Why we need to take a closer look at ‘loot boxes’

Aspiring barrister Georgia Keeton-Williams delves into why more needs to be done to protect children from in-game currencies

The pandemic thrust video games into mainstream popularity. They provided an escape from furloughed boredom and gave a platform for people desperately attempting to connect with people outside their bubble. Ultrafast play and hyper-realistic graphics are worlds away from the OG video game pong, much like, as you will see, the current money-making strategies.

With uSwitch, a broadband comparison site, estimating that 91% of children aged 3-15 play video games, the issue comes when these revenue generating strategies reach the consoles of children.

The ‘loot boxes’ problem

One of these strategies is ‘loot boxes’. How loot boxes appear changes depending on the game, but they are often depicted as in-game chests (Coinmaster) or card pack look-alikes (FIFA). Sometimes, they are something completely outlandish such as Fortnite’s ‘loot llamas’ (a loot box shaped like a pinata llama). Simply put, loot boxes are just a container with a random item(s) which a player will receive. These can be bought for in-game or real-world money.

When opening a loot box, a player does not know what they will get. They could gain a heavily sought-after item with high value or a repeat item that is basically worthless. Some in-game items are even being sold on secondary markets for real-world money.  For example, the most expensive knife on SkinPort, a marketplace for in-game items, is over £44,000 (though the site recommends its actual worth to be circa £1,000)! Selling happens even though trading is usually against both the game’s and platform’s terms and conditions.

The legal response

Loot boxes sometimes use roulette-style wheels to show the player what they have ‘won’, often accompanied by flashing lights and sound effects. Importantly, roulette wheels are a ‘game of chance’ and are classed as gambling under s6 of the Gambling Act 2005. It was this similarity that led the Gambling Commission, the UK’s gambling regulator, to assess whether loot boxes could be a type of gambling.

The Commission found that most loot boxes could not be considered gambling under existing law. The problem was not the way the mechanism operated, but rather, the need for a qualifying prize under section 6(5). A prize needs to have ‘money’s worth’ or real-world value. The conclusion was that as there was usually no legitimate way to cash out loot box rewards, loot box prizes had no real-world worth and could not be considered gambling. They did explain further that if there were a legitimate way to cash out, those loot boxes would likely fall under the gambling label and the commission would take steps accordingly.

This meant that most loot boxes could continue to be sold to children.

The government has recently reviewed whether loot boxes should be classed as gambling. The call for evidence received 32,000 public responses, a rapid evidence assessment of available psychological studies and 50 direct submissions from sources such as academics and industry experts. The government’s response to this evidence can be accessed here.

Ultimately, the government’s views echoed those of the commission – most loot boxes had no monetary value. The report decided not to amend the law to bring loot boxes under the umbrella of gambling, stating that it would be premature given the lack of definitive information about their potential harms. It was argued that doing so may risk unintended consequences — children beginning to use adult accounts was one example — or unfairly hindering the video game industry’s freedom. Similarly to the gambling Commission, the report did recognise that where loot boxes could be cashed out legitimately they may be in breach of existing gambling law – but that they trust the gambling Commission to take action when this occurs.

Digging deeper

It is true that the rapid evidence assessment found a lack of available research but InGAME, the report’s publisher, found that this gap meant that “a cautious approach to regulation of loot boxes is important.” However, the publisher went on to note that this “does not mean that nothing can or should be done”. The assessment actually advocates for enhanced protections and encourages ethical game design, where game developers prioritise safety within the design process. An example of this is age ratings in games or for loot boxes specifically.

Enhanced protections are particularly important when we consider loot boxes as a new product. As they are available to buy often with both in-game money or real-world money, many of the existing advertising restrictions on in-game purchases do not apply. So, if a player gets an unwanted reward, a game can display messages such as “you nearly had it!” when the outcome was purely chance dependent or “you’ll get it next time!” to promote a purchase when in reality, there is no guarantee.

This do-nothing approach has been confirmed in the latest gambling reform policy paper. This means that a change to the law is not imminent. Whether this approach is correct remains to be seen. It is, however, concerning that the UK has chosen to allow the sale of loot boxes to children when so many other countries are taking steps to restrict their sale. They are not completely harmless, as InGAME highlighted, and there are some studies starting to emerge that link loot box expenditure to problematic gambling.

Many people including the Children’s Commissioner, the House of Lords and the government’s Digital, Culture, Media and Sport Committee advocated for loot boxes not to be sold to children. In fact, the House of Lords Committee went as far as calling for the use of Section 6(6) of the Gambling Act 2005 to bring loot boxes under gambling law until a permanent solution can be found. While it shows the sentiment, this solution may be legally flawed. Section 6(6) allows the Secretary of State to classify something as a game of chance. As mentioned above, the issue with Loot Boxes is that most are unable to satisfy the prize element of the act, rather than the ‘game of chance’ element.

Until more research into the harms of loot boxes is conducted, we cannot know whether the government decision to leave loot boxes alone was correct. What is apparent is that there is huge potential for a disconnect between UK law and technological advancements, if the loot boxes issue is left unmonitored.

Georgia Keeton-Williams is an aspiring barrister and first-class law graduate from Northumbria University.