Are Loot Boxes Set to Be Classed as Gambling?

Video game loot box.

An upcoming government white paper is set to suggest tightening various restrictions on UK gambling laws. So far delayed by a change of administration, the white paper is set to address several issues well known to the public, such as sports sponsorships. Yet one point of interest, unknown to many, is the discussion of classifying loot boxes as a form of gambling. Used in video games, studies have suggested these purchasable items can lead to harmful gambling-related behaviours. So, what are loot boxes and will they soon be classified as a form of gambling?

What Are Loot Boxes?

Loot boxes are virtual items, often found in video games. When opened, they provide a random selection of prizes and bonuses to players. These make take the form of improved statistics, credits to buy other items or skins to change the appearance of items. Some can be won, but they are often attainable only when bought with cash.

They first appeared in online multiplayer games. With the birth of free-to-play mobile gaming, loot boxes experienced a boom period. Along with advertising and merchandise revenue, they added another way for developers who gave games away for free to earn money. By making certain features and elements only accessible with loot boxes, people who wanted to further themselves were left with no option but to make purchases.

Pay-to-play elements like this soon found their way into mainstream gaming. This caused a lot of controversy, particularly when consumers had paid for a new title, and then been expected to pay extra to access its features.

Why Are They Being Considered a Form of Gambling?

One of the main arguments that liken loot boxes to a form of gambling is their random nature. The contents of boxes are rarely divulged. Possible contents may be included in a description, and loot boxes may come in different levels, with more expensive ones having higher-level prizes. However, it is generally accepted that you don’t know what you will get.

Research conducted by the University of Plymouth and Wolverhampton University has shown strong links between the use of loot boxes in gaming and gambling behaviour. It showed that of the 93% of children who play video games, up to 40% have used loot boxes. It also suggested that around 5% of people who use them generate around half the entire revenue from boxes. A small core is spending a lot of money in an industry worth $15 billion a year worldwide. It is this evidence that has prompted concern.

Are Existing Regulations in Place?

So far, there are no regulations on loot boxes in the UK. Many games, particularly ones targeted at minors, are making huge sums of money from the unregulated industry. Countries such as Belgium, however, have already moved to classify them as a type of gambling product.

UKIE, the trade body for video games in the UK, has stated that the sector has already made moves to lessen the impact of loot boxes. Probability disclosures have been added to major game platforms, along with random item descriptors. This information works similarly to publishing probability and returns to player ratios that the gambling industry has done for some time. Nonetheless, this says little about items sold on non-major platforms, such as indie developers and mobile games.

What Changes Have Been Suggested?

It seems to be too little too late for the UK government. Their delayed white paper on gambling reform has been pre-empted by a specific paper on loot boxes. While condemning the practice, it did very little to suggest an outright ban was about to occur and made few suggestions to regulate them.

One idea was that the Department for Digital, Culture, Media, and Sport will form its own regulatory board. This will consist of game developers and major platforms, with an aim to protect players. Parental controls and transparent information for those playing have also been suggested.

The problem is that many of these protocols are already in place. Major consoles do have measures in place to stop children from using their parent’s payments that are on file. Coupled with the information already provided by the industry on games, it seems to suggest little in the way of major changes. It remains to be seen if the much-delayed government white paper on gambling will have stricter, wider-ranging suggestions.

Our team of talented writers at the Casino.com Blog have years of experience writing about and working within the online gaming industry. We bring you the latest casino gaming news and the best insights into what’s happening in the world of casinos.

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