Are video game loot boxes a type of gambling or not? That’s the question British authorities are grappling with as they try to determine if the popular video game feature that provides random prizes should be regulated, so children are not targeted and lured into potentially addictive and harmful behaviour.
The signs, in recent days, are that politicians are moving more in favour of classifying loot boxes as gambling, and they would, therefore, come under legislation covering the sector. The UK has one of the most vibrant, and valuable, gambling industries in the world, including everything from corner betting shops to casinos on the internet and also the National Lottery.
Annually, the entire sector generates over £14 billion — nearly double what it was less than a decade ago — with online betting and gambling gaining an ever-larger share of the market. Some of the best live casinos are launching sophisticated sites and apps where people can bet and play in real-time.
What Does the Gambling Regulator Say about Loot Boxes?
The UK Gambling Commission regulates the gambling industry in Britain and in the last couple of years has been introducing strict new measures in an attempt to clean up the sector and make it safe and fair to play at online sites. It has dished out fines to operators amounting to tens of millions of pounds and struck some rogue operators off the list.
So far, the commission has said little about video game loot boxes apart from issuing a position paper in 2016. The powerful watchdog takes its instructions — and any subsequent action — based on the parliament in London and what laws it passes. But in the absence of any legislation covering loot boxes, the commission said it was still monitoring video games with the feature to see if it crossed the line into gambling territory.
“A key factor in deciding if that line has been crossed is whether in-game items acquired ‘via a game of chance’ can be considered money or money’s worth,” the commission said. “In practical terms, this means that where in-game items obtained via loot boxes are confined for use within the game and cannot be cashed out, it is unlikely to be caught as a licensable gambling activity.”
What’s Parliament Saying about Loot Boxes?
The upper chamber of the UK parliament — the House of Lords — has said video game loot boxes should come under the Gambling Act of 2005 because they’re essentially “games of chance” and therefore gambling.
“If a product looks like gambling and feels like gambling, it should be regulated as gambling,” the Lords said, calling on the government to “act immediately” to make provisions in the Gambling Act, so that loot boxes are regulated. They said this was especially important regarding underage people because video game loot boxes can also be purchased, instead of just opening one during play and seeing what rewards are offered.
It’s big business. One estimate puts the amount video gamers spend on loot boxes and the related skins gambling at around $30 billion annually and estimate this will shoot up to $50 billion in the next two years.
“Skins are acquired both through playing video games and from opening purchased loot boxes. These items have value depending on rarity and popularity within game communities,” said researcher Lauren Foye. “On PCs, skins are traded for real money via Steam’s Marketplace; the platform has 125 million registered users globally.”
Some countries, such as Belgium, have already banned loot boxes while elsewhere, there are moves to add loot box warnings.