Loot Boxes, Fun Gaming Feature or Harmful Gambling Addiction?

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According to a recent report published by the UK charity GambleAware, there is “robust evidence” to support that loot boxes are “structurally and psychologically akin” to what the report refers to as “problem gambling.”

The data, collected by Wolverhampton and Plymouth's universities, reveals that of the 93% of children in the UK who play video games, close to 40% of them have opened loot boxes.

Loot boxes are video game features that offer randomized rewards. They appear in games as sealed mystery boxes that players can earn by playing the game or by purchasing them with real or in-game currency.

According to the study, loot boxes are commonly regarded as a form of gambling, but how does the UK government view them?

In March 2017, the UK's Gambling Commission issued a position paper titled, “Virtual currencies, esports, and social casino gaming.” In the form, the Commission stated that virtual items are considered “prizes” and that “Where prizes are successfully restricted for use solely within the game, such in-game features would not be licensable gambling.” The paper went on to say that the ability to convert in-game items into cash or “money's worth” is what constitutes licencing.

Afterward, in August of 2017, The Commission issued a statement explaining that they cannot determine when loot boxes will cross over into gambling. The statement also explained that they could only enforce what Parliament has issued as the law for gambling and restated their earlier position.

Subsequently, in October of 2017, more than 10,000 British citizens signed a petition asking the British government to modify gambling laws to include gambling in video games that target children and vulnerable adults.

After much discourse, in September of 2019, the Department for Digital, Culture, Media, and Sport (DCMS) urged that the British government restrict games with loot boxes to minors. DCMS also recommended that the government work with Pan European Game Information (PEGI) to ensure the loot boxes are labeled as having gambling mechanics.

On July 2nd, 2020, The House of Lords Gambling Committee released a statement saying that video game loot boxes should be regulated under the Gambling Act of 2005.

In the new GambleAware study, the researchers compiled data relating to gambling and gaming's structural and psychological nature. They established a strong connection linking loot box purchasing and ‘problem gambling' in about 13 studies. The findings are as follows:

Approximately 5% of loot box buyers produce almost half of industry revenue for loot boxes.

Of the 5%, nearly a third of them fall into the ‘problem gambler' category.

Younger males with lower educational achievement are more inclined to buy loot boxes than their peers.

As a result of those outcomes, researchers have recommended approaches to prevent gambling harms linked with loot boxes:

Well-defined descriptions of what loot boxes are
Clear Game descriptions and age ratings
Complete disclosure of probabilities displayed in an easy to understand fashion
Spending limits with costs shown in real money value
revisions to the current gambling act to include previous proposals

According to GambleAware CEO Zoë Osmond, the charity funded this research to bring awareness to loot boxes and problem gambling before the upcoming Gambling Acts of 2005 Review. She further says that it's now up to the government to review this research and decide the best legislative course of action.

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