Loot boxes are a controversial yet increasingly common aspect of modern video games, starting off in free-to-play mobile titles and now appearing even in paid-for, triple-A releases for PC and console.
Developers are making tens of billions of pounds from loot boxes, so they are eager to integrate them as widely as possible. Meanwhile campaigners argue that they are effectively a form of gambling which normalises this practice in a context where children are likely to be exposed to it.
So are loot boxes gambling or just harmless in-game rewards, and more importantly will regulators in the UK step in to ban them outright, or will they stick around in spite of protests?
International precedent
The idea of outlawing loot boxes in video games is not a new one, and indeed a number of countries including Belgium have already taken steps to prevent them from being made available in exchange for actual cash. Instead, loot boxes can only be earned as a reward for playing the game itself, not bought with a real world currency.
In other parts of the world, other regulatory changes have been introduced to demystify loot boxes. In China, for example, developers are required to publish information on the odds associated with loot boxes used in games, so that players know the likelihood of receiving a particular item each time they open one.
There are other, more nebulous and indistinct responses seen elsewhere, with some regions choosing to use existing legislation relating to online gambling sites in order to clamp down on loot boxes, while others choose to define them as an entirely separate practice.
Evolution of the UK’s approach
The UK has one of the most liberal approaches to gambling activities in the world, with regulated land-based and online operators found in abundance and the advertising of betting services still associated with major sporting events.
Even so, there has been growing pressure to clamp down on the promotion of gambling, especially in ways that could be seen as enhancing its appeal to the under-18s.
The first instance of the Gambling Commission actually assessing loot boxes and other virtual prizes found in games came in 2017, when it determined that so long as the digital content in question was only usable in a given game ecosystem, it was not necessary to regulate or license it in the same way as gambling. Even so, it also recognised that digital items could have real world value, equivalent to chips used in a casino, hence the need for ongoing investigation into and scrutiny of this issue.
Later in the same year, the Commission pointed out that it was powerless to regulate loot boxes until legislative changes were pushed through parliament to define them as gambling.
As time passed, the calls for action to be taken on the loot box issue grew louder and more numerous, although a study from the Commission concluded that around a third of children had encountered loot boxes and there was no clear link to draw between this and any subsequent interest in other gambling activities.
By the autumn of 2019, a report from the Department for Digital, Culture, Media and Sport made a key recommendation; that the government should act to stop games which feature loot boxes as a core mechanic being marketed and sold to children.
As it stands today, loot boxes are not explicitly banned in the UK, nor are they covered by the Gambling Act of 2005, so they remain effectively unregulated.
Future prospects
Whether or not loot boxes will be entirely eliminated as an aspect of video games in the UK remains to be seen and is entirely down to whether the government decides to define them as a form of gambling and thus give existing regulatory bodies the option to use their powers to limit them.
The focus has been on games which target children that include loot boxes and it seems very likely that there will be a clampdown on them at some point in the near future. This would impact hugely popular titles like Fortnite and the FIFA football franchise, as well as a host of mobile games.
Games which are restricted to being played by adults may still be able to feature loot boxes for years to come, although if there is enough of an uproar from consumers themselves then developers may be compelled to cut down on their use, regardless of what politicians and regulators decide to do.
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