Lords Recommend Immediate Loot Box Reclassification

Lords Recommend Immediate Loot Box Reclassification

Loot box regulation may soon be a reality. The House of Lords Gambling Committee has recommended video game loot boxes should be regulated under gambling laws in the near future.

If such as change is pushed through, loot boxes would be classified as ‘games of chance’ bringing them under the 2005 UK Gambling Act.

The committe has also stated that the change should not wait.

“The government must act immediately to bring loot boxes within the remit of gambling legislation and regulation,” said a statement accompanying the report.

The report makes two recommendations specific to videogames:

We recommend that Ministers should make regulations under section 6(6) of the Gambling Act 2005 specifying that loot boxes and any other similar games are games of chance, without waiting for the Government’s wider review of the Gambling Act.

The term ‘any other similar games’ could cause problems for the videogames sector, as the report states several times that if something has the characteristics of gambling (and involves real money in some way), then it should be treated – and legislated – like gambling.

The report goes on to make this explicit:

We recommend that section 3 of the Gambling Act 2005 should be amended to give Ministers a power, analogous to that in section 6(6), to specify by regulations that any activity which in their view has the characteristics of gambling should be treated as gambling for the purposes of the Act.

So anything which has the characteristics of gambling could open the door to many games having to radically change their business models, reward mechanisms, or internal gameplay. From the ‘fruit machine’ mini game in Plants V Zombies, to the ‘gacha’ mechanic in Crossy Road, many ‘innocent’ games may well come under scrutiny.

Alongside loot box regulation, the report also highlights esports betting as another potential problem and recommends that the gambling commission keeps an active watch on social gaming, as yet another possible issue.

The reason for the report and the investigation from the Lords Committee is simple. Gambling harms people.

According to the report’s Summary:

One third of a million of us are problem gamblers. On average, one problem gambler commits suicide every day.

The young are most at risk:

  • 55,000 problem gamblers are aged 11–16;
  • for girls aged 11–16, the rate of problem gambling is twice that of any other female age group;
  • for boys, the rate is three times the rate for adults;
  • for all of them, gambling is illegal, yet such efforts as the industry makes to prevent it are altogether unsuccessful.

The harm goes wider: for each problem gambler, six other people, a total of two million, are harmed by the breakup of families, crime, loss of employment, loss of homes and, ultimately, loss of life.

The gambling industry spends £1.5 billion a year on advertising, and 60% of its profits come from the 5% who are already problem gamblers, or are at risk of becoming so.

The summary highlights the approach taken to videogames:

New games are constantly being devised, often highly addictive, sometimes with a particular appeal to children. There is currently no adequate system of checking such games before they are put on the market. We recommend that new games should not be allowed until they have been tested against a range of factors to ensure that they do not score too highly on the harm indicator scale.

So there we have it. While this is not yet law, it’s a very clear and simple set of recommendations. If they are adopted, then the games sector in the UK is going to have to look very carefully at all of the mechanics and business models it uses that may be considered to ‘have the characteristics of gaming’.

You can find the full report here. Chapter six is the one which deals with videogames and loot boxes.

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  1. Pingback: Loot Boxes: UK Government Calls for Evidence - Industry Input Required

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