UK distinguishes loot boxes from gambling, leaves it to gaming companies

The Association for UK Interactive Entertainment (Ukie) has recently established new guidelines governing how loot boxes will work in the country, aiming to protect children and provide more transparency to gamers.

In 2020, the UK's entertainment regulatory arm, The Department for Digital, Culture, Media & Sport (DCMS), launched a call to gather evidence on the potential harm that loot boxes can have on players. The goal was to explore whether new regulations should be set on gaming companies and whether it falls under the UK's 2005 Gambling Act.

Based on findings from an InGame report, the DCMS released a statement saying, "While many loot boxes share some similarities with traditional gambling products, we view the ability to legitimately cash out rewards as an important distinction."

They continue, "Most loot boxes currently on the market do not meet the definition of gambling under the Gambling Act 2005, as the prize is confined for use within the game and cannot be converted into real-world money."

Ultimately, this led the regulatory body to pass the responsibility to Ukie, a group representing gaming organizations in the country. Alongside companies including the likes of Microsoft, Nintendo, and Sony, Ukie formulated 11 new guidelines to help regulate loot boxes in the country.

While the DCMS concedes that there have been 15 peer-reviewed studies correlating loot box use and problem gambling, it claims that research is still early and that there may be other "plausible explanations" linking the behaviors.

New guidelines tasks developers with disclosing odds, protecting children

While the UK may not consider loot boxes officially gambling, they recognize the harm they can do, which is why many of the new regulations set by Ukie will help gamers make more informed decisions when buying loot boxes.

One important new guideline governs how odds are presented to the player. Loot boxes should now provide clear probabilities, which should lift the veil behind the chances of getting certain items.

The guidance also tasks the gaming industry to develop stronger technologically-based parental controls to restrict anyone under the age of 18 from getting a loot box without the permission of a parent or guardian. In addition, it calls for fair and lenient refund policies to act as a backstop for instances when children purchase loot boxes without parental consent.

A clear problem that still persists is the existence of third-party websites that will buy and sell in-game items with real-world money. This defeats the argument that loot box buying and gambling are different, as the potential to bring in real-world revenue is more than possible with just a little research.

While against the terms of service for most titles, selling your entire account for real-life money is also possible and something gamers have done in the past. Even when players can’t redeem in-game items for money, platforms like Steam enable players to sell items for account credit, which could theoretically result in thousands of dollars in “free” games.

That being said, the new guidance does touch on this, as one of the new recommendations includes, "Continue to tackle the unauthorised external sale of items acquired from Loot Boxes for real money and continue to invest in IP protection to combat such sales."

While probability disclosures and better tech for parental controls are better for gamers at large, only time will tell whether the regulatory guidelines will positively affect problematic loot-box purchasing behavior. What’s also unclear is whether or not gaming companies in the UK will make a concerted effort to adjust loot box mechanics if there are no penalties for breaking the new rules.

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