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Source: US Global Legal Monitor

(Oct. 27, 2020) On September 23, 2020, the government of the United Kingdom (UK) issued a public consultation notice calling for “information on the use and impact of loot boxes in video games in the UK.” The government aims to determine public opinion regarding the regulation of loot boxes in video games under existing gambling laws. Loot boxes are defined in the consultation notice as

features in video games which may be accessed through gameplay, or purchased with in-game items, virtual currencies, or directly with real-world money. They contain randomised items, so players do not know what they will get before opening them, but they will get something. The items are usually either cosmetic i.e. items of clothing for avatars etc, or power-ups to improve the playing experience. Loot boxes vary in the way they are accessed, their cost, how the random reward is selected and in the content they return. … Their unique element is the chance mechanism.

The government is seeking to understand the ways loot boxes may cause harm; the nature of the wider in-game purchase market; the ways current protections, including parental controls, operate; and the extent to which the public perceives such controls as being effective. This information will help the government determine whether to include loot boxes under gambling laws.

On July 2, 2020, the House of Lords published a report addressing problem gambling in the UK, noting that the in-game purchase of loot boxes has become more prominent in video games in the past few years and that some research has shown a link between spending on loot boxes and problem gambling.

The Gambling Act 2005 contains the current legislative framework regulating gambling. This act provides that any prize must be “money, or money’s worth” in order to fall within the legal definition of gambling in Great Britain. As the contents of loot boxes are in game items, they do not have any monetary or money’s-worth value and thus currently do not fall within the scope of the legislation.

In 2015 the Gambling Commission considered whether loot boxes were within the framework of the gambling laws. At that time the Commission stated that, while the boundaries between social gaming and gambling had started to converge, “we do not consider there is a persuasive case to move from the ‘watching brief’ stance we have adopted to date.” It said that regulatory intervention could not be justified at that time because only a small group of people spent significant amounts within social games.

The Gambling Commission has continued to recognize the link between loot boxes and gambling and the risk of harm loot boxes pose, but has maintained its stance that loot boxes remain outside the remit of gambling legislation in that they do not have any monetary or money’s-worth value. This position has remained consistent despite the Gambling Commission also acknowledging that because certain games are lax in enforcing their platforms’ terms and conditions, loot boxes are frequently exchanged for cash.

As video gaming is so prominent among children, the Children’s Commissioner recommended in October 2019 that “[t]he Government should take immediate action to amend the definition of gaming in section 6 of the Gambling Act 2005 to regulate loot boxes as gambling.” A report from the House of Commons Digital, Culture, Media and Sport Committee into immersive and addictive technologies had also recommended in September 2019 that the government legislate to bring loot boxes within the remit of the Gambling Act by specifying that they are a game of chance and should not be sold in games marketed to children until research shows that no harm is being caused by exposing children to this type of gambling. The committee further recommended that “any gambling-related harms associated with gaming should be recognised under the online harms framework” and that a working group should be established to gather evidence about this subject.