Congressman Wants to Ban "Exploitative" Loot Boxes in Games

"Game developers who knowingly exploit children should face legal consequences," Sen. Josh Hawley states in his proposal.

Missouri Sen. Josh Hawley introduced legislation to ban “pay-to-win” and “loot box” monetization practices in video games Wednesday morning, labeling the business model an "exploitation of children."

“Social media and video games prey on user addiction, siphoning our kids’ attention from the real world and extracting profits from fostering compulsive habits," said the Republican senator in a statement. "No matter this business model’s advantages to the tech industry, one thing is clear: there is no excuse for exploiting children through such practices."

Hawley has taken aim at big tech companies in the past, including Facebook, which he asked the FTC to investigate on Tuesday.

The "pay-to-win" model used in games (also referred to as free-to-play or F2P), allows players to download a game for free while offering in-game purchases, usually for a small one-time fee, to gamers. The model has been used by such games as Fortnite, Candy Crush and Apex Legends and has resulted in massive revenues

“When a game is designed for kids, game developers shouldn’t be allowed to monetize addiction. And when kids play games designed for adults, they should be walled off from compulsive microtransactions," said Hawley. "Game developers who knowingly exploit children should face legal consequences.”

Stanley Pierre-Louis, acting president and CEO of the Entertainment Software Association responded to Hawley's proposal on Wednesday morning, saying, “Numerous countries, including Ireland, Germany, Sweden, Denmark, Australia, New Zealand, and the United Kingdom, determined that loot boxes do not constitute gambling. We look forward to sharing with the senator the tools and information the industry already provides that keeps the control of in-game spending in parents’ hands. Parents already have the ability to limit or prohibit in-game purchases with easy to use parental controls.” 

The proposed legislation, titled "Protecting Children From Abusive Games Act," specifically calls out Candy Crush and its "Candy Land style cartoon aesthetic." The mobile game is developed by King, which was acquired by game giant Activision Blizzard. Request for comment by Activision was not immediately returned.

The FTC is set to host a workshop on the issue of loot boxes Aug. 7, inviting industry representatives, consumer advocates, academics and others to discuss the business model. Last November, FTC Chairman Joe Simons vowed to investigate the issue following a call for a probe into the issue by Democratic Senator Maggie Hassan of New Hampshire.

Hawley’s proposal is not the first of its kind, as last year Belgium declared loot boxes as illegal with a punishment of fines or prison time. The penalties in the country can be doubled in cases where “minors are involved.”