The House of Lords has called on the UK Government to reclassify loot boxes as gambling.
Over the last few years, there has been a growing debate over loot boxes and their relationship to gambling. Loot boxes are items within video games which can be bought and offer players new characters to play with, new weapons, new skins, or power-ups. However, players cannot see what is in loot boxes until they have been purchased and its contents can sometimes be traded, leading many to liken the mystery mechanic to gambling.
Last week, the House of Lords Gambling Committee published a report which said that video game loot boxes should be classed as “games of chance” and should be regulated under the 2005 Gambling Act. According to the BBC, the report also states that changes should be made immediately, reading: “The government must act immediately to bring loot boxes within the remit of gambling legislation and regulation.”
The UK Government previously promised to focus on the “issues around loot boxes” in its upcoming review of the Gambling Act 2005 and has said it will be launching a call for evidence on the mechanic which involves examining the design of the mechanic, other types of in-game spending, the mechanic’s link to problem gambling, and the size and variation of the loot box market. However, the House of Lords has demanded “urgent action” on the issue and referred to previous studies which highlighted links between loot boxes and problem gambling.
The report, which can be found here, reads: “There is academic research which proves that there is a connection, though not necessarily a casual link between loot box spending and problem gambling. We echo the conclusions of the Children’s Commissioner’s report, that if a product looks like gambling and feels like gambling, it should be regulated as gambling. We also agree with the House of Commons Digital, Culture, media and Sport Committee’s recommendation that loot boxes should be regulated as a game of choice.”
However, the House of Lords’ report then warned that if loot boxes do become regulated, gambling operators and video game companies may then create new products which “blur the distinction between video gaming and gambling”. The report then suggests that all future gambling-like products are regulated under the act and not just products defined as “games of chance”.
There has been rising concern regarding loot boxes since they became popularise in video game franchises like FIFA and other titles, but not just in the UK. Back in 2018, the Belgian Gaming Commission reclassified loot boxes as gambling products and forced gaming companies to remove them from their titles.
Similarly, the Netherlands Gambling Authority ruled that loot boxes with non-transferable to tradeable content was legal, but loot boxes with tradeable content were illegal, and therefore banned the latter.
According to EuroGamer, Ukie, a trade body which represents video game companies in the UK, has said it is working to address all concerns raised in the report. It stressed that it has been pushing for more family controls on home game consoles, saying: “We’ve worked hard to increase the use of family controls on consoles which can turn off or limit spending and we will be working closely with the DCMS during its review of the Gambling Act later this year.’
Back in 2019, the UK Gambling Commission revealed that it doesn’t classify loot boxes as gambling under current rules. This is because, despite the fact that some items can be tradeable, the prizes do not hold a monetary value. Under current law, prizes must have monetary value to be regulated as gambling.
Speaking at the Department for Culture, Media and Sport select committee, Neil McArthur, the Chief Executive at the UK Gambling Commission, said of loot boxes: “There are other examples of things that look and feel like gambling that legislation tells you are not – [such as] some prize competitions but because they have free play or free entry they are not gambling… but they are a lot like a lottery.”
However, he did admit that there are “significant concerns” regarding children playing video games with loot box mechanics, particularly as several studies have found that numerous children and teenagers spend hundreds of pounds on loot boxes. The Gambling Commission later said that the firm is ready to begin regulating loot box mechanics and similar products if current law is changed.
The news comes as the UK Gambling Commission continues to tighten its regulation of the gambling market within the United Kingdom. Back in April, the Commission banned the use of credit cards at all brick-and-mortar and online casinos after a study found that around 800,000 people in the UK used credit cards to gamble and around 22% of them were classed as problem gamblers.
Also in April, the Commission introduced new changes to gambling operators’ VIP schemes. The new regulations now prohibit operators from adding customers aged under 25 to their programmes and requires operators to carry out mandatory financial checks beforehand too.
More recently, the UK Gambling Commission opened a consultation on the design of video slots with the aim of making them safer to vulnerable gamblers. The consultation will run between July 9th and September 3rd and will look at various changes to online slots.
This includes reducing the speed of each spin to 2.5 seconds, removing boost and split-screen features, and new rules which require operators to ensure that customers can only play one game per account regardless of the multiple tabs, windows, browsers or applications open.
Finally, the Gambling Commission is looking at permanently banning the ability to reverse or cancel withdrawals. Many online casino sites allow customers to reverse or cancel these transactions, reverting them back to the customer’s bank balance and allowing them to use the funds for gambling.
The Commission hopes that an industry-agreed code will be published at the end of September after the consultation, and that all gambling operators across the nation will follow the rules and implement them into the portfolios or risk fines and other penalties.