Government action on loot boxes
There has been recent parliamentary interest in loot boxes. Since October 2017, three Labour MPs have questioned the Government on loot boxes and their association with gambling.
Loot boxes, in brief, are virtual boxes within games that contain random prizes. They can contain items from skins to power-ups that can significantly increase your chances of winning. The rush of obtaining these items in a game of chance has been likened to gambling.
However, under current law, this does not constitute gambling. Tim Miller, Executive Director of the Gambling Commission, explains:
‘In relation to loot boxes specifically, the key thing here is the loot boxes we’ve seen, none of them contain a facility to be able to cash-out within the game itself, and that’s really the key thing which is preventing them from crossing that line into becoming gambling.’
The ability to ‘cash-out’ items is often enabled by third party websites, which does constitute gambling. The Gambling Commission has helped launch prosecutions against such websites. The first case of this kind was brought against the FutGalaxy website, which concluded in February 2017.
In response to questions by MPs, the Government has cited three areas of regulation and policy that apply to loot boxes.
Third party websites have come under scrutiny from the Gambling Commission. The body was set up under the Gambling Act 2005 to regulate commercial gambling in Great Britain.
In a written answer published 16 October 2017, Tracey Crouch MP, Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport stated:
‘Where items obtained in a computer game can be traded or exchanged outside the game platform they acquire a monetary value, and where facilities for gambling with such items are offered to consumers located in Britain a Gambling Commission licence is required. If no licence is held, the Commission uses a wide range of regulatory powers to take action.’
She added that the ‘Gambling Commission is keeping this matter under review and will continue to monitor developments in the market.’
In November 2018, the Gambling Commission published its Young People and Gambling 2018 report. It found that 31 per cent of children had opened loot boxes while playing video games, while 3 per cent have bet with in-game items. However, a spokesperson for the regulator stated: ‘We have not in any way, in the survey, referred to [loot boxes] as exposure to gambling.’
Consumer Protection from Unfair Trading Regulations 2008
Consumers are protected by the Consumer Protection from Unfair Trading Regulations 2008. This includes a requirement on businesses not to subject anyone to misleading or aggressive marketing practices, or, for example, direct exhortation to buy products, such as games content, including in-game purchases such as loot boxes.
The Government has stated that it is committed to ensuring that consumers are properly protected and that children’s vulnerability and inexperience is not exploited by aggressive commercial practices.
Internet Safety Strategy Green Paper
Published on 11 October 2017, the Internet Safety Green Paper intends to ensure that ‘Britain is the safest place in the world to be online.’ Alongside issues such as social media, online radicalization and data protection, the paper also looks at online gaming in terms of child safety.
While the Strategy does not mention loot boxes specifically, it outlines how the government will work with online platforms, game publishers and game developers, and with agencies such as the VSC Rating Board, to continue to improve online safety in games. This includes promoting further awareness and understanding of PEGI age ratings, parental controls and advice on safe gaming.
The paper also outlines the Government’s pledges to work with the video games industry and others on:
- further promoting awareness and understanding of PEGI age ratings, parental controls and advice on safe gaming;
- considering what evidence there is of existing issues and thinking about issues that may emerge, particularly as new types of games (such as Augmented Reality) develop;
- develop an understanding of the various safeguards, techniques and protocols that games companies use to manage their consumers’ online game experience with a view to highlighting best practice;
- sharing guidance and best practice for games businesses to help them ensure their consumers – particularly children – can have a safe and enjoyable online gaming experience; and,
- exploring how the principles behind our social media code of practice should apply to the interactive elements of the games industry, particularly in respect of reporting and removing offensive user generated content.
A consultation on the Internet Safety Strategy closed on 7 December. The Government will consider stakeholder opinion and update the Strategy accordingly.
In September 2018, 15 gambling regulators from across Europe, as well as Washington State Gambling Commission, have signed an agreement to work together to voice concerns about skins ambling and loot boxes.
The regulators stated that their priority is to tackle unlicensed third party websites offering illegal gambling and called on the video games industry and technology platforms to play their parts. Games companies must ensure that features within games, such as loot boxes, do not constitute gambling under national laws.
Neil McArthur, Chief Executive of the Gambling Commission, said that ‘We encourage video games companies to work with their gambling regulators and take action now to address those concerns to make sure that consumers, and particularly children, are protected.’
TIGA will continue to monitor developments and engage with policy makers on this subject. Should any members wish to discuss loot boxes, please get in touch.