A new European Union Report has recommended tackling loot boxes via new consumer protection regulation, rather than via gambling based ones.
EA even removed premium currency from FIFA 18 and FIFA 19 after Belgium authorities deemed loot boxes as being on-par with gambling. In addition several companies pulled their games from service within Belgium.
In 2018, the UK Gambling Commission refuted the claim made by some media outlets that loot boxes are akin to gambling. In 2019 the UK Digital, Culture, Media and Sport Committee recommended the UK government ban the sale of loot boxes 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. Some felt the proceedings were intentionally badgering.
In any case, there were blunderous comments by some. EA representatives claimed loot boxes were “surprise mechanics,” while an Epic Games representative said they “would disagree with the statement that Epic makes money from people playing the games.“ The report laments that “some representatives” chose to lie, in the committee’s opinion.
While the UK’s National Health Service (NHS) would recommend a ban on games with loot boxes aimed at children in January of this year, UK trade body The Association for UK Interactive Entertainment (UKIE) reiterated many tools and methods are already in place.
On June 8th, the UK’s Department for Digital, Culture, Media and Sport then called for evidence that loot boxes should be deemed gambling. This later lead to the UK’s House of Lords Select Committee calling on the UK government to “act immediately” and classify loot boxes as gambling.
Now the European Union have released a report titled “Loot boxes in online games and their effect on consumers, in particular young consumers.” Created on behalf of the Internal Market and Consumer Protection, it “examines the regulatory framework at EU and national level within which loot boxes operate, provides an overview of public and industry practices, and derives recommendations.”
What sets it apart from other reports is its focus on consumer protection, rather than the debate over whether loot boxes should come under the classification of gambling or not. “Framing the debate around loot boxes,away from gambling and towards consumer protection, would provide the EU with an array of tools to address problematic practices and minimise potential harm, especially for minors.”
The Executive Summery section makes some initial recommendations, suggesting that “consumer protection should be focused on problematic game designs more broadly, rather than focussing [sic] too narrowly on loot boxes.”
This could be of concern to those worried about government overreach, as what could be justified in protecting younger games from lootboxes today could pave the way for censoring content deemed “problematic”- despite the game’s age rating being not for children.
Focusing on consumer protection is also due to how different member states of the EU have different laws for gambling. The cited example is how “consumers in Belgium and the Netherlands currently do not have access to the same game versions as consumers in other Member States, and video game publishers cannot offer the same game across the whole Single Market.”
This also allows the EU to use different means “ranging from non-binding recommendations to mandatory legislation;” along with seeing if existing methods (informing the consumer about loot boxes) are effective via testing.
Findings include that while there is a link between problem gambling and spending on loot boxes, “the direction of causality is unknown.” While the report states that “not all loot boxes carry risks,” there are some games that “use problematic designs which are linked, but not restricted, to loot boxes.”
These mechanics are related to “opaque pricing and offer techniques,” and rewards and presentation “of which could be addictive.” That segment concludes, stating “more research into the behavioural effects of loot boxes on players is needed.” The report also states “The European Union has no competence in the area of gambling,” and as such has not tackled loot boxes directly.
On page 42, the report concludes with recommendations and further actions. While some gambling authorities are now working together, the report recommends “that national gambling authorities intensify their cooperation to ensure that video game publishers take action against illegal marketplaces” that sell virtual items for real money (against a game’s terms and conditions).
The report also recommends “all Member States would need to develop a common approach to avoid that the EU market for video games becomes fragmented,” due to each nation’s laws and different attitudes towards gambling and loot boxes.
“The fact that the national gambling authorities have come to different conclusions about the nature of loot boxes,” the report states, “despite similarities in their national legal definitions of gambling and despite their cooperation in the framework of GREF, shows the limitations of such a national approach.”
To counter-act the fast-moving video games industry, and future “problematic game designs and monetisation methods,” the report recommends broadening “the perspective beyond gambling aspects and approach the issue of loot boxes and other problematic game designs from a wider consumer protection angle.”
Citing previous EU methods such as those in alliance with the CPC and the revision of the Audiovisual Media Services Directive in 2018, the report recommends systems to be “put in place at different points of the consumer journey” to protect gamers and especially minors. These would include warnings, restricted advertising to minors, and disclosing the odds of a loot box before purchases were made.
Expanding parental controls were also suggested; such as being on by default, making parents more aware of the controls existence, payment history, spending limits, alerts, transcripts, refund policies, and “reframed to motivate adoption by adult players to protect themselves from harmful practices.” The effectiveness of these controls should also be verified through testing.
Should these policies still be insufficient, the report recommends the voluntary recommendations be regulated at the EU level.
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