A Business Model Worth Tens of Billions
Loot boxes - paid, randomised in-game rewards of uncertain value - are projected to generate more than $20 billion annually, up from roughly $15 billion just a few years earlier. They've become a foundational part of the "free-to-play" business model that dominates the games most popular with children, including titles like Roblox and Fortnite, which cost nothing to download but generate the bulk of their revenue from exactly this kind of in-game spending.
Why Researchers Increasingly Call This Gambling
Academic research has found that loot box mechanics meet several established psychological criteria for gambling - a randomised reward for a real-money purchase, uncertain value, and variable reinforcement schedules that closely mirror slot machine design. A 2023 study found that adolescents who engage in these "simulated gambling" mechanics in video games go on to engage in gambling-like behaviour more frequently and in more varied forms later, and - critically - that young people frequently fail to recognise loot box spending as resembling gambling at all, even while displaying the same behavioural patterns associated with problem gambling.
The Legal Grey Zone That Lets This Continue
Despite the psychological similarities, most legal systems have been slow to classify loot boxes as gambling outright, largely because courts have hesitated over whether virtual items with no direct cash-out mechanism count as a "thing of value" under existing gambling law. This grey zone has allowed the practice to continue largely unregulated in most jurisdictions, even as regulators increasingly acknowledge the underlying concern. Belgium and the Netherlands are among the few countries to have taken a firmer legal stance treating certain loot box mechanics as regulated gambling; most others, including the UK and the majority of US states, have stopped short of that classification.
Where Enforcement Has Actually Happened
Legal accountability has come more often through consumer protection law than gambling law specifically. Epic Games, publisher of Fortnite, agreed to a $520 million settlement with the US Federal Trade Commission over deceptive design practices - dark patterns that encouraged unintended purchases - and its handling of children's data, and separately paid out a further multi-million-dollar settlement in Canada over loot box spending specifically. Roblox faces an active class-action lawsuit alleging its monetisation design is financially exploitative toward the children who make up a large share of its user base.
New Rules, Old Habits
Several countries introduced new classification systems specifically targeting loot boxes and similar "random reward mechanics" in children's games. Recent research checking compliance a year after these rules took effect found widespread non-compliance across both the Apple App Store and Google Play Store, leaving parents to navigate an inconsistent landscape where a game's official age rating often doesn't reliably reflect whether it contains gambling-like monetisation at all.
What Parents Can Actually Do
Given the gap between regulation and enforcement, the most reliable safeguards remain ones parents can control directly: disabling in-app purchases at the device or platform level rather than relying on a game's built-in parental controls, which research shows are inconsistently enforced; reviewing a game's monetisation model before download rather than relying solely on its age rating, since ratings frequently don't account for loot box mechanics; and having a direct, judgement-free conversation with children about how these systems are designed to encourage repeated spending, which research suggests meaningfully improves a child's ability to recognise and resist the mechanic once they understand how it works.
