Lords call for urgent regulation of loot boxes in UK

The House of Lords Gambling Committee has published Gambling Harm – Time for Action, a new report that calls for the immediate regulation of loot boxes in video games under the Gambling Act 2005.

The report joins a growing number of voices calling for closer attention to and regulation of loot boxes in the UK. As we reported last month, the Department for Digital, Culture, Media, and Sport (DCMS) has already launched a call for further evidence on loot boxes to help support the Government's review of the Gaming Act 2005, which was announced in the Queens Speech in December 2019. This call for further evidence comes despite loot boxes having been around for many years and made notorious in part by Star Wars: Battlefront II as far back as 2017. Indeed, the new Lords report is clear that it thinks there is evidence enough already:

‘We recommend that Ministers should make regulations under section 6(6) of the Gambling Act 2005 specifying that loot boxes and any other similar games are games of chance, without waiting for the Government’s wider review of the Gambling Act.’

The basis for this recommendation comes from evidence primarily given by Dr David Zendle, lecturer in Computer Science at the University of York. Dr Zendle’s research indicates a clear and very strong correlation between spending on loot boxes and problem gambling i.e. the more money you spend on loot boxes, the more likely you are to be classified as having problem gambling. While this doesn’t prove one causes the other, Dr Zendle did emphasise that the evidence is ‘extraordinarily robust. It is of a magnitude that is uncommon in the social sciences. […] It has been replicated across the world, from Canada to Finland to the UK.’

The implication is that either loot boxes contribute to problem gambling or they directly exploit the pre-existing behaviour of problem gamblers - neither of which is great. While Dr Zendle would favour industry self-regulation, he is aware that ‘that has not happened’ and is therefore ‘not against’ some form of loot box regulation. 

The report also cites evidence from Simone Vibert, the Senior Policy and Public Affairs Analyst from the Children’s Commissioner’s Office, which already recommended regulation of loot boxes in October 2019. Ms Vibert claims that regardless of whether items in games have real monetary value (legally speaking), ‘they have immense value to the children who are spending money to get them, whether that is to take part in the game all their friends are playing or whether it is to not be bullied, in some cases. That is where we feel the Gambling Act is not working in the way it should in the modern world.’

Neil McArthur, Chief Executive of the Gambling Commission, which would be responsible for implementing any regulation changes, said he would rather stay away from regulating the gaming industry but would do so if the decision was made.

Whether or not the UK Government takes on the recommendation to regulate loot boxes prior to its review of the Gaming Act 2005 remains to be seen, but there is already precedent for doing so in the EU. Certain loot boxes have been illegal in video games in The Netherlands since 2018, and Belgium followed suit with a less forgiving law of its own in the same year.

What do you think the best course of action is?