But you're not describing a loot box. That's not how loot boxes work.

I mean, for one thing, 1 in 4 doesn't mean you should get a payout in the fourth try. You could buy a hundred things with a 1 in 4 chances and never win. Random means random.

But precisely for that reason loot boxes sometimes implement "mercy rules" that increase the odds on repeated tries to prevent people being frustrated because squishy human brains are bad at understanding probability intuitively.

But the way look boxes work is by having a loot table, which associates a list of possible outcomes to a weight and runs a random check against that table each time. It's how it worked on pen and paper Dungeons and Dragons in the 70s and it's how it works in monetized loot boxes today. Different implementations can have different odds, each game can offer different box types with different probabilities, but if we're talking about loot boxes we're talking about that.

I don't know what game you were playing. I suppose a loot table with 75% of nothing and 25% of a single hardcoded item is still a valid loot table, but it's overly simplistic and now how it'd typically be implemented. If you're playing some game that gives you an on-screen representation of a paid item under those rules and you can show that they are misrepresenting the odds you can and should go flag them in front of whatever body regulates advertising in your country, as well as to whatever platform is offering the game. It's very likely that it'd be breaking multiple regulations entirely unrelated to gambling, both public and private. I'm not saying it doesn't happen (mobile games in particular are full of really gross design people aren't following up on enough), but that isn't a typical implementation and not the base complaint people have.

And again, can't stress this enough, it's probably already illegal regardless of whether loot boxes run on gambling rules or not.