Inside the Loot Box Debate: Perspectives from the UK

Gaming has soared in popularity across various age demographics, emerging as the second most lucrative entertainment sector in the UK, valued at GBP 7.05bn in 2022, as reported by Ukie (the trade body for the UK games and interactive entertainment industry). Despite a projected 5.6% year-on-year decline due to multiple factors, 2022 still boasts a 17% increase compared to pre-pandemic levels. However, this surge in gaming comes under increased scrutiny, particularly regarding certain in-game features known as “loot boxes”.

For those unfamiliar, loot boxes are virtual items purchasable with real money or in-game currency, containing randomised rewards from cosmetic items to game-changing equipment. The randomness of these rewards has sparked widespread debate (see here and here and here), drawing attention from players, industry stakeholders, and the UK government.

Background and Concerns:

Initially used in free-to-play games, loot boxes have transitioned into premium games due to their revenue-generating potential. However, concerns have arisen regarding their resemblance to gambling, given the uncertainty of outcomes.

The primary worry revolves around potential harm, particularly among younger players, with fears of encouraging gambling tendencies or excessive spending. Lack of transparency in odds disclosure further compounds these concerns. The Gambling Commission has stated that the Gambling Act 2005 does not encompass loot boxes, rendering it unable to utilise its regulatory authority for intervention.

Nevertheless, the Commission has expressed apprehension regarding the blending of video gaming and gambling. In September 2019, the Digital, Culture, Media and Sport Committee released a report on immersive and addictive technologies, urging for amendments to extend the 2005 Act to cover loot boxes. Similarly, a report from the House of Lords Committee on gambling harm in July 2020 also advocated for the inclusion of loot boxes under the Act’s purview.

UK Government’s Position on Loot Boxes:

In June 2020, in response to the DCMS Committee report, the Government declared its intention to initiate a call for evidence regarding the influence of loot boxes on behaviour resembling gambling. This call for evidence was included in the Government’s broader examination of the Gambling Act, which took place from December 8, 2020, to March 31, 2021.

In July 2022, the Government released its findings in response to the call for evidence. It noted various potential harms linked to the acquisition of loot boxes, such as mental health issues, financial repercussions, and gambling-related risks. These risks were deemed to be particularly elevated for children and adolescents. However, academic studies had not definitively established a direct causal relationship between spending on loot boxes and problematic gambling behaviours.

After releasing its response to the call for evidence in July 2022, the Department for Culture, Media and Sport (DCMS) assembled a working group comprising representatives from the gaming industry to bolster player protection measures. Acknowledging risks, the UK government advocates for protective measures.

While they have not introduced legislation to regulate this directly, they have urged game companies to take steps, aiming at limiting under-18 access and providing transparent information and spending controls. In response to the Government’s call, the UK games industry, represented by bodies like Ukie, has introduced principles focusing on transparency, player protection, and responsible gameplay. This includes clear probability disclosures, fair loot box design, and technological controls to manage spending.

Collaboration:

The UK loot box debate underscores the challenge of regulating digital innovations within traditional frameworks. Collaboration between the government and industry aims to balance innovation and player protection.

Conclusion:

Staying informed about industry developments is crucial for players, parents, and stakeholders alike. As the industry grows, prioritising player welfare and responsible gameplay isn’t just ethical but also prudent for long-term success. To improve the evidence base on loot boxes and video games, the DCMS published a Video Games Research Framework in May 2023 to facilitate research to assess:

 • the effectiveness of the implementation of industry-led protections and how widely they are being adopted across the sector.

• how best to ensure player safety with regards to loot boxes.