You know the feeling. You have a bit of in-game currency, there is a pack you could open, and maybe, just maybe, this is the one with the player you want. You open it. It is not. So you think about buying just one more.
That feeling is not an accident. It is the product.
What is actually happening
A loot box (EA calls them packs, other games call them crates, cases or chests) is a randomised reward you open without knowing what is inside. Sometimes you earn them by playing. Often you buy them, with real money, or with an in-game currency you bought with real money. The thing you are paying for is not the reward. It is the chance of the reward. You are paying to find out.
Translation: You hand over money before you know what you get. The odds of getting the good stuff are set by the company, and in most games you cannot see them clearly. Pay first, random outcome, house sets the odds. That is the structure of a slot machine.
Why studios love them
For a game company, this is close to a perfect business. A normal game sells once. A pack sells over and over, to the same player, forever, and it costs the company almost nothing to make another digital pack. For EA, the packs inside Ultimate Team are the engine of its "live services" business, and live services, not the games themselves, now make up the majority of EA's revenue. Year after year, that is well over a billion dollars from people buying chances.
Translation: The game is the shop window. The packs are the actual business. That is why your favourite game gets a new "season" of packs every year. Not mainly to make the game better, but to restart the spending.
Where it gets uncomfortable
Because the mechanic looks so much like gambling, governments have started asking whether it is gambling. Belgium restricted paid loot boxes under its gambling laws. Other countries have reviewed them. The UK looked hard at it and, for now, left it to the industry to police itself. The reason this matters more in gaming than almost anywhere else is that the players are often young. A mechanic engineered to make spending feel exciting, aimed at an audience that is still learning what money is worth, is a genuinely live ethical question, not a settled one.
Translation: It is the same instinct casinos are built on, but pointed at an audience too young to walk into one. That is exactly why regulators keep circling it.