Loot Boxes In The UK At The End Of 2019

With the reintroduction of gambling in EVE Online, catching up on the sentiment in the United Kingdom towards gambling in video games is once again relevant to the space game. Back in 2016, the issue was skins gambling. In 2017, the concern shifted to the massive introduction of loot boxes by big game publishers into live service games. As we head into 2020, a look back at some of the activity in the UK over the second half of 2019 is a good idea.

The subject flared up in July when the UK Gambling Commission's program director, made a very unpopular statement at a hearing of the House of Commons Digital, Culture, Media and Sport Committee.

In an evidence session with the digital, media, culture and sport select committee, which is examining links between gaming and gambling, the UK’s betting regulator said it had “significant concerns” about products such as skins and loot boxes. Skins are in-game items that can be won in the game, such as weapons, outfits or particular football players, while loot boxes invite players to pay a certain amount for a mystery reward.

Such products are not defined as gambling under English law, due to the fact that the in-game items cannot be exchanged for cash within the game, despite the fact they can be bought and traded with real money on other sites and acquiring them may involve an element of chance akin to placing a bet.

The Gambling Commission’s programme director, Brad Enright, said it was “constrained by the current legislation”, although it was prepared to regulate such products if the law were changed.

When regulators state they cannot do what politicians want them to do, the response is a push to change the law. In September, the DCMS committee issued a report recommending the regulation of loot boxes under gambling law. The report's summary specifically addressed loot boxes.

Loot box mechanics were found to be integral to major games companies’ revenues, with further evidence that they facilitated profits from problem gamblers. The Report found current gambling legislation that excludes loot boxes because they do not meet the regulatory definition failed to adequately reflect people's real-world experiences of spending in games. Loot boxes that can be bought with real-world money and do not reveal their contents in advance should be considered games of chance played for money’s worth and regulated by the Gambling Act.

Evidence from gamers highlighted the loot box mechanics in Electronic Arts's FIFA series with one gamer disclosing spending of up to £1000 a year.

The Report calls for loot boxes that contain the element of chance not to be sold to children playing games and instead be earned through in-game credits. In the absence of research on potential harms caused by exposing children to gambling, it calls for the precautionary principle to apply. In addition, better labelling should ensure that games containing loot boxes carry parental advisories or descriptors outlining that they feature gambling content.

• The Government should bring forward regulations under section 6 of the Gambling Act 2005 in the next parliamentary session to specify that loot boxes are a game of chance. If it determines not to regulate loot boxes under the Act at this time, the Government should produce a paper clearly stating the reasons why it does not consider loot boxes paid for with real-world currency to be a game of chance played for money's worth.

• UK Government should advise PEGI to apply the existing 'gambling' content labelling, and corresponding age limits, to games containing loot boxes that can be purchased for real-world money and do not reveal their contents before purchase.

A presentation that seemed to leave an impact on the committee concerning loot boxes was a presentation from the 2018 4C International Game Developers Conference in Prague from Dr. Ben Lewis-Evans, a user experience researcher at Epic Games. He discussed some of the thinking behind the loot boxes. The presentation is available on YouTube and embedded above.

In October 2019, the Office of the Children's Commissioner for England issued a report, "Gaming the System", that focused on how the way game companies monetize games affects children. On the summary page, the following recommendations were listed.

• Bringing financial harm within the scope of the Government’s forthcoming online harms legislation. Developers and platforms should not enable children to progress within a game by spending money and spending should be limited to items which are not linked to performance.
• All games which allow players to spend money should include features for players to track their historic spend, and there should be maximum daily spend limits introduced in all games which feature in-game spending and turned on by default for children.
• The Government should take immediate action to amend the definition of gaming in section 6 of the Gambling Act 2005 to regulate loot boxes as gambling.
• The Government’s age appropriate design code must include provisions on nudge techniques and detrimental use of data, as proposed in the draft code.
• Games that are distributed online should be subject to a legally enforceable age-rating system, just as physical games are. There should be a requirement for an additional warning to be displayed for games which facilitate in-game spending. The Government should consult on whether age ratings of all games should be moderated pre-release, just as physical games are.
• Online games should be a key focus of digital citizenship lessons in schools, rather than lessons focusing exclusively on social media. Teachers involved in the delivery of these lessons should be familiar with how key online games that are popular with children work.

With a general election scheduled for 12 December 2019, the issue came to the fore as one the top officials must address. Needless to say, all the political parties came down on the side of saving the children from gambling. The Conservative Party of Boris Johnson specifically mentioned loot boxes in its election manifesto.

Also, given how the online world is moving, the Gambling Act is increasingly becoming an analogue law in a digital age. We will review it, with a particular focus on tackling issues around loot boxes and credit card misuse. (p 20) [emphasis in the original]

On 19 December, Queen Elizabeth gave the Queen's Speech to open parliament. In the background briefing notes, loot boxes and gambling were placed in the Online Harms section.

The Government will carry out a review of the Gambling Act, with a particular focus on tackling issues around online loot boxes and credit card misuse (p. 59).

My understanding is that the Open Harms plan has cross-party support. So while Brexit will get all of the attention, those who follow video game news will have to see what happens with legislation concerning loot boxes and other forms of gambling in online video games. If additional studies, such as the one published by the Royal Society for the Protection of Health the day after the Queen's Speech is any indication, the issue will not go away anytime soon.