Implementable ideas that can improve behaviour overall
We've all been there - the early game mess up, our bot/mid/top laner is under-levelled and doesn't know how to stay alive under turret, or maybe even getting dived, jungler's raging, and the enemy laner is embarrassing them in all chat. "This team so heavy! Uninstall, never play bot/mid/top again!" But once you've slept on it, realized your boyfriend wasn't actually trying to break up with you irl last week and you realize you just got a 5 day suspension for that silly raging comment, damn... why did you flip out too?
League's report system, from what I've read, is actually pretty amazing. They use an automated process to review every flagged (reported) game and have a huge amount of data on behaviour issues.
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So why is there still so much toxicity in League?
Surprisingly (or perhaps not so surprisingly), the vast majority of toxicity, of flaming and raging, running it down mid doesn't actually come from hardened trolls or consistently toxic players. It comes from you or me, in a rare game, or in small, not quite reportable behaviour when we're on edge.
Those things add up. Not only does it add up to such an extent that youtube streamers teach us the secret to climbing soloq is to mute your teammates, a huge player base avoids ranked play just because they fear aggression from their teammates, not to mention that 1 game that ruined our fun for a day, even though we played 5 others that were great. Toxicity leaves a strong impression and it's not right.
Obviously, League's behaviour system isn't working in this regard. I mean, I get little text boxes on my client every couple weeks that say someone I reported was successfully punished, hooray? But is learning that someone's banned really what we need? We just want a better community where we don't have to report people in the first place.
I strongly believe there's a middle ground. Not punishment but feedback to show players how they can be more sportsmanlike, not to replace the current system, but improve the qualitative aspect of it.
Riot has already tested 'Tips' quite extensively (I know... I'm a bit of a geek to read up on behaviour experiments... but it's cool). Even just showing a generic message like 'Players who don't tilt win 30% more games' in the loading screen (in red, behavioural science OP) are less likely to do silly things and spiral negative attitude out of control.

What's your big idea?
I don't know what will work. But I do think there are some things that can be tried out. The carrots and sticks for sure, but also just talking about it.
Post in the comments if you have other ideas, the more the merrier (if anyone even reads this longass post...) But before you post, please give this thread a read. I think I followed these principles in each of the suggestions below, but tell me if I missed something.
Also, disclaimer: none of these are tested. They are simply ideas on what I would personally find helpful to keeping me positive and playing at my best. If you do know of data points or experiments done with things like these, please shout out in the comments.
** a) Feedback on me when I report** [sg-lux-2]
When you make a report, you generally have gone out of your way to say something and are expecting something to happen.
But the only thing we get is that kind of creepy message that sometimes says we punished someone successfully...
But more importantly than that, was my report accurate? Was I biased - maybe I should reflect on my own conduct that game? As often as we feel wronged, we also vent our own frustrations by reporting other people unjustly after game. Some basic feedback from the client saying "We hear you, but our review shows you weren't keeping it cool either." can remind people they might not be incorrect, but they weren't being sportsmanlike either. That kind of nuance is missed in the black and white feedback of punishments in the current system.
** b) Low priority queue when tilted** [sona-playing]
We already have low priority queue. To be honest, I think low priority queue is underused. I definitely understand how using it for those who are dodging is a good punishment, else we'd have people just dodging all the time.
But wouldn't it be even better if it was used to tell people when they should really take a break? I don't believe that people who are tilted or raging actually want to play anymore.
Maybe it's just that I am weak-willed, but sometimes I'll feel almost compelled to play another game when I'm doing badly because I damn well want to vindicate myself... then I lose more and get more tilted and toxic.
Playing when you're tilted not only feels bad, but is likely to lead to losing games and playing more out of frustration. A 10 minute breather could be helpful both to signal that their behaviour isn't great right now, can also help them clear their head and come back refreshed and save everyone who gets matched with them the headache of playing with someone who is tilted.
** c) 5 blue essence token cheer up** [katarina-love]
Toxicity is contagious.
Unfortunately, when you get shouted at, you get mad back. How many fights have I seen break out between 2 people in a game that led to things like "I'm done! GG - afk" or "I'm not ganking your lane again" or "Don't ever come to my lane" or other silly things. Not to mention the people who just start feeding to get back at people who flamed them...
And that's in game. So much of tilt is what happens the next game.
But Riot can play a key role there. If things are bad, even without saying 'yes, they were toxic', but just noticing those emotional spikes, they can encourage people to cheer up. Here's a token 10 BE, hardly even needs to be worth anything, 5 BE is enough even. Just tell them "It's alright, games like that can happen, but hang in there and keep cool."
** d) Tell me how I'm being negative** [sg-ahri-3]
You don't have to punish someone because they got aggressive once or twice or made things hard for their team because they couldn't get over their early game. But more feedback would be great.
Give more notes explaining how to deal with tilt, or tell them what they did that was not cool. Sometimes the 'official' messages such as "Type I agree in the scary box to admit you are guilty to AFK'ing" or "You're in a chat restriction now. Sucks to be you." can both be scary and frustrating. They don't necessarily improve behaviour, just make you endure the injustices until your restrictions are lifted.
Although specific context of what they did might be hard to automate, even just some generic messages obviously meant for the player might still be enough to remind and improve behaviour.
This type of negative behaviour feedback can be just as important when it's not plain aggressiveness and harder to punish for.
Some players just don't realize that sulking over getting flamed can be almost as bad as flaming itself or that being arrogant without flaming, although harder to clearly report, can also cause issues. The problem with toxicity, in the end, is that it's a cycle where people are feeding off others' negative emotions.
** e) Temporary feature suspensions**

Instead of just punishing through bans, giving less rewards from the honour system or chat restrictions, also consider suspending things like skins or nice emotes even just for short periods of time to drive through the message "This is not accepted behaviour in League" while not actually doing something lasting to them. Small punishments can also be frequent punishments. Since they are inconsequential, they mainly just send a message.
Anyway, just wanted to leave some thoughts and ideas. I think there's still plenty of room to improve feedback and behaviours on the rift without relying on punishments when things go really wrong.
Hope to see comments about whether others feel like they've had bad days and this kind of thing would help, or other ideas you might come up with!