Cyberlaw and Digital Business Law.

But João Vitor Gomes Corrêa, a lawyer specializing in civil and consumer law, believes that everything depends on how the company presents the concept of the loot box and proposes to sell it. He exemplifies this with the game Dota 2, from the developer Valve, in which the loot boxes appear on the screen with a casino roulette-like visual, practically presenting themselves as a game of chance. On the other hand, some games adopt a mechanic similar to a sticker album.

This last concept is used to support the view of Rodrigo Araujo, managing partner of the law firm Hoffmann Advogados, which specializes in Digital Law: "I don't consider loot boxes to violate children's rights any more than the system of selling sticker packets."

In the Brazilian legal system, all games that depend exclusively or mainly on luck are considered games of chance, according to the Law of Criminal Offenses. According to legal experts, this definition seems too broad to draw conclusions about loot boxes. Teixeira points out that this legislation was drafted in the 1940s, long before the invention of video games and the emergence of new forms of gambling.

“Although, in general terms, such a definition contributes to classifying loot boxes as games of chance, it is necessary that, as happens internationally, the matter be properly addressed by the legislator, in order to reflect the new reality in which we live, especially regarding the peculiarities of the virtual world,” Teixeira points out.

Corrêa believes the best approach is to guarantee consumer protection and then analyze whether, in limited cases, the boxes are truly sold as gambling. "Once transparency is guaranteed, so that a player can buy a loot box but also audit its numbers, it's possible to eliminate this gambling characteristic."

Pay to win

Attorney Felipe Bezerril, who works with games at the Vital Advocacia Digital law firm, proposes an evaluation based on the pay-to-win concept, which is used as justification for the ban. Many games that have abused the loot box mechanic have received this definition: "pay to win," meaning they require spending money on loot boxes for player progression.

According to Bezerril, for a game's loot box system to be considered pay-to-win, it needs to unfairly affect gameplay: "Some publishers don't use loot boxes that make a difference to the game mechanics, they only affect the visuals," he explains.

According to him, in massively multiplayer online games — so-called MMOs — loot boxes contain usable items that make characters stronger, which characterizes pay-to-win. On the other hand, in games like Counter-Strike, also distributed by Valve, and League of Legends, from Riot Games, the items in loot boxes serve only to embellish the characters and their equipment. In these cases, there is no pay-to-win.

Araujo agrees that pay-to-win game modes, specifically, can be equated to gambling, "since they directly influence the player's performance during the match, which can really stimulate interest in acquiring a larger quantity of loot boxes to gain a competitive advantage."

Production demand

According to Corrêa, many game developers argue that loot boxes are not gambling because their items remain within the games and cannot be withdrawn. However, in games like Counter-Strike, it has been possible to sell items online for some time now.

Due to dissatisfaction with the randomness of the mechanism and cases of bad faith in its commercialization, in Brazil the players themselves are calling for a ban on loot boxes. "Our consumer market completely rejects the presence of loot boxes in games," points out Corrêa.

According to the lawyer, the country is moving towards banning loot boxes, which he sees as negative. Corrêa points out that currently, despite high profits, games also have extremely high production costs, often exceeding US$300 million. "Loot boxes are also a way for companies to sustain themselves," he emphasizes.

Araujo goes further: "Often, loot boxes are the only way a particular game can sustain itself financially, since it is distributed for free." Unlike Corrêa, he believes in a decision favorable to the developers, based on recent moves to regulate gambling and betting in the country.

“This type of barrier, simply removing or suspending the sale of these items, will not end the sale itself, as it is the biggest source of revenue for companies. At most, they will leave the country, and the Brazilian market will be the loser, in terms of market outlook,” points out Bezerril.

He also advocates for a balance to curb excesses and demand transparency. According to the lawyer, setting a multi-billion dollar compensation would only "sweep the problem under the rug" and cause developers to stop investing in the Brazilian market, "without addressing the real problems arising from the exploitation of loot boxes."

Protection of minors

While the complete illegality of loot boxes is not unanimously agreed upon, the dangers to children and adolescents, raised by Anced in its actions, are undeniable. “Unlike adults, children do not have a clear perception that, when acquiring a loot box, they are actually entering a kind of gambling game, nor do they have the necessary clarity or understanding of the value involved, thus becoming vulnerable to the practices perpetrated in virtual games,” Teixeira indicates.

Corrêa points out that adults spend thousands of reais on loot boxes, making children even more susceptible to addiction. He believes that these mechanics shouldn't even exist in games aimed at children, or even games with a free age rating. But, "in games aimed at an older consumer audience, or young adults, it might be possible to work with loot boxes in a more transparent way, allowing them to exist within the limits of the law and ensuring consumer safety," he adds.

According to Araujo, the problem lies in the reasoning adopted by Anced, which used article 80 of the Statute of Children and Adolescents to attribute responsibility to developers for the harm caused to children: “Article 22 of the same legislative text also transfers this responsibility to parents and legal guardians, when it determines the duty of care for children and adolescents. Therefore, I believe this interpretation is not valid.” In addition to parental involvement, he advocates for better oversight of age ratings for games by the competent authorities.

Solutions and measures

Corrêa emphasizes that he prefers a path of transparency and progressiveness rather than a total ban, so that companies are punished if they actually use the loot box mechanic in bad faith. "Perhaps new legislation isn't needed, just applying the provisions of the Consumer Protection Code to electronic games in general," he concludes.

Bezerril disagrees with this view. For him, "progress on this issue depends much more on understanding the market than on wanting to legislate at any cost."

Araujo shares this view, seeing no need to abolish loot boxes: "I believe there is no need for further regulations, and some adjustments are possible through a conduct adjustment agreement (TAC), with some minor changes, similar to those already adopted by developers in other countries."

Teixeira understands that the country needs attention regarding mechanisms that resemble gambling. “What we need is regulation, that is, clear definitions of what is permitted and what is not, so that the protection of players, especially children, is guaranteed, and, on the other hand, the freedom of companies to model and innovate in their businesses,” he concludes. (Legal Consultant – José Higídio)