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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

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. Not all lootboxes, however, are the same.

There is a strong association between spending on lootboxes and problem gambling status. This detriment exists for children and adults. One study estimated the association to be of a similar magnitude to the link between problem gambling and the use of online slots and casino games.

Monetised lootboxes are of greatest concern – we recommend these should be the priority for policy action. The absence of money’s worth prizes mean they are not classified as gambling under the 2005 Act. But to consumers they nonetheless closely resemble gambling because they directly involve speculating money on a random event with the chance to win items which have varying value to players. The use of real money is also most associated with the risk of financial harm.

Providing these products to children should not be permitted. Public policy in Great Britain is based on the principle that commercial gaming is an activity for adults. There are exceptions to this (e.g. Category D machines) – but we note there are fewer examples of this now that the Government has taken precautionary action to prevent use of the National Lottery by under-18s.

ABSG, therefore, recommend that monetised lootboxes should not be available to children. This means the Government should consider options including:

  • requiring them to be removed from games that children play
  • age-gating these products when they are present in-games.

ABSG also note concern about non-monetised lootboxes. Evidence from research shows children still perceive using these games as gambling. Despite the absence of real-world money or money’s worth prizes, children as young as 11 still report this as gambling. ABSG recommends that these products should also be removed from games that children play.

Lootboxes can be harmful to adults. Improvements to consumer information and warning labels should be mandated. This would keep these products in line with existing consumer protection principles. It is well known that consumers do not easily understand information on Return to Players (RTP), recent research, however, has shown that more accessible language in warning labels increases consumer understanding of the costs of their gambling. More prominent and accessible information is therefore an essential part of reform.

Any new consumer protection regulations would need future proofing. Lootbox features are likely to decline as new products are introduced by games developers. They should be prevented from introducing innovations which monetise ‘surprise-mechanics’ in games used by children.

Regulations are only effective if there is an agency with responsibility for enforcement and resources to monitor and oversee the market. ABSG does not believe this will be best achieved by simply amending the existing legal definition of gambling so that lootboxes are captured within the remit of the Gambling Commission. The lines between gambling, gaming and online retail are blurred. The Government’s Online Harms’ White paper proposed measures to address a wide range of online risks – and lootboxes should be considered within this. A multi-agency response by Ofcom, Trading Standards, the Gambling Commission, the Advertising Standards Authority, and others is required. This should be underpinned by clearly defined roles for each agency, a well-specified policy framework, and specific outcome metrics.

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