I. Introduction[1]

Loot boxes have taken over the video game industry in the past twelve years.[2] The randomness and ability to win fantastic in-game rewards provides a feeling for players like no other. Or does it? One can quickly sense the resemblance between the exhilaration of paying for the chance to win a highly sought-after, in-game item that few other players will ever have[3] and the intoxication of betting for the chance of seeing “777” on the slot machine. So why treat them any differently?

This similarity to gambling has not gone unnoticed.[4] Aside from consumer backlash against game developers who adopted this type of microtransaction system,[5] many regulators and governments have been kept abreast of loot boxes and their potentially negative effects.[6] However, while some countries like Belgium, the Netherlands, and China have banned or severely limited loot boxes and recognized them as gambling, the United States has not taken many steps to address loot boxes.[7]

The few courts that have dealt with gambling issues in video games have relied on their respective state gambling statutes.[8] The main issue with determining whether loot boxes or other game mechanics are a form of gambling essentially boils down to whether the prize is a “thing of value.”[9] However, Texas has some of the strictest gambling laws of any state in the United States.[10] Texas gambling law is relatively unique in that it defines “thing of value” differently than other jurisdictions that have heard these cases.[11] This definition provides for more leeway to include loot boxes within the definition of gambling.

Broadly, this Comment looks at how Texas gambling law can be interpreted to include the promotion or use of loot boxes as a gambling offense. Specifically, Part II of this Comment first introduces the background of microtransactions in video games, describes what loot boxes are, and provides a brief overview of public and regulatory backlash against loot boxes. Part III provides the legal background of relevant Texas gambling statutes and compares important statutory definitions of gambling laws from different jurisdictions. Part IV maps the distinct characteristics of loot boxes onto the specific elements of a gambling device under the Texas Penal Code (TPC), applies these elements to criminal gambling and gambling device statutes, and then provides a real-world example of a video game that likely violated Texas gambling laws. Part V then delves into the issues of future loot box litigation and the remaining limitations in Texas law for addressing loot boxes.

II. Loot Box Background

To fully understand why Texas gambling laws should include loot boxes, an overview of what loot boxes are and where they fit into video games is helpful. Given that most people have never interacted with loot boxes, this Part attempts to provide enough information so that even a reader without any experience with loot boxes will understand the general idea.

A. Brief History of Microtransactions in Video Games

Microtransactions are purchases in video games that provide a player access to additional digital items, content, characters, or more in exchange for real-world currency.[12] The virtual goods take on many forms and may be a one-time use or may last indefinitely.[13] Microtransactions often allow players to skip the “work-to-reward ratio” to obtain desirable in-game items simply by purchasing them.[14]

While not the first microtransaction, many consider the first major microtransaction in U.S. video games to come from The Elder Scrolls IV: Oblivion, a medieval fantasy game, in 2006.[15] Bethesda Studios offered players the option to buy cosmetic horse armor for a small fee of a couple dollars.[16] In the following years, other game developers took note of this opportunity and started developing their own games to include microtransactions.[17] One of the leading game developers in the field, Electronic Arts (EA), implemented the microtransaction system in its games with much success, amassing over $100 million in revenue from microtransactions alone in 2011.[18] That number has since grown to over $4.3 billion in revenue for EA from microtransactions in 2023.[19] The mobile game industry—which includes games made specifically for mobile phones—has also had much success incorporating microtransactions, with 75% of its $90 billion global earnings in 2023 coming from in-app purchases.[20] It is clear that game developers are enticed to keep these microtransactions alive.

B. What Are Loot Boxes, How Do They Work, and What Makes Them Appealing?

One popular type of microtransaction is a loot box—a virtual box that players can purchase within the game either directly with real currency or with in-game currency, purchased using real currency.[21] Inside a loot box is one of “a variety of items, including, but not limited to, in-game currency, weapons, armor, or visual enhancements.”[22] Thus, when players open a loot box, they do not know what they will receive and can only hope that whatever virtual reward they get from the box will be valuable.[23]

The game developers who sell these loot boxes create the set of probabilities for each item in a loot box.[24] The subjective value of the reward received typically correlates with the rarity of the item. Loot boxes generally have different tiers of rarity for their items, with items of higher rarity having a progressively lower probability of being awarded.[25] What makes loot boxes so appealing to players is the ability to win extremely rare items—often with probabilities of less than 1%[26]—with every box purchased, which keeps players continuously returning to buy loot boxes until they get what they want.[27]

C. Consumer Backlash and Video Game Developer Responses

The adverse effects of loot boxes and their similarity to gambling attracted much attention from gamers and regulatory bodies alike. One of the larger examples of public outcry over a video game that incorporated loot box mechanics came with the release of Star Wars: Battlefront II.[28] Fans of the game complained that even after purchasing the game for full price, some of the most important characters were locked behind in-game barriers that would require almost forty hours of gameplay to unlock.[29] As a result, for many of these players, the characters were only reasonably attainable through purchasing loot boxes and hoping to get these items.[30] Battlefront II was not the only game to receive criticism over its loot boxes.[31] Many governments and regulators took notice of consumer complaints about loot boxes in video games and their similarity to gambling through official letters or by proposing legislation aimed at curbing the impact of loot boxes.[32]

The response from game developers in the face of this criticism took on many different forms. Many game developers reworked, transformed, or scrapped their loot box systems entirely.[33] A popular strategy among developers was to transition from a loot box system to a “battle pass monetisation”-based system, which allow players to purchase a “battle pass” that provides items through an unlockable progression route that are visible at the time it is purchased.[34] Some developers went so far as to remove loot boxes from games that were originally designed around them.[35] And, most interestingly, some game developers have even recompensated players with in-game currency for previous purchases of loot boxes as part of a class action settlement agreement.[36] While game developers are trending away from using loot boxes in their games, their impact is still large, with revenue from loot boxes projected to exceed $20 billion by 2025.[37]

Texas has some of the most restrictive gambling laws in the United States.[38] The state’s constitution requires the legislature to broadly prohibit lotteries—which includes most forms of gambling—except for a few explicit exceptions.[39]

A. How Texas Gambling Laws Compare to Other Jurisdictions

Under Texas law, a person commits the offense of criminal gambling if they play or bet for any “thing of value” at any gambling device.[40] A gambling device under Texas law is any “electronic . . . contrivance” that (1) requires consideration to play; (2) provides a player any opportunity to win “anything of value”; and (3) the award is determined at least partially by chance.[41] A “thing of value” is defined by the TPC as “any benefit.”[42] Both the gambling and gambling device statutory restrictions house specific defenses discussed below.[43]

Texas’s approach to the thing of value requirement is unique. Other jurisdictions that use similar verbiage have very different definitions. California, a site for a few loot box and video game gambling cases, defines a “thing of value” narrowly: “any money, coin, currency, . . . or any representative of value.”[44] New Jersey, one of the most lenient states on gambling laws,[45] practically reduces “[s]omething of value” to only mean things exchangeable for cash.[46] The prize or award element in the New Jersey statutory definition of gambling also features this exchangeability for cash requirement.[47] But Texas law only requires that the prize awarded be “any benefit” to the player to satisfy the thing of value element.[48] The Texas Supreme Court has also reinforced that the statute means what it says, recognizing that “any benefit” is not limited to a specifically monetary benefit.[49] This distinction from other jurisdictions is important because the existing loot box or video game-related gambling litigation outside of Texas has mostly been decided by determining whether the digital items were considered a “thing of value” under the respective statute.[50]

There is no existing Texas case law specifically challenging loot boxes or other video game mechanics as gambling devices. However, case law from outside of Texas can demonstrate how litigation on these matters in Texas would look much different. In 2016, an Illinois district court addressed a putative class action that alleged a loot box-like feature of an online, mobile phone game, Castle Clash, constituted gambling under California law.[51] Castle Clash offered players the opportunity to purchase “Hero Rolls,” where players could win heroes of varying rarities based on chance.[52] The game operator argued that California gambling laws were not violated because the Hero Rolls were purchased with in-game currency, not real money, and because the prize—the hero received—was not a thing of value.[53] While the court gave little merit to the in-game currency argument, it was concerned that the digital hero’s imaginary nature precluded treating the reward as a thing of value under the statute’s language.[54] The court ultimately rejected two of the plaintiffs’ potential approaches to characterizing the digital hero as a thing of value. First, the court flatly refused to consider multiplying the cost of each Hero Roll by the expected odds of receiving an item to calculate value.[55] Second, the court declined to take into account how much a digital hero increased the value of a player’s overall account on a secondary market.[56] As a result, the court found that the Hero Roll rewards were not a thing of value and rejected plaintiffs’ claim that the loot box system was a gambling machine.[57]

A California district court similarly disposed of a claim that loot boxes in the online, mobile game, Brawl Stars, violated state gambling laws.[58] In Brawl Stars, players could obtain “Brawl Boxes” by purchasing a virtual, in-game currency called “Gems” and then purchasing the loot box with those Gems.[59] Players who purchased a Brawl Box had the chance to win items of different rarities ranging from “Common” to “Legendary.”[60] The item received was determined completely by chance, with the Legendary items having a 0.3% probability of being rewarded to the player.[61] Like the Illinois court, the California court rejected the argument that the virtual rewards were considered a thing of value under the California statute.[62] The court made clear that any subjective value of an item is irrelevant as to whether something is a thing of value—it is the real-world transferable value that controls.[63] The California court also went further, stating that because the loot boxes were purchased with in-game currency, the player was not wagering real money.[64] These determinations led the court to grant the game operator’s motion to dismiss.[65] However, it is important to note that these decisions relied on California’s very narrow definition of a “thing of value.”[66] Texas’s broader interpretation of thing of value provides more leeway for analyzing loot box rewards.

B. Relevant Texas Defenses to Gambling

While Texas gambling laws are generally broad in coverage, they still afford defenses that are relevant to loot boxes.[67]

1. The “Fuzzy Animal” Exception

Among the strongest of the defenses to likely protect loot boxes is the “fuzzy animal” exception found within the definition of a “[g]ambling device.”[68] The TPC provides that even if a machine meets the consideration, chance, and thing of value elements, if the prize is noncash merchandise with a wholesale value less than $5, or less than ten times the consideration paid, the machine is not considered a gambling device.[69] This exception was created in 1995 by the legislature to accommodate the growing popularity of arcade games that rewarded carnival-style stuffed animals and toys.[70] However, the constitutionality of the exception has recently been challenged.[71]

In Rylie II, the city alleged that a game room operator’s “eight liner” machines violated an occupational code because the machines were either (1) unconstitutional lotteries themselves or (2) outlawed gambling devices if the “fuzzy animal” exception was unconstitutional.[72] While the appeals court on remand decided the issue on the first prong without addressing the fuzzy animal exception’s constitutionality,[73] the Texas Supreme Court was open to hearing argument about it on appeal.[74] Rylie I is significant because it demonstrates that the court recognizes the tension between the fuzzy animal exception and the plain language of the state constitution,[75] and Rylie II is significant because the court determined that a gambling device may still be unconstitutional even if it is not illegal.[76]

Additionally, the fuzzy animal exception’s constitutionality has not only been addressed within the courts. The Texas Office of the Attorney General has consistently taken the position that the exception is unconstitutional since 1998.[77] These considerations make it unclear how the fuzzy animal exception will apply in future litigation.

2. Social Gambling Defense

Texas law also grants a social gambling defense for most of the criminal gambling statutes.[78] The main elements of the exception require: (1) the gambling occurred, or is intended to occur, in a private place; (2) no player received an economic benefit other than winnings; and (3) the risk of winning or losing was the same for all players, except for the effects of luck or skill.[79]

The private place element is defined by section 47.01(8) of the TPC to include places that are not generally accessible to the public.[80] The TPC’s examples of what is not a private place only include physical locations such as highways, restaurants, or others.[81] However, in 1995, the Texas Attorney General took the position that two people using a computer or other transmission device to engage in a card game for money would be considered gambling if there was any public access to the game.[82] As loot boxes are transmitted over the internet to many different people, this is an important distinction to make from the rather narrow, location-specific definition in the TPC. The economic benefit element was laid out most clearly in Miller v. State, where the court specified that, to exclude the defense, the economic benefit must be one where a party gets some kind of percentage of profits outside of winnings or charges for the privilege to use the facilities.[83] The Miller court also clarified that the risk of winning or losing element focuses on the rules of the game and disregards any luck or skill of a player.[84] If any of the social gambling elements are not met, the defense fails.[85]

IV. Applying Texas Gambling Law to Loot Boxes

With a grasp on what loot boxes are and a general idea of what Texas gambling laws proscribe, it becomes easy to see how loot boxes can fit within Texas’s prohibitions on gambling and lotteries. The purpose of Texas gambling laws also supports their inclusion.

A. Why Loot Boxes Need to Be Included in Texas Gambling Laws

In applying Texas gambling laws to loot boxes, it is important to keep in mind the purpose and intent of these statutory prohibitions on gambling and lotteries. A crucial purpose of criminal gambling laws is to counter the negative effects that inherently come with gambling.[86] Within this purpose, there is usually a fundamental focus on protecting children from these detrimental effects.[87]

1. Public Health

Negative outcomes of gambling extend far beyond the individual gambler; its effects extend to communities and societies as a whole.[88] Gambling is not only associated with disproportionately negative effects on vulnerable groups but also creates a large economic burden on society.[89] While gambling has become more accepted socially—especially sports betting—the overall negative effects are still present.[90] Any person who gambles can be at risk of developing a gambling problem.[91] Problem gambling can drain a locality’s funds through treatment and prevention programs, policing or prosecuting gambling-related crimes, child welfare for gambling-related family issues, and unemployment.[92] On a personal level, problem gambling can lead to changes in rates of bankruptcy, divorce, child neglect, or suicide.[93] Other research has shown that a gambler does not need to reach the diagnostic levels of problem gambling to experience these harmful effects.[94]

The rise of internet use has led to increased online gambling, and relationships have been found between greater access to gambling and gambling-related problems.[95] Related to internet gambling, studies have shown that gambling with digital forms of currency appears to lead to higher gambling losses.[96] Net gambling losses by consumers, fueled in part by the increased accessibility to online gambling, are projected to reach $700 billion by 2028.[97]

2. Protection of Children

While children experience many of the second-hand effects of gambling discussed above,[98] they also face the direct risks of gambling harms—absent any restrictions.[99] Most jurisdictions recognize that children and adolescents should not be allowed to gamble and set age restrictions that prohibit underage gambling.[100] However, researchers have found that “[t]he distinction between gaming and gambling has also been blurred” by the digital revolution.[101] Children and adolescents are increasingly exposed to gambling through the incorporation of gambling elements into online games.[102] A prime example is the introduction of loot boxes.[103]

Loot boxes share the main characteristics of gambling in that they require the payment of money for the opportunity to win an item of uncertain value based entirely on chance.[104] The variable reward reinforcement in loot boxes is akin to those used in traditional gambling machines that encourage “persistent repetitive behaviour in the hope of being rewarded.”[105] Given that a significant number of children and adolescents are exposed to these gambling-like mechanisms in video games,[106] the longstanding principles of gambling laws protecting children should include limitations or prohibitions on loot boxes.

B. Application to Loot Boxes Generally

To violate Texas gambling laws, a loot box or loot box system must be a gambling device. From there, players who buy and use loot boxes may be liable for criminal gambling,[107] and the game operator may be criminally liable for abetting the player’s gambling or for possessing or manufacturing a gambling device.[108]

1. The Gambling Device Definition

Loot boxes fit the definition of an illegal gambling device under section 47.01(4) of the TPC. To obtain a loot box, the player is generally required to use real money or in-game currency bought with real money.[109] After acquiring and opening the loot box, the player receives a randomized item typically determined entirely by chance.[110] Upon purchasing and opening the loot box, the player is provided the opportunity to win a variety of types of items that are a benefit to the player—especially the rarer the item is in the game.[111] These aspects map well onto the requirements of an illegal gambling device. The payment to open the loot box can clearly serve as the consideration element for a gambling device. Much like inserting a coin to spin a slot machine in hopes of winning big, loot boxes require payment before having the opportunity to win exclusive rewards.[112] The set probabilities and randomness of winning an item also demonstrate that the reward is completely determined by chance.[113] No amount of skill is involved in opening the box.[114] Lastly, the broad “any benefit” requirement of the prize is likely satisfied by the digital reward received by the player. The Texas Supreme Court made clear that “any benefit” does not need to be a monetary one.[115] Players desire exclusive rewards and receive a benefit when rewarded with one in a loot box.[116]

Of course, a machine that satisfies every element of the illegal gambling device definition may still fall under the fuzzy animal exception.[117] The fuzzy animal exception provides a defense for otherwise illegal gambling devices if the player can only receive a noncash prize, toy, or novelty with a wholesale value of less than $5 or ten times the amount paid to play.[118] This exception is the main thorn in the side of categorizing loot boxes as illegal gambling devices. Digital rewards received by players most likely fall within the scope of the exception as a “prize[], toy[], or novelt[y].”[119] The million-dollar—or in this case the five-dollar—question then becomes whether these digital rewards “have a wholesale value available from a single play of the game or device of not more than . . . $5.”[120] If the wholesale value of the reward exceeds $5, then the fuzzy animal exception does not apply, and the loot box would be considered an illegal gambling device.[121]

Unfortunately, practically applying the $5 limit to these digital rewards can be difficult. The value of digital rewards from loot boxes has been the main source of contention in the litigation outside of Texas. Cases applying California law stressed how these digital items have no monetary value and are not exchangeable for money.[122] A California court explicitly declined the invitation to impute value on items based on the cost of the loot box itself or how the item increased the net “worth” of the account on a second market.[123] However, the TPC specifically references the wholesale value of the prize, not the value a player could get from exchanging the prize.[124] The TPC definition thus circumvents some of the difficulties of estimating the value of digital items faced by plaintiffs in other jurisdictions because, if available, one can then look at the price game developers sell the item for outside of the loot box context—in other words, the wholesale value.[125]

2. TPC Sections 47.02 and 47.06 Application

After defining a loot box as a gambling device, the next logical step is to evaluate how loot boxes would interact with criminal gambling statutes that require an illegal gambling device as an element of the crime.

a. TPC Section 47.02—Individual Gambling. If loot boxes are gambling devices under Section 47.01(4), then applying the offense of gambling under Section 47.02(a)(3) to the individual players using loot boxes is relatively straightforward. A person commits the offense of gambling when they bet for a thing of value at a gambling device.[126] There is no mens rea requirement for this offense.[127] The money paid to acquire and open the loot box is “consideration” under the definition of “gambling device.”[128] Additionally, wagering this money for the chance to win a rare digital item is a “bet.”[129] Barring any exceptions or defenses, a player purchasing and opening loot boxes would commit the offense of gambling under Texas law.

The social gambling defense can apply to potential criminal gambling by an individual.[130] This defense only applies if: (1) the gambling occurred in a private place; (2) no person received any economic benefit from the gambling other than winnings; and (3) the odds of winning or losing were the same for all players.[131] The conjunctive “and” signifies that all three elements must be met to successfully raise the defense. There is no doubt that elements two and three are satisfied. The economic benefit rule only applies when a person not gambling receives some kind of percentage or share of the gambling winnings.[132] With loot boxes, there is no such arrangement; the player simply wagers money that goes directly to the game developer or studio. There is no other person who profits from this wager.[133] Additionally, the odds for all players are the same because most loot boxes have a fixed table of probabilities for the winnable items.[134] However, whether the “private place” element is satisfied for players opening loot boxes over the internet is up for debate.

At first glance, players opening these loot boxes in the apparent privacy of their residences may seem to satisfy the private place element of the social gambling defense. This intuition is also preliminarily supported by the statutory definition of Section 47.01(8), which provides only tangible, real property as examples of private places.[135] However, the statutory language emphasizes that a private place is one in which “the public does not have access.”[136] In 1995, the Texas Attorney General was asked whether an internet card game with gambling between two people on separate devices would constitute illegal gambling.[137] In his determination, the attorney general focused on whether the social gambling defense would apply—specifically whether the private place element was met.[138] The attorney general had no trouble applying the private place element to potential gambling over the internet and stressed that the requirement focuses on the scope of public access to the gambling.[139] It is not unreasonable to extend this reasoning to players purchasing loot boxes on large, public video game servers.[140] Due to the often-public nature of these games, it is possible that the private place element is not met and that the social gambling defense would fail.

With the gambling device elements met for loot boxes, the bet requirements met for the players purchasing loot boxes, and no applicable defenses, the players who were purchasing and opening loot boxes in these public games would likely have committed the offense of gambling under Section 47.02. Video game developers creating, selling, and promoting these loot boxes may also be criminally liable for these individual gamer’s actions through section 7.02 of the TPC.[141]

b. TPC Section 47.06—Possession of a Gambling Device. If loot boxes are gambling devices, then game developers who created these loot boxes may be criminally liable for manufacturing gambling devices under section 47.06 of the TPC. Section 47.06 states that anyone who, with intent to further gambling, manufactures gambling devices that they know are designed for gambling purposes commits a criminal offense.[142] The mens rea requirements of this statute make the application of Section 47.06 more difficult than the gambling offense discussed above. However, there is a strong argument that game developers who created and sold loot boxes would meet these culpability requirements.

Whether a game developer intended to further gambling or knew the gambling device was intended for gambling purposes is a fact question.[143] While this means that issues of possessing a gambling device will depend on specific facts for each game developer’s loot box system, there are general features of loot box sales that may be enough to show the requisite culpability.[144] It goes without saying that loot boxes are generally put into games to have players purchase them. There is no real argument against the fact that game developers design loot boxes so that players will provide consideration for an opportunity to win something based entirely on chance. As discussed above, this is a “bet” on a gambling device under Texas law.[145] Game developers creating and providing players access to loot boxes—which if paid for and opened meet the elements of a gambling offense—serves as strong evidence of an intent to further gambling. Additionally, a game developer’s control over the mechanics of their loot boxes strongly supports that the developer knows that the loot boxes are designed for gambling purposes. Developers set the cost to purchase loot boxes and set the probabilities for the types of items that will be received.[146] If game developers design their loot boxes to require money in order to open it, and the chances of winning are based on a set of probabilities specifically created by the game developer, then it follows that the developer would know that the loot box is designed for gambling purposes. Thus, there is a strong argument that many game developers who manufactured and marketed loot boxes in this way would be criminally liable under section 47.06 of the TPC.

C. Practical Example Through Rocket League’s 2019 Loot Box System

While applying Texas gambling law to loot boxes in the abstract is helpful, a real-world example from the past can provide a clearer picture of how it could practically work. Rocket League, a 2015 game created by game developer Psyonix and later taken over by Epic Games, is a great example to work through.[147]

Rocket League is described as a “high-powered hybrid of arcade-style soccer and vehicular mayhem” where players use rocket powered cars to play a futuristic version of soccer.[148] Players can customize the car they use in the “Garage” using a combination of different preset items or decals.[149] In 2019, Rocket League had a “Crate” system in place that awarded these different items or decals.[150] These Crates that players could acquire were loot boxes. To open these loot boxes, players had to purchase a “[K]ey” using real money.[151] Additionally, the rewards from these Crates were determined entirely by chance using a set probability table.[152] These factors map well onto Texas gambling laws.

Rocket League’s Crates satisfy the definition of a gambling device under the TPC. A contrivance is a gambling device if it, for consideration, allows a player the opportunity to win “anything of value” by chance.[153] Players would open loot boxes with a Key,[154] providing consideration for the opportunity to win an item. What the player won was determined by chance in accordance with the probabilities set by the game developer.[155] The virtual item received by the player would be a benefit and thus satisfy the thing of value requirement of TPC section 47.01(4).[156] With all the gambling device elements met, the only thing that potentially protected these Crates would be TPC section 47.01(4)(B)—the fuzzy animal exception.[157]

The fuzzy animal exception excepts otherwise illegal gambling devices if they reward a player exclusively with noncash toys or items if the item’s wholesale value does not exceed either ten times the amount bet on the game or $5, whichever is lower.[158] This defense makes evaluating Crates difficult because many of the items in the Crates were exclusive and not sold elsewhere.[159] However, there are two potential ways to address this issue. The first considers Rocket League’s transition away from a loot box system and uses the price of a previously exclusive item now directly available for purchase with a fully visible price tag. The second relies on the Attorney General of Texas’s understanding that the fuzzy animal exception is unconstitutional and should not be able to protect illegal gambling devices.

For the first approach, it is easiest to track a previously exclusive item from the Crate and Key loot box system that is now openly for sale through Rocket League’s store. One such item in 2019 was a new Battle-Car named “Fennec.”[160] Once an exclusive item only available through the “Totally Awesome Crate,”[161] the Fennec now retails on the Rocket League store for a wholesale value of around $8.[162] Adjusting for inflation, this would convert to around $6.50 in 2019 when the Fennec was only available in crates.[163] Given that the Fennec is sold for this price today, it is reasonable that the wholesale value in 2019, when the Fennec could only be acquired through Crates, exceeded the $5 limit of the fuzzy animal exception. Without the fuzzy animal exception, the 2019 Crates sold in Rocket League were likely illegal gambling machines.

The second approach of relying on the fuzzy animal exception’s unconstitutionality is much cleaner but will rely on traction with Texas case law.[164] If the exception is unconstitutional and does not apply, then all that needs to be shown with loot boxes is that they require consideration to play, the probability of winning is determined by chance, and the reward won is a thing of value. As discussed above, these are not hard elements to satisfy in the context of purchasable loot boxes.[165]

After determining that the Key and Crate system is an illegal gambling device, applying Texas law to Rocket League players who opened loot boxes with purchased Keys and the game developers is straightforward.[166] By using the Key to open the Crate, players bet a thing of value at a gambling device in accordance with section 47.02(a)(3) of the TPC.[167] Because Rocket League was a large public game, the social gambling defense likely would not apply.[168] Additionally, the Psyonix game developers, who created, marketed, and set the probabilities for the Crates, would likely have the requisite intent to further gambling and the knowledge that the Crates were devices with gambling purposes.[169]

Thus, in 2019, the creation and use of Rocket League’s Crates and Keys loot box system likely violated Texas gambling laws.[170]

V. Future of Loot Box Gambling Issues

Overall, legal precedent is scarce on loot box gambling issues. Without much guidance, the direction of future loot box litigation is far from clear. This can be both a good and a bad thing for potential criminal liability related to loot box promotion and use. Part V attempts to discuss some of the routes courts might take to include loot boxes as gambling under their respective state laws, while also addressing obstacles these courts would face.

A. Future Directions for Addressing Other Jurisdictions’ “Thing of Value” Standard

While Texas’s unique definition of a “thing of value” in its gambling laws provides the ability to include loot boxes as gambling, this is not the case elsewhere.[171] However, there has been an example of a California court—where the definition of thing of value is strictly construed—recognizing that digital assets purchased in a game do have value. In Colvin v. Roblox Corp., a federal district court judge rejected the argument that the in-game digital currency purchased by the plaintiff lacked any economic value.[172] The defendants argued that because the currency lacked exchangeability with real currency, it did not have economic value.[173] However, the court made clear that the players who purchased the in-game currency were akin to moviegoers who bought nonexchangeable movie tickets, which could be traded in for the experience of watching the movie.[174] The court placed the focus on the ability to exchange the in-game currency for in-game experiences that were of value to the player.[175] Most importantly, the court saw “no reason to distinguish the movie or the roller coaster ride in the real world from an in-game experience in the virtual world.”[176] With steps towards this understanding of digital assets and items, loot box litigation in other jurisdictions would look a lot different.

The issue of valuing digital commodities, currency, or property is not a new phenomenon attributable to just loot boxes. Thomas Mallaby addressed how to value virtual items from Massively Multiplayer Online Role-Playing Games nearly two decades ago.[177] Virtual economies create interesting scenarios because game developers usually have control over allocation of items and currency through “artificial scarcity.”[178] With this artificial scarcity, obtaining highly sought-after, in-game items demands large amounts of consumer time in accordance with a “work-to-reward ratio.”[179] Lacking in discussions on valuing virtual goods in the legal sphere are considerations of the perceived value of these loot box rewards to consumers.[180] Understanding and recognizing the social value of digital items to players could potentially shift interpretations of different jurisdictional definitions of a “thing of value.”[181]

While there is no clear answer as to how courts should treat digital rewards from loot boxes outside of Texas’s jurisdiction, it does seem that the issue may be much less black and white than the California court in Taylor v. Apple made it out to be.[182] Time will tell whether future litigation follows precedent similar to Taylor or if a more flexible standard, like that proposed in Colvin, will develop.

B. Limitations of the Wholesale Value Element of the Fuzzy Animal Exception

As discussed above, applying the $5 limit of the fuzzy animal exception to rewards received in loot boxes can be difficult.[183] If an item is not individually sold outside of the loot box, it becomes impossible to determine the wholesale value of the item without some other evidence of how much the game developers would price the item. This evidence, if it existed at all, would also likely be extremely difficult to acquire by any plaintiffs or prosecutors. However, the interest of the Texas Supreme Court in Rylie I in potentially ruling on the constitutionality of the fuzzy animal exception could possibly remedy this roadblock against prosecuting certain loot box use as gambling.[184] If future arguments surrounding the constitutionality of the defense reached the Texas Supreme Court, and the court agreed that it was unconstitutional, then applying Texas gambling laws to loot boxes would become a lot more straightforward. Again, time will tell how potential loot box litigation in Texas will look in the future.

VI. Conclusion

What may seem like a silly or irrelevant discussion on simple video game mechanics takes on a new lens when one is reminded of how many people—how many children—are impacted by the effects of loot boxes. A 2020 study showed that over half of the top mobile games on the Google Play and Apple Store contained loot boxes, and that over 90% of these games were rated as appropriate for children aged twelve and up.[185] Additionally, the video game market is enormous, and it is rare for a child not to have any exposure to video games.[186] When these video games have gambling-like features, it should not be something brushed under the rug. As discussed in Part IV, there are many studies that correlate loot box use and problem gambling in children and adolescents.[187]

Texas gambling laws provide a unique opportunity to call loot boxes out for what they are—gambling tailored for children. The relevant TPC provisions provide for a lenient reading of a “thing of value,” which other courts typically used to immediately dismiss loot box litigation.[188] Additionally, with the fuzzy animal exception’s constitutionality called into question, Texas gambling laws may grow even more inclusive for loot boxes. Rocket League’s 2019 Key and Crate system provides a solid example of how Texas’s gambling laws may have been violated by the game’s developer, Psyonix.[189]

Texas’s construction of the definition for thing of value also allows new ideas regarding how other jurisdictions can address loot box litigation. Different ways of recognizing the value of digital items and rewards in video games can provide a new lens through which both Texas and non-Texas courts can evaluate future loot box litigation.[190]

While many gambling laws are old, it does not mean they have to be outdated. Texas already has the statutory tools it needs to confront loot boxes directly. Additionally, by taking a different view of the value of digital items in gambling contexts with Texas’s “any benefit” interpretation, many of the gambling laws throughout the United States would be able to keep up with the modern, digital gambling landscape. States would presumably make haste to shut down an establishment whose primary purpose was to allow children to effectively gamble real money for valuable prizes. The fact that this occurs in a virtual space within a video game should not be treated any differently.

Andrew Hrabar

  1. This Comment was written between the months of August 2024 and March 2025, before the amendments passed by the 2025 Texas Senate Bill No. 517 of the Texas Eighty-Ninth Legislature were proposed or went into effect.

  2. See David Zendle, Rachel Meyer & Nick Balou, The Changing Face of Desktop Video Game Monetisation: An Exploration of Exposure to Loot Boxes, Pay to Win, and Cosmetic Microtransactions in the Most-Played Steam Games of 2010–2019, Plos One, May 7, 2020, at 1, 8–9, https://journals.plos.org/plosone/article/file?id=10.1371/journal.pone.0232780&type=printable [https://perma.cc/5EJH-MW9F] (finding that exposure to loot boxes in the most played games of a popular video game platform had risen from 4.2% in 2010 to 71.2% in 2019); see also Whitney DeCamp & Kevin Daly, Loot Box Consumption by Adolescents Pre- and Post- Pandemic Lockdown, PeerJ, May 1, 2023, at 1, 11, https://pmc.ncbi.nlm.nih.gov/articles/PMC10158757/pdf/peerj-11-15287.pdf [https://perma.cc/KS7X-L3VP] (concluding that loot box consumption has risen from 2019 to 2022).

  3. See infra Section II.B.

  4. See Nerilee Hing et al., Loot Box Purchasing is Linked to Problem Gambling in Adolescents When Controlling for Monetary Gambling Participation, 11 J. Behav. Addictions 396, 402 (2022) (finding a significant correlation between loot box purchasing and monetary gambling).

  5. See, e.g., Matt Fernandez, ‘Star Wars’ Video Game Microtransactions Ignite Controversy, Variety (Nov. 23, 2017, at 10:00 PT), https://variety.com/2017/digital/news/star-wars-video-game-controversy-microtransaction-loot-box-1202621913/ [https://perma.cc/XW2X-M78V] (discussing one of the most negative events of consumer backlash in response to loot box mechanics in Star Wars: Battlefront II).

  6. Derek Saul, ‘Exploits Kids for Profit’: Multibillion-Dollar Loot Box Industry Under Fire as Campaigners Urge Regulators To Investigate FIFA Video Game Maker, Forbes (June 2, 2022, at 15:25 ET), https://www.forbes.com/sites/dereksaul/2022/06/02/exploits-kids-for-profit-multibillion-dollar-loot-box-industry-under-fire-as-campaigners-urge-regulators-to-investigate-fifa-video-game-maker/ [https://perma.cc/4Z4A-2BPS] (discussing advocacy groups sending a letter about the negative effects of loot boxes to the FTC); Paul Tassi, EA, Activision and Others Should Be Afraid of Hawaii’s New Loot Box Bills, Forbes (Feb. 14, 2018, at 09:41 ET), https://www.forbes.com/sites/insertcoin/2018/02/13/ea-activision-and-others-should-be-afraid-of-hawaiis-new-loot-box-bills/ [https://perma.cc/7LSS-2T48] (discussing that Hawaii legislation proposed bills in 2018 to restrict sales of games with loot boxes).

  7. Alan Gonzalez, The Growing Issue of Unregulated Gambling: Loot Boxes, FSU: Coll. of L., https://law.fsu.edu/growing-issue-unregulated-gambling-loot-boxes [https://perma.cc/878Y-BDGT] (last visited Oct. 6, 2024); Jennifer Guillen, Loot Boxes and Potential Regulation as a Form of Gambling, USC: IP & Tech L. Soc’y (Jan. 14, 2021), https://sites.usc.edu/iptls/2021/01/14/loot-boxes-and-potential-regulation-as-a-form-of-gambling [https://perma.cc/8D5N-FAEC].

  8. See, e.g., Kater v. Churchill Downs, Inc., 886 F.3d 784, 786 (9th Cir. 2018) (applying Washington state gambling laws to an online simulated casino game).

  9. See, e.g., Taylor v. Apple, Inc., No. 20-cv-03906-RS, 2021 WL 11559513, at *6 (N.D. Cal. Mar. 19, 2021) (“[T]he allegations of the complaint further fail to show that the games violate the Penal Code because the loot boxes do not offer players a chance to win ‘a thing of value.’”).

  10. Gambling, Tex. State L. Libr. (Oct. 23, 2025, at 10:54 CT), https://guides.sll.texas.gov/gambling [https://perma.cc/ZRV8-JDF3].

  11. Compare Cal. Penal Code § 330.2 (West 2024) (focusing on money or token as representative of value), with Tex. Penal Code Ann. § 47.01(9) (West 1995) (defining thing of value as “any benefit”).

  12. Shelby Cariaga, Getting Away with Gambling: How Loot Boxes Sidestep American Gambling Laws, 15 Liberty U. L. Rev. 155, 156 (2020).

  13. Id.

  14. Sheldon A. Evans, Pandora’s Loot Box, 90 Geo. Wash. L. Rev. 376, 389 (2022).

  15. Asif Zapata, From Play to Pay: How Microtransactions Took Over Gaming, Bus. Standard (Oct. 4, 2023, at 18:25 CT), https://www.tbsnews.net/features/play-pay-how-microtransactions-took-over-gaming-712234 [https://perma.cc/K7EC-9K58]; GameCentral, Microtransactions Are 18 Years Old This Week and They’re Still a Blight on Games—Reader’s Feature, Metro (Apr. 7, 2024, at 03:00 CT), https://metro.co.uk/2024/04/07/microtransactions-18-years-old-this-week-still-a-blight-games-readers-feature-20597543/ [https://perma.cc/TKJ3-2LEN].

  16. Zapata, supra note 15.

  17. Id.

  18. Id.

  19. Id.

  20. Morohunfoluwa Akinbosede, Mobile Gaming and Microtransactions: A Necessary Evil?, LinkedIn (Dec. 8, 2024), https://www.linkedin.com/pulse/mobile-gaming-microtransactions-necessary-evil-akinbosede-wh91f [https://perma.cc/7FUP-79QP].

  21. Cariaga, supra note 12, at 156.

  22. Id. at 157 (quoting Edwin Hong, Loot Boxes: Gambling for the Next Generation, 46 W. St. L. Rev. 61 (2019)). The types of items available in loot boxes depends entirely on the game. For example, FIFA, a popular soccer game, had loot boxes in the form of “packs” that rewarded the gamer with a real-life soccer professional’s card that they could then add to their team. See Felicity Hannah & Jane Andrews, Loot Boxes: I Blew My University Savings Gaming on Fifa, BBC (July 8, 2020), https://www.bbc.com/news/business-53337020 [https://perma.cc/TAZ9-WX5G].

  23. Evans, supra note 14, at 378.

  24. See, e.g., EA Sports FC Mobile—Pack Probabilities, EA Sports (Sep. 26, 2023), https://www.ea.com/en/games/ea-sports-fc/fc-mobile/news/mobile-pack-probabilities [https://perma.cc/BAR9-SMFB] (explaining how EA, the game developer, sets “pack probabilities” that determine what digital player you will receive).

  25. See, e.g., Taylor v. Apple, Inc., No. 20-cv-03906-RS, 2021 WL 11559513, at *1–2 (N.D. Cal. Mar. 19, 2021) (stating that Brawl Stars “Brawl Boxes” included items “ranked by order of probability with terms such as: ‘Common,’ ‘Rare,’ ‘Epic,’ and ‘Legendary’” and allotted only a 0.3% probability for players opening loot boxes to receive Legendary items).

  26. Id. at *2.

  27. Cariaga, supra note 12, at 158.

  28. Fernandez, supra note 5.

  29. Id.

  30. See id.

  31. See, e.g., Saul, supra note 6 (describing that another popular game, FIFA, was reported to the FTC over their loot box mechanics).

  32. See id. (discussing a letter that advocacy groups sent to the FTC about the negative effects of loot boxes); Tassi, supra note 6 (discussing that Hawaii legislation proposed bills in 2018 to restrict sales of games with loot boxes).

  33. Amrita Khalid, Call of Duty Won’t Be the Last High-Profile Game to Get Rid of Loot Boxes, Quartz (July 20, 2022), https://qz.com/1731220/call-of-duty-modern-warfare-wont-be-the-last-to-ditch-loot-boxes [https://perma.cc/VYD9-ETEA]; Crates Leaving Rocket League Later This Year, Rocket League (Aug. 6, 2019), https://www.rocketleague.com/en/news/crates-leaving-rocket-league-later-this-year [https://perma.cc/CKF6-5385]; Overwatch: Paid-for Loot Boxes Are Being Removed from the Game, BBC (Aug. 10, 2022), https://www.bbc.co.uk/newsround/62489075 [https://perma.cc/88KW-LK26].

  34. James Moar, The New Trends Shaping the Loot Box Landscape, Juniper Rsch. (Mar. 2021), https://www.juniperresearch.com/resources/blog/the-new-trends-shaping-the-loot-box-landscape/ [https://perma.cc/K8CB-UHK4].

  35. Star Wars Battlefront 2’s Loot Crate Controversy: Everything You Need To Know, Polygon (Mar. 21, 2018), https://www.polygon.com/2017/11/13/16646692/star-wars-battlefront-2-loot-crate-controversy-ea [https://perma.cc/5WDZ-RKPW]; see also Kyle Orland, So Long, Supply Drops: Call of Duty Ditches Loot Boxes, WIRED (Oct. 20, 2019, at 10:00 CT), https://www.wired.com/story/so-long-supply-drops-call-of-duty-ditches-randomized-loot-boxes/ [https://perma.cc/95XU-Z5WR] (commenting on the Call of Duty franchise’s removal of loot boxes that had been a part of the game since 2014).

  36. Players Who Purchased an Event Crate or a Key That Was Used To Open a Crate To Receive 1000 Rocket League Credits, Rocket League (Feb. 22, 2021), https://www.rocketleague.com/en/news/players-who-purchased-an-event-crate-or-a-key-that-was-used-to-open-a-crate-to-receive-1000-rocket-league-credits [https://perma.cc/84RT-CYU4]; Makena Kelly & Nick Statt, Epic Games Will Settle Fortnite Loot Box Lawsuits in V-Bucks, Verge (Feb. 22, 2021, at 14:50 CT), https://www.theverge.com/2021/2/22/22295676/epic-games-fortnite-loot-box-lawsuit-settlement-rocket-league-v-bucks [https://perma.cc/P7NT-R44S].

  37. Moar, supra note 34.

  38. Gambling, supra note 10.

  39. Tex. Const. art. III, § 47; see also Authority of the Legislature to Permit Casino Games of Chance Without a Constitutional Amendment, Op. Tex. Att’ys Gen. No. JM-1267 (1990) (explaining how “gambling” is prohibited by Section 47).

  40. Tex. Penal Code Ann. § 47.02(a) (West 2024).

  41. Id. § 47.01(4).

  42. Id. § 47.01(9).

  43. See infra Section III.B.

  44. Cal. Penal Code § 330.2 (West 2020); see also Taylor v. Apple, Inc., No. 20-cv-03906-RS, 2021 WL 11559513, at *6 (N.D. Cal. Mar. 19, 2021) (finding no violation of state Penal Code because loot boxes did not offer the chance to win a “thing of value”).

  45. See Chris Bates, Spotlight on Legal Gambling: A Comparative View with New Jersey’s Casino Industry, BreakingAC.com, https://breakingac.com/news/2024/nov/12/spotlight-on-legal-gambling-a-comparative-view-with-new-jerseys-casino-industry/ [https://perma.cc/Z3LD-WC5H] (last visited Aug. 27, 2025).

  46. N.J. Stat. Ann. § 2C:37-1(d) (West 2025).

  47. Id. § 2C:37-1(b).

  48. Tex. Penal Code Ann. § 47.01(9) (West 1995).

  49. See State v. $1,760.00 in U.S. Currency, 406 S.W.3d 177, 179 (Tex. 2013) (determining that noncash store merchandise was a “benefit” under section 47.01(9) of the TPC).

  50. See Soto v. Sky Union, LLC, 159 F. Supp. 3d 871, 879 (N.D. Ill. 2016); Taylor v. Apple, Inc., No. 20-cv-03906-RS, 2021 WL 11559513, at *6 (N.D. Cal. Mar. 19, 2021).

  51. Soto, 159 F. Supp. 3d at 874.

  52. Id. at 875.

  53. Id. at 878–79.

  54. Id. at 879.

  55. Id.

  56. Id. at 879–80.

  57. Id. at 880.

  58. Taylor v. Apple, Inc., No. 20-cv-03906-RS, 2021 WL 11559513, at *6–7 (N.D. Cal. Mar. 19, 2021).

  59. Id. at *1.

  60. Id.

  61. Id.

  62. Id. at *6.

  63. Id.

  64. Id. at *5 (citing Mason v. Mach. Zone, Inc. 140 F. Supp. 3d 457, 465–66 (D. Md. 2015), aff’d, 851 F.3d 315 (4th Cir. 2017)). While the Taylor court adopts this approach, it is worth mentioning that the Mason court’s reasoning for this determination had to do with an element of California’s unfair competition laws that required economic injury, not the California gambling laws. Mason, 140 F. Supp. 3d at 461, 465.

  65. Taylor, 2021 WL 11559513, at *7.

  66. Id. at *6.

  67. See Tex. Penal Code Ann. § 47.01(4)(B) (West 1995) (the “fuzzy animal” exception for otherwise illegal gambling machines); id. §§ 47.02, 47.04, 47.06 (all providing explicit social gambling exceptions to criminal gambling statutes).

  68. Id. § 47.01(4)(B).

  69. Id.

  70. Cameron Langford, Is It Crime, or Is It the Fuzzy Animal Exception?, Courthouse News Serv. (July 10, 2017), https://www.courthousenews.com/crime-fuzzy-animal-exception/ [https://perma.cc/5VYJ-UXF9].

  71. See City of Fort Worth v. Rylie (Rylie II), 649 S.W.3d 246, 248 (Tex. App. 2022).

  72. Id.

  73. Id.

  74. See City of Fort Worth v. Rylie (Rylie I), 602 S.W.3d 459, 466 (Tex. 2020) (leaving the issue of first impression regarding the fuzzy animal exception’s constitutionality to the lower courts so that they could later address it after being fully briefed if necessary).

  75. See id. at 462 (acknowledging the Attorney General of Texas’s longstanding position that the fuzzy animal exception was unconstitutional).

  76. See Rylie II, 649 S.W.3d at 258 (holding that the eight liners were unconstitutional gambling devices that violated the occupational code which required the device to be unconstitutional or illegal).

  77. See Constitutionality of Section 47.01(4)(B), Penal Code, Which Excepts Certain Types of Electronic Contrivances from the Definition of “Gambling Device,” and Related Questions, Op. Tex. Att’ys Gen. No. DM-466, at 4 (1998) (maintaining that the fuzzy animal exception “contravenes the Texas Constitution’s proscription on ‘lotteries’” and is void); see also Whether a Machine that Records a Player’s Winnings onto a Stored-Value Debit Card Is a “Gambling Device” for Purposes of Section 47.01(4)(B) of the Penal Code, Op. Tex. Att’ys Gen. No. GA-0527, at 4 n.6 (2007) (deferring to prior conclusions by the Attorney General that the fuzzy animal exception is unconstitutional).

  78. See Tex. Penal Code Ann. §§ 47.02, 47.04, 47.06 (West 1995) (all providing explicit social gambling exceptions to criminal gambling statutes).

  79. Id.

  80. Id. § 47.01(8).

  81. Id.

  82. Whether Persons May Play and Bet on Card Games Using Computers with Modems or Other Transmission Devices and Related Questions, Op. Tex. Att’ys Gen. No. DM-344 (1995).

  83. Miller v. State, 874 S.W.2d 908, 911–12 (Tex. App. 1994).

  84. Id. at 912.

  85. Id. at 910–11, 914.

  86. See Heather Wardle, Gambling and Public Health: We Need Policy Action to Prevent Harm, 365 BMJ 193, 193–94 (2019).

  87. Heather Wardle et al., The Lancet Public Health Commission on Gambling, 9 Lancet Pub. Health e950, e982 (2024) (finding the majority of jurisdictions surveyed imposed age restrictions on gambling).

  88. Wardle, supra note 86, at 193.

  89. Id. at 195.

  90. Gemma Mastre-Bach et al., Sports-Betting-Related Gambling Disorder: Clinical Features and Correlates of Cognitive Behavioral Therapy Outcomes, Addict Behavs., Oct. 2022, at 1, 6.

  91. FAQs: What Is Problem Gambling?, NCPG, https://www.ncpgambling.org/help-treatment/faqs-what-is-problem-gambling/ [https://perma.cc/XKG4-SBMR] (last visited Aug. 28, 2025). “Problem gambling” is defined by the National Council on Problem Gambling as “gambling behavior that is damaging to a person or their family.” Id.

  92. . Robert J. Williams, Jürgen Rehm & Rhys M.G. Stevens., The Social and Economic Impacts of Gambling 42 (2011).

  93. Id. at 43.

  94. Wardle et al., supra note 87, at e951, e953.

  95. Sally M. Gainsbury, Online Gambling Addiction: The Relationship Between Internet Gambling and Disordered Gambling, 2 Current Addiction Reps. 185, 185–86 (2015).

  96. Id. at 186.

  97. Wardle et al., supra note 87, at e953.

  98. See Williams, Rehm & Stevens, supra note 92, at 43 (gambling-related domestic relation issues); see also Wardle et al., supra note 87, at e957 (explaining that it is well-documented that negative effects of gambling befall those other than the gambler like children).

  99. See Wardle et al., supra note 87, at e954 (recognizing children as a specific group who faces elevated risks of problem gambling).

  100. See id. at e951, e982.

  101. Id. at e952–53.

  102. Id. at e953.

  103. Jason W. Osborne, How Loot Boxes in Children’s Video Games Encourage Gambling, Forbes (May 25, 2023, at 11:46 ET), https://www.forbes.com/sites/jasonwosborne/2023/05/25/how-loot-boxes-in-childrens-video-games-encourage-gambling/ [https://perma.cc/9DNJ-ZTJW].

  104. Hing et al., supra note 4, at 397.

  105. Id.

  106. An Australian study found that 93% of participants aged 12–24 had played at least one game with loot box mechanics. Loot Boxes Potentially Groom Young People for Gambling, GambleAware (July 28, 2020), https://gambleaware.nsw.gov.au/news-and-media/loot-boxes-potentially-groom-young-people-for-gambling [https://perma.cc/P6SY-6CGU].

  107. See Tex. Penal Code Ann. § 47.02(a)(3) (West 2024).

  108. See id. § 47.06.

  109. See Cariaga, supra note 12, at 156 (explaining that loot boxes are virtual boxes acquired with either in-game or real-world currency).

  110. Id. at 157.

  111. See id. (stating that players keep buying loot boxes to acquire “better or more desirable items”).

  112. Id. at 156.

  113. See id. at 157 (indicating that the reward received is, presumably, chosen at random).

  114. See Evans, supra note 14, at 415.

  115. See State v. $1,760.00 in U.S. Currency, 406 S.W.3d 177, 179 (Tex. 2013) (determining that noncash store merchandise was a “benefit” under section 47.01(4) of the TPC).

  116. See Cariaga, supra note 12, at 157.

  117. Tex. Penal Code Ann. § 47.01(4)(B) (West 1995) (describing the “fuzzy animal” exception).

  118. Id.

  119. Id.

  120. Id.

  121. Id.

  122. See e.g., Soto v. Sky Union, LLC, 159 F. Supp. 3d 871, 878–79 (N.D. Ill. 2016) (emphasizing the lack of transferable value of the digital “Hero” item received from a loot box); Taylor v. Apple, Inc., No. 20-cv-03906-RS, 2021 WL 11559513, at *6 (N.D. Cal. Mar. 19, 2021) (holding that it is the objective real-world transfer value that controls).

  123. Soto, 159 F. Supp. 3d at 879–80.

  124. Penal § 47.01(4)(B) (West 1995).

  125. Out of the frying pan and into the fire. While this solves some of the immediate issues of digital item valuation that shut down loot box litigation in other jurisdictions, it still leads to problems in situations where items are only available in loot boxes and not sold individually. See, e.g., infra Section IV.C. (The Rocket League example below is one such situation.). These limitations, and a potential solution, are discussed below. Infra Part V.

  126. Penal § 47.02(a)(3).

  127. See id. § 47.02(a).

  128. Id. § 47.01(4).

  129. Id. § 47.01(1).

  130. Id. § 47.02(b).

  131. Id.

  132. See Miller v. State, 874 S.W.2d 908, 911–12 (Tex. App. 1994).

  133. See, e.g., Taylor v. Apple, Inc., No. 20-cv-03906-RS, 2021 WL 11559513, at *1–2 (N.D. Cal. Mar. 19, 2021) (describing how game developers and Apple profit from money wagered on loot boxes).

  134. Id. at *1–2 (explaining that Brawl Stars “Brawl Boxes” set 0.3% probability for players opening loot boxes to receive legendary items).

  135. Penal § 47.01(8).

  136. Id.

  137. Whether Persons May Play and Bet on Card Games Using Computers with Modems or Other Transmission Devices and Related Questions, Op. Tex. Att’ys Gen. No. DM-344 (1995).

  138. Id.

  139. Id.

  140. Well beyond simply two players in their own virtual poker game, some of the major games that have utilized loot box mechanics have publicly hosted millions of players. See, e.g., Matthew Perks, Limited Edition Loot Boxes: Problematic Gambling and Monetization, Medium (Oct. 11, 2016), https://medium.com/@perks_matthew/limited-edition-loot-boxes-problematic-gambling-and-monetization-756819f2c54f [https://perma.cc/G4M8-SB2K] (stating that Overwatch had 15 million players by the end of the summer of its release).

  141. Section 7.02(a)(2) provides that a “person is criminally responsible for an offense committed by the conduct of another if . . . acting with intent to promote or assist the commission of the offense, he solicits, encourages, directs, aids, or attempts to aid the other person to commit the offense.” Penal § 7.02(a)(2). Game developers promoting and encouraging players to pay for loot boxes with the intent of players purchasing these loot boxes—or in other words betting on a gambling device—likely satisfy the requirements of Section 7.02(a)(3), thus these game developers may be criminally responsible for players’ illegal gambling under section 47.02 of the TPC. Id. § 7.02(a)(2)–(3).

  142. Id. § 47.06(a).

  143. See Jester v. State, 64 S.W.3d 553, 558–59 (Tex. App. 2001) (finding that evidence was sufficient for jury to find that defendant intended to induce people to play the game and make a gambling bet).

  144. A more fact specific analysis of the game developer Psyonix’s Rocket League loot box system is provided in Section IV.C.

  145. See supra Section III.B; Penal § 47.01(1), (4).

  146. See, e.g., Pack Probability in FIFA Ultimate Team, EA Sports: FIFA, https://web.archive.org/web/20250714053414/https://www.ea.com/games/fifa/news/fifa-pack-probabilities [https://perma.cc/2DCH-RJUP] (last visited Aug. 28, 2025) (explaining how EA, the game developer, sets “pack probabilities” that determine what digital player you will receive). Notice the amount of control the developers have over these packs and the minute details they can add. See EA Sports FC Mobile–Pack Probabilities, supra note 24 (breaking down the probabilities of winning a digital player in the mobile version of the game all the way down to less than a 1% chance).

  147. About Psyonix, Psyonix, https://www.psyonix.com/ [https://perma.cc/MS3J-WYKB] (last visited Aug. 28, 2025).

  148. This Is Rocket League!, Rocket League, https://www.rocketleague.com/en [https://perma.cc/W5Q7-DHHG] (last visited Aug. 28, 2025); Alice O’Connor, Car-to-Ball: Rocket League, Rock Paper Shotgun (Dec. 3, 2014), https://www.rockpapershotgun.com/rocket-league-trailer [https://perma.cc/Y766-VGDZ].

  149. Garage, Rocket League Wiki, https://rocketleague.fandom.com/wiki/Garage [https://perma.cc/7E9C-B6Z5] (last visited Aug. 28, 2025).

  150. See Totally Awesome Crate Drops During Radical Summer, Rocket League (June 27, 2019), https://www.rocketleague.com/en/news/totally-awesome-crate-drops-during-radical-summer [https://perma.cc/G8CV-SVAG] (explaining that a new batch of “Crates” were arriving that summer with “more than a dozen customization options”).

  151. See Nicole Carpenter, Rocket League’s Crates Are Being Replaced by Blueprints, Polygon (Oct. 1, 2019), https://www.polygon.com/2019/10/1/20893911/rocket-league-loot-crates-replaced-with-blueprints-psyonix [https://perma.cc/AJ2X-2HNT] (describing how Crates needed purchased keys to be opened); Key Price Adjustment for Steam, Rocket League (Sep. 23, 2016), https://www.rocketleague.com/en/news/key-price-adjustment-for-steam [https://perma.cc/VB9R-46AE] (providing a list of prices for Keys in 2016).

  152. See Max Thielmeyer, Rocket League Crate Drop Rates Revealed: How Do They Compare?, Forbes (July 25, 2018, at 20:56 ET), https://www.forbes.com/sites/maxthielmeyer/2018/07/25/rocket-league-crate-drop-rates-revealed-how-do-they-compare/ [https://perma.cc/AE82-WX9L] (discussing Psyonix’s 2018 reveal of Crate item “drop rates”). A “Black Market Item”—the game’s rarest category of item—had a 1% chance of being awarded from these Crates. Id.

  153. Tex. Penal Code Ann. § 47.01(4) (West 1995).

  154. Carpenter, supra note 151.

  155. Thielmeyer, supra note 152.

  156. See State v. $1,760.00 in U.S. Currency, 406 S.W.3d 177, 179 (Tex. 2013) (explaining that noncash rewards of store merchandize were “clearly benefits and thus ‘things of value’ under the statute”). This Texas Supreme Court decision makes clear that the statute’s language of “any benefit” is broad and does not require any kind of exchangeability with money like in other jurisdictions. Compare id. (holding that noncash or nonimmediate rights are both clearly benefits under the statute), with Taylor v. Apple, Inc., No. 20-cv-03906-RS, 2021 WL 11559513, at *6 (N.D. Cal. Mar. 19, 2021) (holding that the lack of transferable value of loot boxes is outside the statutory definition of “a thing of value”).

  157. Penal § 47.01(4)(B).

  158. Id.

  159. See In-Depth with the Rumble Update, Rocket League (Sep. 2, 2016), https://www.rocketleague.com/en/news/in-depth-with-the-rumble-update [https://perma.cc/4UVF-TX6W] (“Players will then have the option to purchase Keys that will allow them to access the contents of the Crates, where they can find random, but exclusive, Garage items that are unique to the Crate they’ve chosen.” (emphasis added)). The reason many of these Crates were so appealing was the exclusivity of the items and the lack of any alternatives to acquire them. See id.

  160. Totally Awesome Crate Drops During Radical Summer, supra note 150.

  161. Id.

  162. See Image posted by u/Elegant-Lettuce8846, Reddit (r/RocketLeague), Why did they raise the price of the fennec? (2024), https://www.reddit.com/r/RocketLeague/comments/1dtrmch/why_did_they_raise_the_price_of_the_fennec/ [https://perma.cc/JCW8-HSN5] (on file with the Houston Law Review) (providing a July 2024 screenshot describing the Fennec’s price as 800 Credits); see also How Do I Purchase Credits in Rocket League?, Epic Games, https://www.epicgames.com/help/en-US/c-Category_RocketLeague/c-RocketLeague_Gameplay/how-do-i-purchase-credits-in-rocket-league-a000084231 [https://perma.cc/ZN7B-GPBB] (last visited Oct. 6, 2024) (demonstrating that 500 credits equates to about $4.99).

  163. Inflation Calculator, US Inflation Calculator, https://www.usinflationcalculator.com/ [https://perma.cc/EU7Z-PGX8] (last visited Sep. 4, 2025) (comparing values of $8 in 2025 versus 2019). While this does not account for other fluctuations in the price of the Fennec overtime, it is worth noting that the demand for the Fennec is still high and was likely extremely high in 2019 upon its release. See Burair, The Best Cars in Rocket League, Dignitas (Mar. 29, 2024), https://dignitas.gg/articles/best-cars-in-rocket-league [https://perma.cc/7ZD4-Y6EY] (“Almost every Rocket League player either has a Fennec or wants to get one in their garage.”).

  164. While the Texas Supreme Court in Rylie I appeared open to hearing argument on the exception’s constitutionality, the lower court decided the litigation on a different matter. See Rylie I, 602 S.W.3d 459, 466 (Tex. 2020); see also Rylie II, 649 S.W.3d 246, 248 (Tex. App. 2022) (not reaching the issue of the statute’s constitutionality).

  165. See supra Section IV.B.1.

  166. See supra Section IV.B.2.

  167. Tex. Penal Code Ann. § 47.02(a)(3) (West 2024).

  168. See supra Section IV.B.2.a (discussing how the “private place” element is likely not satisfied for public, online loot boxes).

  169. See supra Section IV.B.2.b.

  170. While outside of the scope of this Comment, it is worth noting that a violation of Texas state gambling laws may have federal consequences as well. 31 U.S.C. § 5363 prohibits the “acceptance of any financial instrument for unlawful Internet gambling.” 31 U.S.C. § 5363. The definition of “unlawful Internet gambling” under this statute includes any bet placed or received which involves the internet where the bet is “unlawful under any applicable Federal or State law . . . in which the bet or wager is initiated, received, or otherwise made.” Id. § 5362(10). The federal law also defines a bet as risking something of value. Id. § 5362(1). The exclusions provided by this section do not appear to take on a meaning different than that of Texas. Thus, if creating or purchasing loot boxes were unlawful under Texas law, the acceptance of funds for these loot boxes would likely be unlawful under federal gambling laws. Violations of these federal internet gambling laws could lead to civil injunctions under § 5365 or criminal penalties under § 5366. See id. §§ 5365–66.

  171. See supra Part III (other jurisdiction’s “thing of value” requirement).

  172. Colvin v. Roblox Corp., 725 F. Supp. 3d 1018, 1023–24 (N.D. Cal. 2024).

  173. Id. at 1023.

  174. Id. at 1024.

  175. Id.

  176. Id.

  177. See generally Thomas Malaby, Parlaying Value: Capital in and Beyond Virtual Worlds, 1 Games & Culture 141, 147–59 (2006) (providing an early account of “[f]orms of [c]apital in [s]ynthetic [w]orlds” including “[m]arket,” “[s]ocial,” and “[c]ultural” capital types).

  178. Evans, supra note 14, at 389.

  179. Id. at 398–99.

  180. Id. at 398.

  181. See id. at 381–84, 399, 405–06. Further discussion on how this could apply is outside the scope of this Comment. However, Evans’ article provides an idea of how potentially close-minded legal precedent and scholarship has been in addressing virtual commodities, currency, or items. See id.

  182. Taylor v. Apple, Inc., No. 20-cv-03906-RS, 2021 WL 11559513, at *6 (N.D. Cal. Mar. 19, 2021) (holding that only the exchangeability with real-world currency would determine if a digital item was a “thing of value”).

  183. See supra Section IV.B.

  184. Rylie II, 602 S.W.3d 459, 466 (Tex. 2020).

  185. David Zendle et al., The Prevalence of Loot Boxes in Mobile and Desktop Games, 115 Addiction 1768, 1770 (2020). While much more conservative, a significant 36% of desktop games included loot boxes. Id. Of those games, several still used the same age rating of 12+. Id.

  186. See Consumer Advisory: Video Games Are Targeting Your Children to Get into Your Wallet, Consumer Fin. Prot. Bureau (Aug. 28, 2024), https://www.consumerfinance.gov/about-us/newsroom/consumer-advisory-video-games-are-targeting-your-children-to-get-into-your-wallet/ [https://perma.cc/A3JD-NT84] (estimating that “45.7 million children in the U.S. play video games, or more than 80 percent of all children between the ages of 5 and 18”).

  187. See supra Section IV.A.

  188. See supra Part III.

  189. See supra Section IV.C.

  190. See supra Part V.