Debate on classification of loot boxes continues in the UK

Posted on Tuesday, July 23 2019 @ 23:20 CEST by Thomas De Maesschalck

Loot box
The loot box is a digital reward that can be purchased through the game. But what’s in the box...

Loot boxes have been at the center of a debate in Parliament and beyond, with MPs, and the gambling commission all sharing concerns over the potential damages of this form of micro-transaction. There are even centers opening to combat the negative effects that loot boxes and gaming, in general, could have on young people.

The criticism is simple enough. Loot boxes seem to constitute a form of gambling, at least in certain circumstances. Yet currently, they are not recognized as such. The classification is important here. The UK allows for land-based casinos and online sites like PokerStars Casino, which offer games like slots and roulette.

Yet loot boxes, as it stands, are not regulated to the same standards or with the same age-restrictions. There is no support structure in place, and for some loot boxes, this can lead to hefty bills.

Loot Boxes – How They Work
Loot boxes are a form of micro-transaction. The player pays a set amount, usually a small fee, and is given a box in return. Inside the box or chest are items and accessories for use in the game. They could be anything from weapons that you can unlock, to costumes that are purely aesthetic.

You don’t need these items to complete the game, but some players argue that they can improve the experience or make the game easier. Some items are rarer than others, and so it’s argued that players can be tempted to keep buying in the hope of getting more ‘valuable’ items.

Indeed, there are similarities between loot boxes and gambling. A payment is made, and there’s an element of chance to what items are in the box. Developers argue that the player pays for the box, not for its contents.

Arguably, items in loot boxes have no real value. They exist only as a virtual reward. In reality, this is only officially true. Players can sell items, trade and use them as virtual currency on third party sites, providing the formula for what is known as ‘skin gambling.’ If used this way, the value of the item in the box becomes significant to make a profit.

Several games have been criticized so far for their aggressive use of micro-transactions, including Overwatch, Star Wars Battlefront II, which removed this element after the backlash, and recently FIFA19.

Battlefront II
Star Wars Battlefront II removed loot boxes following backlash

The Loot Box Debate
The debate around loot boxes is not just taking place between developers, players, and parents, but also between the government and gambling commissions.

MP Damian Collins, Chair of the Culture, points out that purchasing a loot box is similar to making a real money bet that is essentially speculative and compares it to spinning a roulette wheel. His is a strong position for the reclassification of loot boxes.

MP Margot James, who recently resigned as Digital Minister, countered the argument, saying that loot boxes lack any monetary value. She says, “importantly they can’t be traded for offline money,” and so are not gambling. As mentioned, officially, this is the case, though technically it is wrong. James does admit that there is some evidence emerging that loot boxes are a problem.

UK Commission Responds
In 2018, Belgium classified loot boxes as gambling under their gambling legislation. In the UK, the equivalent legislation is the Gambling Act, which defines it as “playing a game of chance for a prize.”

This would seem to point to loot boxes as gambling but, as Neil McArthur points out, the deeper you delve into the definition of “prize” the more complicated the issue becomes. A “prize” in this context must have a value in money. This throws up the same old conversation about skin gambling again.

Brad Enright, a member of the commission, is satisfied that EA has taken adequate measures to make sure the loot is not traded for money. Both Enright and McArthur also say that they have taken action against 20 skin betting sites in the last four years.

The debate is likely to continue over whether loot box micro-purchases can be considered gambling, or whether they need a classification of their own. Often it depends on circumstances, but for sure, the issue needs to be researched and brought to the attention of the public and commissions.