June 9, 2020 5 min read


UK May Reclass Gaming Loot Boxes as Gambling in Order to Protect Youngsters

The DCMS, a UK watchdog, has looked into the effects that opening loot boxes has on young gamers. The government may take steps to reclassify loot boxes as gambling products.

The UK Government Might Reclass Gaming as Loot Boxes

UK’s Department for Digital, Culture, Media, and Sport is launching research later this week aimed at loot boxes in video games. Depending on the results, the UK government might consider reclassifying loot boxes as gambling products. The research is a response to growing concern that loot boxes could be teaching young children to gamble.

Keeping in mind the mechanics used by loot boxes, it is believed that this type of entertainment can expose children to a process similar to gambling. Although the kids that play those games and open up loot boxes don’t consider this act as gambling, this may result in gambling-related addiction at an older age.

The video game industry value is set at some £23 billion a year with revenues that only keep rising. This is partly because all of the top market titles offer some sort of loot boxes. This way, players keep spending more on the same title after the initial purchase.

With that being said, if the UK officials choose to reclassify loot boxes, many game companies will be impacted. EA has already tangled with national legislation in Belgium and the Netherlands over the use of loot boxes. The company was especially criticized for its loot box policies in certain franchises.

Effectively this might result in some games withdrawing from the UK market. On the other hand, some developers may choose to reconstruct their titles making them suitable for audiences under 18.

Loot Boxes Are Not Regulated by the UKGC

Loot boxes, while being part of games, include an element of chance. This is similar to the casino random number generators (RNG). In the UK, loot boxes are not regulated by the Gambling Commission under the pretext that the items which are won do not hold any real money value.

With that being said, the DCMS committee has seen proof last year that prizes won by loot boxes can be sold for real money with the help of mediator websites. This once again raised a concern as to whether game developers are actually profiting from underage “gamblers”.

MP Carolyn Harris who is also head of the UK’s All-Party Parliamentary Group for Gambling Related Harm (APPG) joined the discussion about loot boxes. She said that loot boxes: “They are a virtually speculative commodity that only helps to normalize and encourage young people to take a chance.” She continued by stressing out: “All too often this will lead to youngsters developing an addiction to gambling.

Focusing on research from 2018 by the University of York there is information that loot boxes are now available in more game titles than before. Some 71% of the most popular game titles on Steam include loot boxes. Looking back 10 years, the percentage of titles that supported loot boxes was only 4%, which marks a staggering increase. In that line of thought, browsing through the Counter-Strike: Global Offensive market on Steam, players can easily find the highest items listed. Currently, there are more than 35 items which are listed at a price above 1,246£ (1,400€).

What Can Be Found in the Controversial Loot Boxes  

Although no research can offer a history of loot boxes development, there have been on the market for quite some time. Rewards do vary depending on the game title. Upon the start of loot box offering, awards included basic skins of weapons, sprays other attributes. In recent times, this has changed rather quickly with developers increasing the variety of loot available in the boxes. By now, children can look for any item or tool which allows game customization in those boxes. The loot can include icons, music kits, paint decals used for weapon style modification, description tags, and many more.

But how does it all work? Although this may depend on the game title, usually loot boxes are received by players for free in-game. However, in order to receive the loot, the player must use a key, which is purchasable. The key can be either bought from the provider’s platform or exchanged with other users. Like any other market, gamers also follow a fair exchange rate. In other words, the player that wants to receive the key needs to trade items that add up to the same value as the key or exceed it.

But Where Is the Catch?

There is a catch? The catch is that a key can be exchanged or purchased for 2.00€, for example. On the other hand, the reward which the player receives can be as little as 0.03€. This is precisely why loot boxes are so controversial. Of course, all players want ‘legendary‘, ‘epic‘, or ‘gold‘ items, but oftentimes they receive much less than paid for.

It’s important to mention that many game titles implement fees on each transaction when it comes to in-game market purchases. Part of those fees would go towards the game developer and another part towards the platform. Another worrying fact surrounding the game platforms which offer loot boxes or market purchases is gift cards. Underage players can easily top up their accounts with fresh funds by simply purchasing gift cards.

Lead Author

With 4 years experience as an analyst, Julie—or ‘Jewels’, as we aptly refer to her in the office—is nothing short of a marvel-worthy in her attention to the forex and cryptocurrency space as she quickly became the first pick to co-pilot education to the masses with Mike.

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