One form of digital promotion that has recently drawn attention across several states and countries is the sale of treasure chests or “loot boxes” in video games and apps. Loot boxes typically offer players a chance-based opportunity to obtain virtual items for use in a game. These in-game items may help improve a player’s chances of success in the game, or they may merely be decorative and simply give a player bragging rights based on rarity (often called “skins”).

Although the items found in a loot box often are available by “grinding,” or continuing to play the game over time, buying a loot box gives a player a chance to obtain the same item faster. In short, it can be a trade-off of time vs. money (though without a guarantee what is in any given loot box).

Loot boxes also may give a player the psychological excitement and stimulation of feeling like the player has “won” something (regardless whether the “thing” has any real-world value or utility outside the virtual world of the game). It is largely based on these psychological factors that some jurisdictions have begun to take the position that the selling of loot boxes may constitute a form of gambling – or at least warrant some form of regulation – even in the absence of prizes with real-world value being available in the loot boxes (such real-world value/prizes generally being a threshold requirement for a finding of illegal gambling under most existing U.S. precedents at this time).

In this GT Alert, we explore how certain jurisdictions around the world are addressing loot boxes. Click here for the full alert.

For more on gaming, click here.

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Photo of Ed Chansky Ed Chansky

Ed Chansky focuses his practice in the areas of intellectual property (particularly development, selection, protection and licensing of trademarks worldwide) and advertising, sales promotion, and trade-regulation law, including charitable promotions, cause-related marketing, sweepstakes, contests, gift cards, eCommerce, substantiation of advertising claims, social gaming…

Ed Chansky focuses his practice in the areas of intellectual property (particularly development, selection, protection and licensing of trademarks worldwide) and advertising, sales promotion, and trade-regulation law, including charitable promotions, cause-related marketing, sweepstakes, contests, gift cards, eCommerce, substantiation of advertising claims, social gaming, social media, and all aspects of unfair or deceptive trade practices in a wide variety of industries.

A trusted advisor to many national companies, Ed is a frequent speaker at seminars and conferences on advertising and promotion law topics, including sweepstakes, premium production, coupon and rebate offers, charitable promotions, social gaming, and social media, and has helped shape state legislation affecting sales promotion matters. He also works with clients on a wide range of contract and licensing matters, including agency-client agreements in the advertising and sales promotion industries, software and website development, privacy policies and terms of use, and other matters affecting intellectual property, marketing and electronic commerce. For many years, he worked as a part-time musician (trombone) playing everything from grand opera to rhythm and blues.

Photo of Erica Okerberg Erica Okerberg

Erica L. Okerberg focuses her practice on gaming law and promotional law. She has deep experience handling complex gaming licensing, operational, and regulatory matters for U.S. and International clients. She represents land-based and online casino companies, sports wagering operators, manufacturers and distributors, as

Erica L. Okerberg focuses her practice on gaming law and promotional law. She has deep experience handling complex gaming licensing, operational, and regulatory matters for U.S. and International clients. She represents land-based and online casino companies, sports wagering operators, manufacturers and distributors, as well as other companies providing services to the gaming industry. Erica also has wide-ranging experience with analyzing and structuring social games, skill-based contests, and sweepstakes. She regularly counsels clients on promotional matters, including advertising claims, charitable promotions, and cause-related marketing.