In recent years, the gaming industry has been under pressure over using loot boxes in video games. These virtual items, which players can purchase to receive in-game rewards, have sparked a debate about whether they’re a form of gambling and their potential impact on young players.
The UK government has now entered the scene, considering regulations to address concerns about loot boxes raised by campaigners, parents, and industry experts.
What are Loot Boxes?
Loot boxes have been defined as virtual items, features in video games which can include different items like chests, crates, card packs, powerful weapons, or rare characters. Players purchase these boxes with real money or in-game currency without knowing what they’ll receive.
The Controversy
The main concern about loot boxes is their structural and psychological similarities with gambling and that they can encourage children to gamble. Many popular games with loot boxes are marketed to children and teenagers.
For that reason, critics argue that the psychological mechanisms used in loot boxes – such as flashy animations and the thrill of unpredictability – are the same as those used in slot machines and other types of gambling. Many campaigners argued that these loot boxes should be subject to strict regulation and treated the same way fast withdrawal casino sites are treated when launched.
When the loot boxes first appeared on the market, the UK Gambling Commission (UKGC), the body responsible for enforcing gambling law in the UK, said that the Gambling Act 2005 does not cover loot boxes and, therefore, cannot use any of its powers to take action. However, the Commission expressed its concern about their close connection with gambling.
After the Digital, Culture, Media and Sport Committee published a report on immersive and addictive technologies in 2019, the UKGC extended the Gambling Act to include loot boxes. As a result, in 2020, the Government introduced the Gambling Act Review, which ran until March 2021. Then, it unveiled a plan to restrict loot boxes for children.
The arguments on both sides of the debate are different. The regulatory bodies aim to protect vulnerable players, especially children, from developing gambling-like behaviours through loot boxes. They also look to increase transparency in monetisation in the games and address potential addiction issues related to loot box mechanics.
On the other side, opponents argue that loot boxes are a form of entertainment, not gambling. They suggest that parental controls and self-regulation are enough. There are also concerns that stricter regulations could harm the UK gaming industry.
UK Government’s Responses
The government’s response to the call for evidence on loot boxes was published in 2022. The report said that loot boxes can cause many harms, including mental health, financial, and gambling-related harms. The risks of harm were likely to be higher for young people.
To address this, the Government said that the purchase of loot boxes should be unavailable to young people unless and until a parent or guardian enables them. Additionally, “all players, including children, young people and adults, should have access to and be aware of spending controls and transparent information to support safe and responsible gaming”.
The Government further published a research briefing on loot boxes in video games, saying that it was working with industry and academics to monitor the implementation and effectiveness of the new guidance and that it would provide an update following the 12-month implementation period. It said it would keep future legislative options “under review”.
As the debate continues, several potential solutions have been proposed. One approach involves promoting parental control features in games and gaming platforms. Another suggestion is encouraging game developers to adopt more transparent and ethical monetisation practices through industry self-regulation. Some also proposed educational initiatives for parents and young players. Many experts ask for a collaborative approach between game developers, regulators and child protection services to find the best solution.
