A UK’s House of Lords Select Committee has called on the UK government to “act immediately” and classify loot boxes as gambling.

In the ongoing controversy surrounding loot boxes, several governmental bodies within nations, and their politicians [1, 2, 3, 4] threatened to take legal action against developers.

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.

Now, the House of Lords Select Committee on the Social and Economic Impact of the Gambling Industry have called on the UK government and regulators to classify loot boxes as gambling.

“The liberalisation of gambling by the Gambling Act 2005, the universal adoption of smart phones, and the exploitation of soft-touch regulation by gambling operators has created a perfect storm of addictive 24/7 gambling,” the Lords Select Commitee stated in their gambling report.

“The Committee expects the Government and the regulator to make changes now. Many of the report’s recommendations do not need legislation, and all of them are urgent if consumers are to be protected and lives saved.”

Among the key recommendations includes “The Government must act immediately to bring loot boxes within the remit of gambling legislation and regulation.” Should ministers do this, game developers would likely pull their games from sale or service in the UK, or remove the mechanic entirely. This has been seen in Belgium, after they declared loot boxes and gambling were one and the same [1, 2].

Certain other recommendations could further affect developers and publishers of loot box games as well. While the recommendations refer to gambling and betting games as we currently know them (such as slot machines and card games), these could apply to loot boxes if they are deemed gambling.

Out of all the recommendations, these include the following:

• “The gambling industry offers a variety of products to consumers, including some which can be highly addictive. The Gambling Commission should create a system for testing all new games against a series of harm indicators, including their addictiveness and whether they will appeal to children. A game which scores too highly on the harm indicators must not be approved.
• The Gambling Commission must explain the minimum steps which operators should take when considering customer affordability, and make clear that it is for the operator to take the steps which will enable them to identify customers who are betting more than they can afford.
• Problem gambling is a common mental health disorder, and the NHS has the same duty to treat it as to treat any other disorder. Last year the NHS promised to open 15 new clinics. It should do this before 2023 and establish a comparable number within the following few years.”

Other recommendations include making it so that no game is quicker online “than in a casino, bookmaker or bingo hall,” creating an independent Ombudsman Service to settle disputes between gambling operators and gamblers, and banning of gambling advertising on sports teams’ shirts and venues.

The Lords Select Committee’s report “Gambling Harm – Time for Action” cites the written evidence submitted by Dr. David Zendle of the University of York. Dr. Zendle stated that “in every single one” of his 449 studies, there was (in the report’s words) “a link between spending on loot boxes and problem gambling.”

In short, those who spent more on loot boxes, the more severe a gambling problem they had. Dr. Zendle also stated that “all effects observed were of a clinically important magnitude,” one that is “uncommon in the social sciences.”

The report further quote’s Dr. Zendle’s theory that loot boxes either create “problem gambling,” or exploit those who have such problems.

“It may be the case that these things are linked because spending on loot boxes causes problem gambling. This is a credible explanation because loot boxes are very similar in many ways to gambling, and therefore may provide a gateway to it. However, it may alternatively be the case that this relationship exists because people who already have gambling problems are drawn to spend significantly more on loot boxes. This also makes sense. Problem gambling is characterised by uncontrolled excessive spending on gambling. Loot boxes share many similarities with gambling. It therefore makes sense that this uncontrolled spending may transfer to loot boxes too.”

However during Dr. Zendle’s oral evidence, he stated that there was no definitive link in loot boxes being a gateway for problem gambling.

“We do not know. We just know that the two things coincide. It might be a gateway. You spend, spend, spend on the loot box. You are conditioned to associate this gambling-like product with some sort of reward, maybe an arousal reward, and you go out into the real world and see something that looks just like a loot box, in the form of a slot machine, and you spend more on that. It could be the other way around. You are already a young problem gambler. You already have a disordered, excessive relationship with slot machines. You go home and load up your favourite game, and you see something that looks just like them, and you spend, spend, spend. Either way, I would argue it is not great. I think there is clear harm there, whether the harm is in the form of turning people into problem gamblers or whether it is in the form of taking a vulnerable population and taking lots of their money away.”

The Chief Executive of the Gambling Commission Neil McArthur expressed some concerns however.

When asked in oral evidence if the Commission would accept a change in the law (albeit in what appears to be after much badgering), McArthur stated while he would enforce it, though there were games that blurred the lines of the criteria.

“One possibility is the Gambling Commission regulating this; one is these products not existing; one is somebody else regulating it. But I absolutely agree that we should be concerned about this, because these games look and feel like gambling and they are not, due to a technicality. That was the evidence I gave to the DCMS Select Committee, and that is my answer here.

I am not making a land grab to regulate the gaming industry. I would rather they [the Select Committee] stayed away from the perimeter in the first place. But I absolutely understand and share the concern. If you have a game that looks like gambling and acts like gambling, and the only thing that stops it being gambling is the ability to cash out, that is not a good place to be.”

One example could be seen with Super Mario 64 DS (on Wii U). The Pan European Game Information ratings board (PEGI) rated the game as appropriate for those 12 and older, due to “infrequent gambling elements” as players can play casino style slot machines, roulettes and card games. No real money is ever exchanged.

The Pokemon games have also seen to no longer feature the “Game Corners” where players could use in-game money to play slot machines and more. Again, no real money is ever transferred. Remakes of older titles have changed the Game Corners to arcades (with unplayable machines), different minigames, or removed them entirely.

While most loot boxes offer no physical world value, the report also discusses how game skins can be bought and sold with real money (albeit failing to mention the selling is usually through third-party websites), or using them to bet on eSports.

As stated in a prior report, the crux of the loot box argument seems to center around whether it is the responsibility of the parents or the government to prevent children from accessing materials or actions that could be inappropriate or ruinous. Similar arguments occurred in the past over violence, and sexual content.

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

Image: Overwatch fan Wikia