Is Online Gaming Paving the Way for Children to Gamble

Loot boxes are a popular monetisation technique in games, which have been likened to gambling. Loot boxes can be purchased in-game using virtual currencies or actual money and contain randomised virtual rewards that can range from power-ups to skins to rare items.

They are unique because of their element of chance; players know they will get something but need to know exactly what. For example, a loot box may have a 5% chance of yielding the anticipated item on opening (its drop rate), but 95% of the time will yield a different prize.

Some loot boxes operate using player data to lower the drop rate of players who have previously spent more than other players on loot boxes to encourage them to keep seeking the anticipated reward. 

In 2020, the Government issued a ‘call to evidence’ regarding loot boxes to establish whether they carried a risk of gambling behaviour and excessive spending in games.

Evidence (including a study by InGame) found that, while there was an ‘association’, there was no determination of a causative link between loot boxes and harmful behaviours. As a result of this, the Government proposed an industry-led response to developing protections for young players and took no further action for the time being with respect to reforming gambling legislation.

Within the gaming sector at that time, only games which were available for purchase through the Apple App Store and Google Play were required to display probability rates for loot boxes.

The Government recommended the following measures to promote safe gameplay:

• Children and young people should not be able to purchase loot boxes without the consent of their parent or guardian, and 
• All players should have access to spending controls and transparent information, 

They also convened the Technical Working Group to look into the issue further.

The principles, while a step towards protecting players and consumers, especially children, are a voluntary code – there are no sanctions nor regulatory bodies to enforce them. Rather, it is the players (and the players’ parents) who will be practically enforcing these principles.

It seems probable that if there is no collective move within the gaming industry towards adhering to the principles in the next 12 months, the next step may be to legislate on loot boxes and introduce stricter legislation.

Legislative reform would build on the trend of other recent moves to make online spaces safer for children, such as the Online Safety Bill, and wider obligations and standards applying to games and online services in general, such as CAP advice on advertising in-game purchases and ICO guidance on age-appropriate design in the ‘Children’s Code’.

Our view is that an industry-led approach might be more effective at keeping pace with the development of in-game purchases as it is more agile and able to pivot quickly to address issues as they arise and develop tailored tools and solutions than trying to amend legislation to meet the ever-changing nuances of the gaming industry.