DCMS committee urges UK Government to regulate loot boxes

12 September 2019

A Department for Digital, Culture, Media and Sport (DMCS) committee has called on the UK Government to regulate video game loot boxes under the Gambling Act 2005 in order to help protect children from potential gambling-related harm.

The cross-Parliament committee this week published a new report into immersive and addictive technologies, in which it covered the issue of loot boxes, a feature of video games whereby a player can buy ‘blind boxed’ virtual items for cash.

At present, loot boxes are not regulated, but the committee said that as they can be purchased with real money and do not reveal their contents beforehand, they should be classed as games of chance and therefore be regulated under the 2005 Gambling Act in the next parliamentary session.

The committee said if the Government opts not to follow its recommendation, it should produce a paper stating the reasons why.

Meanwhile, the report calls for an outright ban on the sale of paid-for loot boxes to children playing video games and apps. The committee proposed younger players be permitted to earn in-game credits while playing instead, which could then be used to purchase loot boxes.

The committee also said that the Government should introduce new regulations whereby games companies would be required to share aggregated player data with researchers and contribute financially to independent research through a levy administered by an impartial body

“We believe that the industry should pay a levy to fund an independent body formed of academics and representatives of the industry to oversee research into online gaming and to ensure that the relevant data is made available from the industry to enable it to be effective,” the committee said.

The committee also hit out at the gaming industry’s current approach, saying that it must take more responsibility when it comes to protecting players from harm. In the report, the committee said given the technological sophistication of the games industry, and the popularity of its products among children, there is more that companies could be doing to safeguard players. 

In relation to this, the committee questioned the inconsistencies in the games industry’s self-regulation around the distribution of games. The committee said that if companies continue to uphold that it is the responsibility of the parent or guardian to enforce age ratings, then more legislation may be needed to protect children from playing certain games. In an evidence session, Electronic Arts vice president of legal and government affairs Kerry Hopkins dismissed concerns about loot boxes, describing them as no different to Kinder Eggs.

The committee also criticised the video gaming industry for being unwilling to share sharing data about players, that would allow reserachers to establish a clearer view of gaming patterns. According to the report, games companies collect data for marketing and design, but representatives “were wilfully obtuse in answering … questions about typical patterns of play”.

In addition, the report noted that it is of serious concern that there is currently no effective system in place to stop children accessing age-restricted platforms and games.

“Gaming contributes to a global industry that generates billions in revenue," DCMS committee chair Damian Collins MP said. "It is unacceptable that some companies with millions of users and children among them should be so ill equipped to talk to us about the potential harm of their products.

“Both games companies and the social media platforms need to establish effective age verification tools. They currently do not exist on any of the major platforms which rely on self-certification from children and adults.

“Loot boxes are particularly lucrative for games companies but come at a high cost, particularly for problem gamblers, while exposing children to potential harm," Collins continued. "Buying a loot box is playing a game of chance and it is high time the gambling laws caught up. We challenge the Government to explain why loot boxes should be exempt from the Gambling Act.”