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Report: UK Parliament Committee Recommends Banning Sale of Lootboxes to Children

The UK Digital, Culture, Media and Sport Committee has recommended the UK goverment ban the sale of lootboxes to children, after its nine month inquiry into “Immersive and addictive technologies.”

The inquiry involved speaking to industry representatives, including game developer representatives, social media representatives, trade bodies, and academics. This resulted in blunderous comments by some- including EA claiming lootboxes were “surprise mechanics,” and Epic Games saying I would disagree with the statement that Epic makes money from people playing the games after much badgering. The report laments that “some representatives” chose to lie, in the committee’s opinion.

“We felt that some representatives demonstrated a lack of honesty and transparency in acknowledging what data is collected, how it is used and the psychological underpinning of how products are designed, and this made us question what these companies have to hide. It is unacceptable that companies with millions of users, many of them children, should be so ill-equipped to discuss the potential impacts of their products.”

The 84-page report (which you can view here, hosted by parliament.uk) tackles many forms of so-called addictive technologies. These include social media, YouTube, the dubiously defined Gaming Disorder (you can read our own doubts in our editorial series: 1, 2, 3), virtual reality games, harassment, bullying, grooming, exposure to age-inappropriate content, harmful content, and lootboxes.

The opening summery does seem to focus on a rather alarmist message, pointing out Ofcom’s “Media Nations” report about teen spending more time on YouTube than watching television (while Adults watch as much YouTube as television).

It even features a quote from Steven Spielburg about VR when discussing his film Ready Player One stating the future of VR was going to be akin to a super drug.” The report also chooses to summarize the film as “set in a dystopian future where people spend more time in a virtual world than the real one.” It seems to omit any mention of that world being in that state due to factors other than the video games, that the virtual reality only haven, and the fight against a mega corporation using indentured servitude- seeking to control people’s entertainment.

The report’s summery also mentions gaming disorder and loot boxes- both as results of “online harms” that com as a result of game mechanics seeking to maximize player attention.

“In this report we build on the newly established principle of ‘online harms’ by considering potential psychosocial and financial harms associated with the use of immersive technologies. Following the World Health Organisation’s formal designation of ‘gaming disorder’, we have heard calls from gamers, academics, and clinicians for urgent action to better understand and address the condition. While gaming disorder is a relatively new area of understanding, immersive technology providers also have clear responsibilities to protect users from well-established online harms including bullying and harmful content. We also consider the effects of disordered spending within games, and consider the links between game design mechanics such as loot boxes and gambling.

The potential harms outlined in this report can be considered the direct result of the way in which the ‘attention economy’ is driven by the objective of maximising user engagement. This report explores how data-rich immersive technologies are driven by business models that combine people’s data with design practices to have powerful psychological effects.

[…] We intend for this report to inform understanding of, and the debate around, those technologies as the Government introduces a new regulatory framework to tackle online harms. Whilst we recognise that the vast majority of people gain pleasure from social media and online gaming, we must balance that against the potential harms that can occur.”

In the segment regarding gaming disorder, the report mention’s the UK government’s own comments acknowledging evidence “is still emerging, and at this stage it can sometimes provide a conflicting picture. It is important that we take steps to better understand both the positive and negative impacts of new technologies” To which the report replies: “It was therefore disappointing that the then Minister was unable to tell us what the Government is doing to facilitate or commission research on gaming disorder, and was unfamiliar with the Department’s own ‘areas of research interest’, which makes no mention of it.”

Section 3 tackles “Financial harms of immersive technologies” (page 24), including “Disorder levels of spending on games.” Therein, the report discusses game company representatives statements on daily spending caps on their software, and the recommendation for individuals to use parental locks for children.

However, the report states the committee’s belief that representatives were “reluctant” to take responsibility for player actions or hypothetical addictions.

“The games companies we spoke to were generally reluctant to accept that they might have a role or responsibility to intervene proactively if a player’s spending fell outside of normal patterns. Moreover, they said that it would be too difficult to determine what level of spending might be harmful.”

The report notes comments made by Alex Dale, Senior Vice President for King. He explained how it used to ask for feedback from players of Candy Crush Saga who spent a certain amount of money in a week, to gauge if users had spent more than they intended. This was eventually stopped, as it proved ineffectual and annoying to players:

“We would send an e-mail out when a player’s spend was $250 in a week for the first time. It was an e-mail that said, “We notice you are enjoying the game a lot at the moment. Are you sure you are happy with this?” […] We got back, “I wouldn’t spend the money if I didn’t have it” and things like, “I’m fine, please leave me alone”. We felt it was too intrusive so we stopped doing that.”

Dr Henrietta Bowden-Jones (a spokesperson on behavioral addictions for the Royal College of Psychiatrists) is reported to have stated that the games industry should learn from the gambling industry, which (in the words of the report) “has much clearer, industry-wide protocols enabling people to self-exclude from spending.” Dr. Bowden-Jones also stated “gaming is several years behind gambling in relation to protecting the vulnerable.” The Digital and the Creative Industries Minister at the time (Margot James MP) stated that if true, it was “lamentable” and “the industry has a job to do.”

The UK’s Chief Executive of the Gambling Commission was also asked to give statements. Both he and a colleague suggested progress needs to be made, and that self-exclusion measures could be adopted by the video game’s industry.

“When we asked Neil McArthur, Chief Executive of the Gambling Commission, whether games companies should be obligated to monitor how much people spend, identify people with a problem and proactively support them, he responded that, “this is an area where progress needs to be made.” His colleague Brad Enright went on to tell us that self-exclusion measures to protect players “could be adopted by the video games industry voluntarily to address some of the concerns about excessive time [and] excessive expenditure.

An unspecified representative of the Royal College of Psychiatrists gave a far harsher suggestion.

“There should be no in game spending by children. Children are less prepared to deal with the potentially addictive nature of some modern computer games and are less able to make informed decisions about spending.”

In the “Gambling-like behaviours” section (page 26), the report expresses concerns that young children game mechanics akin to gambling in young children may cause genuine gambling in later life. One parent expressed concern over an app game called Bricky Farm. They express concern that while the game is rated all ages, a roulette wheel where prizes can be one is utilized. We are currently investigating if this is part of a randomized prize, or if players can spend money to spin the wheel.

“Most worrying for me is a roulette style wheel mini-game whereby differing amounts of gems can be won for further advancement. This is where the game could become addictive to someone with a susceptibility but more than that it is introducing children as young as 4 to the ‘thrill’ of gambling.”

In addition, the report acknowledges that the “Gambling Commission told us that the Advisory Board for Safer Gambling expressed concerns in response to the Online Harms White Paper about the associations between “gambling lite behaviours and children’s behaviours.”

However, the report does acknowledge comments made by unspecified academics, that there is not yet enough evidence to support such a claim. “This is largely because academic scientists do not have access to the proprietary industry data needed to provide an answer to this question. Scientific research needs to study which gaming mechanisms are the most problematic and needing of both monitoring and regulation.”

Dr Mark Griffiths of Nottingham Trent University’s International Gaming Research Unit also submitted written evidence mentioned in the report, stating how more research could be conducted.

“A scientific working group should be set up under the DCMS to collate the latest evidence relating to the effects of gambling-like gaming. This could then inform an evidence-based paper on gambling-like gaming in order to: (i) provide clarity regarding the evidence and the recommendations, (ii) be shared as a common guideline and practice by relevant UK organizations (i.e. UK Gambling Commission, UK Council for Child Internet Safety, Parent Zone, Childnet) that deal with support and advice provision towards parents and the community.”

That segment of the report’s recommendation to  ends with a recommendation to immediately establish a scientific working group to collate the latest evidence relating to the effects of gambling-like mechanics in games. The group should produce an evidence-based review of the effects of gambling like game mechanics, including loot boxes and other emerging trends, to provide clarity and advice. This should be done within a timescale that enables it to inform the Government’s forthcoming online harms legislation.”

Page 27 begins discussion of lootboxes. After discussing the definition of lootboxes, EA’s own FIFA series and it’s Ultimate Team Packs, and criticisms of EA made by gamers who had contacted the committee after; the segment’s end (prior to the “Potential harms of lootboxes” segment) recommends that lootboxes not be sold to children. Even if research proved there was no harm, the report still recommends such a ban.

“We recommend that loot boxes that contain the element of chance should not be sold to children playing games, and instead in-game credits should be earned through rewards won through playing the games. In the absence of research which proves that no harm is being done by exposing children to gambling through the purchasing of loot boxes then we believe the precautionary principle should apply and they are not permitted in games played by children until the evidence proves otherwise.”

The “Potential harms of lootboxes” segment (page 29) then delves into written evidence submitted by Dr. Aaron Drummond and Dr. James D. Sauer. Therein the doctors claim that lootboxes are “designed to exploit potent psychological mechanisms associated with the development and maintenance of gambling-like behaviours.”

The doctors also argue that “it is plausible that engaging with these loot box systems could have short-term consequences (e.g., over-spending on accessing loot box systems) and longer-term consequences (e.g., facilitating migration to more conventional forms of gambling).”

The report however states that “academics broadly acknowledge that there is not yet enough evidence to reliably conclude that loot boxes cause problem gambling,” with the Minister’s own comments echoing these sentiments.

“If evidence does emerge that loot boxes can be a gateway to problem gambling, then we need to take that seriously and we need to take some action. But the evidence is not there yet. There are not many studies.”

The report then state “Yet, even if there is not enough evidence at this stage to establish a causal link between loot boxes and problem gambling, other research suggests that they may still be causing harm.” This comes in the form of a study conducted by Dr. David Zendle and Dr. Paul Cairns entitled “Video game loot boxes are linked to problem gambling: Results of a large-scale survey.” Additional research submitted by the doctors also came from their written evidence.

“A study by Dr David Zendle and Dr Paul Cairns identified a link between the amount that gamers spend on loot boxes and their score on the Problem Gambling Severity Index (PGSI). Moreover, the large-scale study of more than 7,000 gamers suggested “that the gambling-like features of loot boxes are specifically responsible for the observed relationship between problem gambling and spending on loot boxes” as other forms of microtransaction did not display such a strong link. A further study found the same link among adolescents—in fact, the link between loot box spending and problem gambling among adolescents was more than twice as strong as the relationship observed in adults.”

Dr. Zendle also issued oral evidence, stating that while the research did not prove a “casual link” between loot boxes and problem gambling, that lootboxes may unintentionally be targeting those who have gambling problems:

“Something very different might be happening here where people who are already problem gamblers, people who already have a disordered and excessive relationship with gambling-related activities that may to some extent be beyond their control, are now going into their favourite games and saying, “Oh look, it is something that looks an awful lot like this thing I have a disordered and excessive relationship with”. That is why they are spending more money on loot boxes. It is not that it is a gateway; it is that it is a way that video games companies may, accidentally or incidentally, be profiting from problem gambling among their consumers.”

The doctors also recommended enhanced regulations on lootboxes, such as “ensuring games containing loot boxes carry parental
advisories or descriptors outlining that they feature gambling content.” In addition they propose “serious consideration is given to restricting games with loot boxes to players of legal gambling age.”

While PEGI (Europe’s rating board) have begun to implement content warning labels for in-game purchases, Dr. Zendle stated such a warning label would be insufficient for loot-boxes. Firstly due to being “formally very different to other microtransactions,” and for not stating if it features gambling-like mechanics. Citing a statement made by a PEGI representative to WCCF Tech:

“The main reason for this is that we cannot define what constitutes gambling. That is the responsibility of a national gambling commission. […] If a gambling commission would state that loot boxes are a form of gambling,
then we would have to adjust our criteria to that.”

In spite of this, Dr. Griffiths argues PEGI’s position appears to be “somewhat hard line given that PEGI’s descriptor of gambling content is used whenever any videogame “teaches or encourages” gambling. Such a descriptor would arguably cover gambling-like games or activities and the buying of loot boxes is ‘gambling-like’ at the very least.”

The segment ends with the council’s recommendation:

“Loot box mechanics are integral to major games companies’ revenues and evidence that they facilitate profiting from problem gamblers should be of serious concern to the industry. We recommend that working through the PEGI Council and all other relevant channels, the UK Government advises PEGI to apply the existing ‘gambling’ content labelling, and corresponding age limits, to games containing loot boxes that can be purchased for real-world money and do not reveal their contents before purchase.”

This runs counter to the UK Gambling Commission’s statement in late November 2018 that refuted a connection between lootboxes and gambling. In a statement regarding the report, DCMS Committee Chair Damian Collins MP stated the government must now defend why lootboxes are exempt from the gambling act, and that gaming companies need to take more responsibilities with the “potential harm” their games can cause.

“Loot boxes are particularly lucrative for games companies but come at a high cost, particularly for problem gamblers, while exposing children to potential harm. Buying a loot box is playing a game of chance and it is high time the gambling laws caught up. We challenge the Government to explain why loot boxes should be exempt from the Gambling Act.

Gaming contributes to a global industry that generates billions in revenue. It is unacceptable that some companies with millions of users and children among them should be so ill-equipped to talk to us about the potential harm of their products.”

The report also recommended preventing in-game items being traded for real-world money or being used in unlicensed gambling, that the concept of “money’s worth” in gambling legislation does not “adequately reflect people’s real-world experiences of spending in games.” 

The report also stated that loot boxes (purchased with real money) that do not reveal their contents in advance to be considered games of chance. As such, they recommend the government to define it as gambling, or defend its stance:

“The Government Should bring forward regulations under section 6 of the Gambling Act 2005 in the next parliamentary session to specify that loot boxes are a game of chance. If it determines not to regulate loot boxes under the Act at this time, the Government should produce a paper clearly stating the reasons why it does not consider loot boxes paid for with real-world currency to be a game of chance played for money’s worth.”

In summation, the committee’s report requests the following (as per their own statement):

  • “Sale of loot boxes to children should be banned
  • Government should regulate ‘loot boxes’ under the Gambling Act
  • Games industry must face up to responsibilities to protect players from potential harms
  • Industry levy to support independent research on long-term effects of gaming
  • Serious concern at lack of effective system to keep children off age-restricted platforms and games”

What do you think? Sound off in the comments below!

Ryan Pearson

About

Taking his first steps onto Route 1 and never stopping, Ryan has had a love of RPGs since a young age. Now he's learning to appreciate a wider pallet of genres and challenges.