Lootboxes: Advice to the Gambling Commission from ABSG
ABSG has given advice to the Gambling Commission in regards to lootboxes. This advice outlines what lootboxes are, concerns around them, and how to protect consumers.
- Executive Summary
- Evidence of harm
- Under-utilisation of existing consumer law
- International approaches
- Annex A: Links to Recent Research with abstract summaries on key conclusions
- Annex B: Extract from ABSG advice (published July 2019)
What do we know?
- in-game purchases are widely available and used by children and young people with few restrictions on spend or exposure
- more than 93% of games that feature lootboxes are marked suitable for children 12 years plus.4
- 23% of 11-to-16-year-olds in England and Scotland had paid to use lootboxes.5
- the global value of lootboxes is estimated to reach $50 billion by 2022.6
- marketing spend on the speculative value of in-game items would appear to be unchecked
- there is a lack of transparency from the gaming industry on revenues from different consumer groups.
Lootboxes are in-game features that allow consumers to either spend real world money or stake in-game items for a chance of winning something of an unknown value 7. They are also called mystery awards, prize wheels, treasure chests, item packs and ‘gacha’ games.
Not all video games make the same type of offer. Some games, such as FIFA, offer consumers monetary purchases in the game. Others, such as Half Stone, are free of monetary value. Some games (for example Path to Exile) allow consumers to disable their ability to buy lootboxes.8 The items available from both forms of lootboxes often contribute to a player’s social currency within a game.910 They also appeal to players enjoyment of experiencing ‘surprises’ within games. These features help explain their popularity and appeal to players.
In some respects, lootboxes are not unlike an online version of selling card or sticker collections of footballers or Pokemon characters. These all remain highly popular amongst young consumers and are widely available in UK shops. They encourage further purchases, competition for high value items, sharing, swaps and other behaviours that can be part of social interactions and relationship building in childhood.
Lootboxes, however, differ in two important ways. First, they are ‘packaged’ very differently from physical card packs, with much higher levels of multi-sensory stimulation associated with the surprise. Second, they potentially allow virtually unlimited online spend. Press reports of children spending large sums on in-game features have become more common in recent years,11 although we know of no empirical study has been carried out to date on actual spend and no industry disclosure on annual customer spend by age group.
The widespread availability of in-game features is reflected in survey data of usage by children. Different studies have found differing levels of usage – with differences likely to be accounted for by sampling strategies in each study. The most recent Gambling Commission sponsored IPSOS survey found that 23% of 11-to-16-year-olds in the stratified sample (England and Scotland only) had paid to use lootboxes.12
Although data on the actual or average spend on in-game features is not available (although the Government’s call for evidence should help resolve this), there is little doubt that the market worldwide is significant and growing. For example, Foye et.al 2018 estimated that, by 2022, lootboxes and skins gambling would generate $50 billion.13 A recent survey of the 100 top grossing games on Google Play and the Apple App Store found that 58% of video games on Google Play and 59% of iPhone games contained lootboxes. 93% of Android games and 95% of iPhone games that featured lootboxes were marked as suitable for children aged 12+ years.14
The report of the DCMS Committee on Immersive and addictive technologies15 makes specific reference to the absence of evidence in their recommendation:
“We recommend that lootboxes that contain the element of chance should not be sold to children playing games, and instead in-game credits should be earned through rewards won through playing the games. In the absence of research which proves that no harm is being done by exposing children to gambling through the purchasing of lootboxes then we believe the precautionary principle should apply and they are not permitted in-games played by children until the evidence proves otherwise.”
The Government’s ‘Call for Evidence’ should provide more evidence on:
- the GB market - size, key products, and rates of growth
- the distribution of levels of spend – particularly to better understand incidence of very high spending – both annually and over much shorter periods of time
- the number of downloads of games containing various types of lootboxes
- the distribution of spend across different age groups and other demographic groups.
4 The prevalence of lootboxes in mobile and desktop games (opens in a new tab) Zendle et al, Addiction Vol 115, Issue 9, September 2020
5 Young People and Gambling 2020 – Data Tables (Table 1118) Gambling Commission/Ipsos MORI, August 2020
6 In-game Gambling – the next Cash Cow for Publishers (opens in a new tab) Juniper Research, April 2018
7 Reducing online harms: ABSG’s response to the Government’s White Paper ABSG, July 2019
8 How Lootboxes hooked gamers and left regulators spinning (opens in a new tab) Makena Kelly, The Verge, February 2019
9 Definition - What does Social Currency mean? (opens in a new tab) Technopedia
10 Currency value moderates equity preference among young children (opens in a new tab), Peter R.Blake & David G.Rand, Evolution and Human Behaviour 31 (2010)
11 My son spent £3160 in one game (opens in a new tab), BBC News, 15 July 2019
12 Young People and Gambling 2020 – Data Tables (Table 1118) (Table 1118), Gambling Commission/Ipsos MORI, August 2020 – 386 of 1645 respondents
13 In-game Gambling – the next Cash Cow for Publishers (opens in a new tab), Juniper Research, April 2018
14 The prevalence of lootboxes in mobile and desktop games (opens in a new tab), Zendle et al, Addiction Vol 115, Issue 9, September 2020
15 DCMS Committee on Immersive and addictive technologies (opens in a new tab), House of Commons, September 2019
Introduction - Lootboxes: Advice to the Gambling Commission from ABSG Next section
Evidence of harm - Lootboxes: Advice to the Gambling Commission from ABSG
Last updated: 13 August 2021
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