Lootboxes: Advice to the Gambling Commission from ABSG

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.

Introduction

In July 2019, ABSG published advice on online harms, which highlighted concerns about these features and evidence associated with their impact¹. The advice stated:

‘Playing video games, and other online games via apps on mobile phones, increasingly involve content which is very close to gambling activity. Our concerns relate to ‘skins’ gambling, ‘lootboxes’ and ‘social casino games’. Further consideration needs to be given as to whether the gambling-like content is appropriate – particularly as it is used by large numbers of children and young people. Legal definitions of gambling may currently allow certain practices to avoid regulation, even though they are potentially harmful and are perceived as gambling by those that use them.’²

In November 2020, to support the Gambling Commission’s input to policy work being led by DCMS on the issue of lootboxes, we were asked to consider:

• what conclusions could be drawn from the evidence base in relation to nature and scale of any consumer detriment associated with lootboxes
• whether or not lootboxes are increasing the risk that young people who use them become more at risk of gambling harms later in life.³

This briefing note sets out ABSG’s response to these questions and recommendations on how risks associated with these products could be mitigated.

Although out of the scope of this advice on lootboxes, ABSG also notes other concerns related to gaming – such as games and apps which look like gambling products but are not classed as gambling under the 2005 Act because they do not have stakes or prizes. ABSG’s concerns about these types of product and the risks they create for children have been noted in previous advice.

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¹Reducing online harms: ABSG's response to the Government's white paper ABSG, July 2019 - extract in Annex A.

² Reducing online harms: ABSG’s response to the Government’s White Paper (PDF) (opens in new tab). The full extract on lootboxes is provided in Annex B.

³Links are provided to relevant background reading and resources in Annex A.

Background

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.

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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

Evidence of harm

Summary of key points

Studies have found links between lootbox purchases and problem gambling amongst young people. These correlations have been estimated to be as strong as those between problem gambling and using online slots and casino games.

Lootboxes are engaging children in gambling-style behaviour from a young age. Many studies have shown that people under-18s clearly perceive lootboxes to be gambling. How children perceive lootboxes is important and should be reflected in public policy.

Lootboxes do not meet the legal definition of gambling - and are therefore legal for under-18-year-olds. A situation, however, where children are experiencing what they perceive to be commercial gambling is highly concerning. Particularly as public policy in the UK widely accepts that, with a small number of exceptions, children should not take part in commercial gambling.

High-levels of expenditure on gambling-like products – often in short periods of time – is a source of consumer detriment. This is more concerning due to the unclear information provided to consumers on these products.

In analysing the evidence, we have considered three main areas of potential detriment:

• association with current harmful gambling behaviour
• association with harmful gambling behaviour in the future
• high levels of unplanned expenditure – particularly if the consumer was not clear what they were purchasing – or if the expenditure was by a child.

Links to current harmful behaviour

There is evidence suggesting a correlation between lootbox exposure and problem gambling.¹⁶¹⁷ A survey of 16-to-18-year-olds, using correlational analysis, found evidence of a link between lootbox spending and problem gambling. This link was more than twice as strong in its effect than links found in previous studies in an adult population. It was particularly strong in those in the sample classified as ‘problem gamblers.’

Another recent study of an older age group (16-to-24-year-olds) found that lootbox purchasers were more likely to have engaged in gambling activities in the last year. The odds of being classified as a problem gambler were 4.4 times higher amongst those who purchased lootboxes compared with those that did not¹⁸. This association between lootboxes and problem gambling for this cohort was of a similar magnitude as for those who took part in online casino games or slots.

Without further longitudinal analysis, however, it is not possible to determine the directions of causality i.e., whether play with lootboxes is causing problem gambling in this population or whether children with an existing problem are suffering greater harm as a result of the additional opportunities presented by lootboxes to spend money on games of chance. Research is also unclear on which communities or people may be particularly at risk, beyond general trends in relation to gender and age.

These findings all indicate an association between lootboxes and problem gambling. The direction of causality is not clear, but the evidence of a strong association is sufficient to support concern about their harmful effects and to suggest that young people participating on lootbox purchases should be considered as a high-risk of experiencing gambling harms.

These correlations are not surprising. The absence of money’s worth prizes means that lootboxes are not captured by the legal definition of gambling – but from the consumers perspective they share the speculative features of gambling. Online items have meaningful value to consumers who increasingly socialise, work, and interact online.

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¹⁶ The Relationship Between Distance from Gambling Venues and Gambling Participation and Problem Gambling Among U.S. Adults (opens in a new tab), Welte et al, Journal of Gambling Studies, 32, 2016

¹⁷ Quinte longitudinal study of gambling and problem gambling (opens in a new tab), Williams et al, University of Lethbridge, 2015

¹⁸ Lootboxes, Gambling, and Problem Gambling Among Young People: Results from a Cross-Sectional Online Survey (opens in a new tab), Heather Wardle and David Zendle, Cyberpsychology, Behavior, and Social Networking, October 2020

Links to future harmful gambling

In addition to harm caused to children now, there are also concerns about its longer-term impact¹⁹. We know that children have a lower ability to judge risk and to understand the future impact of decisions. But it is a more complex task to understand the risks for longer-term impact of problematic gambling later in life resulting from the use of lootboxes from a young age.

Although the evidence base around early gambling behaviour is less well developed than in other areas of public health, these associations are well established in relation to early exposure to activities such as drugs, alcohol²⁰, and smoking.²¹

Research has also shown that children themselves see buying lootboxes as gambling. In a survey of 11–14-year-olds, 58% saw purchasing lootboxes as a form of gambling²². This suggests that regardless of whether legislation technically capture these products as gambling or not, they are nonetheless viewed as gambling by children themselves – and this should influence how these products are treated by public policy.

There is already considerable public debate about how appropriate it is to expose children to gambling at an early age – even stronger concerns should exist in relation to widespread participation in digital activities children themselves perceive to be online gambling.

In December 2020, the Government announced a change in the age limit for participation in the National Lottery from 16 to 18²³. The change in the National Lottery age limit reflects the increasing shift from draw-based games to more online-based play. This change was not justified on the basis that participation in the National Lottery by under-18s is seen as a high risk to them now, but because of the need to take a precautionary approach to how it might affect them in the future and the need to prevent it from becoming a pathway to harmful gambling.

The precedent set by this precautionary approach adds to the case the participation in lootboxes, which in the eyes of children are experienced as gambling, should also be restricted to people aged 18 and over.

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¹⁹ Country’s top mental health nurse warns video games pushing young people into ‘under the radar’ gambling (opens in a new tab), NHS, January 2020

²⁰ Evaluating the drug use "gateway" theory using cross-national data: consistency and associations of the order of initiation of drug use among participants in the WHO World Mental Health Surveys, Degenhart et al, Drug and alcohol dependence, 2020

²¹ Evidence from tobacco research which shows 40% of adult smokers started before the age of 16 - smoking prevalence (opens in a new tab), Young people and smoking, Action on Smoking and Health, Sept 2019

²² Skins in the Game (opens in a new tab), Royal Society for Public Health, December 2019

²³Government launches review to ensure gambling laws are fit for digital age, DCMS, December 2020

High levels of unplanned expenditure

A key area of concern includes instances of high levels of expenditure – particularly when this was unplanned or based on unclear information about the product. Of even greater concern is when the expenditure is by a child without parental permission.

Instances of these types of expenditure have been widely reported in the media – as demonstrated in the following case studies. The Government’s call for evidence should provide greater clarity on the instances of this type of issue. This should move us from an anecdotal understanding of this type of consumer detriment to a more evidence-based picture.

Case studies demonstrate that:

• there is a high-risk that consumers spend amounts of money, leading to financial harms. This often occurs at a rapid pace over a short period of time – meaning that online lootboxes are distinctly different to products such as Panini stickers or Kinder Eggs, which are not typically linked with similar harmful patterns of consumer behaviour
• there are frequent examples of this expenditure being carried out by children. In these examples the child may be too young to fully understand what they are purchasing or the consequences of their action. There seems to be few comparable examples of products which facilitate high-levels of expenditure directly by children. Although parental responsibility has an important role to play, this characteristic of lootboxes suggests lootboxes are offered in ways which are unclear to parents
• consumers – including adults - frequently report being unclear about the nature of the product they are spending their money on²⁷ – e.g., a lack of information about the probability of successfully obtaining a rare item. We know from research on gambling that information on Return to Players (RTP) is poorly displayed and poorly understood compared with much less common but more accessible information such as theoretical loss statements.²⁸ Although it is unrealistic to expect information to solve this problem itself, consumer protection law means that consumers should be clear about the nature of the product they are buying before a purchase is made
• harm caused by lootboxes will disproportionately effect people from lower-income households who are less able to absorb the financial impact if their children spend large amounts on lootboxes.

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²⁴ My son spent £3160 in one game (opens in a new tab) BBC News, 15 July 2019

²⁵ 'The kids emptied our bank account playing Fifa' (opens in a new tab) BBC News, 8 July 2019

²⁶ My kids spent £600 on their iPads without my knowledge (opens in a new tab), Guardian, 11 March 2020

²⁷ “Lootboxes in digital games” – a gamble with consumers in need of regulation, an evaluation based on learnings from japan, Koeder Tanaka, et al, Research Gate June 2018

²⁸ Statistical risk warnings in gambling (opens in a new tab), Newall et al, Behavioural Public Policy, Cambridge University Press, 2020

Under-utilisation of existing consumer law

Existing consumer protection legislation is not being fully utilised to protect children and young people who make in-game purchases.

In 2011, the Office of Fair-Trading published principles on free to play games. They recommended that optional purchases in-games should not be offered and that information relating to costs should clearly displayed²⁹. The principles also specify that there should be no direct exhortation to children to buy advertised products, no payments taken from account owners without their consent and no exploiting of children’s inexperience.

The following textbox sets out consumer protects within EU law. We recommend that the Government are encouraged to review to what extent equivalent protections exist in UK law post-Brexit. If UK laws are reviewed in this area in the future, we also recommend that close attention is paid to online products such as lootboxes.

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²⁹ The OFT’s proposed Principles for online and app-based games (opens in a new tab) but the OFT did not start looking at free to play games until 2013, and there is no date on the published principles.

³⁰ Guidance on the Consumer Protection from Unfair Trading Regulations 2008, Office of Fair Trading, 2008

³¹ Consumer protection from unfair trading (opens in a new tab), , Business Companion, November 2020

International approaches

There are indications of growing cross jurisdictional concern. To date four jurisdictions have chosen to legislate against lootboxes,^{32 33 34 35} and 19 regulators have signed a declaration expressing concern about their impact³⁶.

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³² EA fined €10m over lootboxes as Dutch court sides with gambling authority (opens in a new tab), gamesindustry.biz, 29 October 2020

³³ Video game lootboxes declared illegal under Belgium gambling laws (opens in a new tab), BBC News. 26 April 2018

³⁴ New Regulation for “Lootboxes” in China – International Impact for all Online Games (opens in a new tab), gameslaw.org, 2 February 2017

³⁵ Valve and EA Found Flouting South Korea Lootbox Rules (opens in a new tab), TechRaptor, 21 October 2020

³⁶ Declaration of gambling regulators on their concerns related to the blurring of lines between gambling and gaming,, Gambling Regulators European Forum 2018

Conclusions

Loot boxes have a strong association with gambling harms – and children perceive their use as gambling. Current evidence suggests a link with harm to consumers now – as well as the potential for young people to suffer harm in the future as a result of early engagement in behaviour that, from their perspective, feels like gambling. ABSG recommends public policy action based on evidence of harm in the present, as well as the precautionary principle because of the concern about the potential for future harm to children.

Further research on actual levels of spending, and other industry held data, would bring greater transparency and understanding of patterns and trends amongst children and young people.

ABSG recognise the complexity of blurred lines between gambling, gaming, and online retail. This challenge will not be best met by simply amending the definition of gambling to capture lootboxes. A cross-government approach to online harms is required. For this to be successful it will need a clearly defined policy framework, with clear roles for regulators including Ofcom, trading standards, the gambling Commission, the Advertising Standards Agency, and others.

Annex A: Links to Recent Research with abstract summaries on key conclusions

Examples of lootboxes being used by consumers and children

The following information provides some of the wider context and issues related to this topic area:

YouTube links

Clips from You Tube of consumers using different types of lootboxes:

• Recent Overwatch lootbox opening (opens in a new tab)
• Star Wars battlefront lootbox opening (opens in a new tab)which started many of the questions asked
• Example of a Child opening Fifa Ultimate Team pack opening (opens in a new tab)
• Physical panini basketball pack opening (opens in a new tab)
• Physical Pokemon pack opening (opens in a new tab)

Summary of recent research

Adolescents and lootboxes: links with problem gambling and motivations for purchase (opens in a new tab) Zendle et al, Royal Society Open Science, June 2019

A large-scale survey of 16- to 18-year-olds (n = 1155) found evidence for such a link (between lootbox use and problem gambling) (η2 = 0.120). The link between lootbox spending and problem gambling among these older adolescents was of moderate to large magnitude. It was stronger than relationships previously observed in adults: 'Video game lootboxes are linked to problem gambling: Results of a large-scale survey' (opens in a new tab), David Zendle and Paul Cairns, PLOS ONE 14(3), November 2018.

‘The prevalence of lootboxes in mobile and desktop games’ Zendle et al, Addiction 115(9), September 2020

• A total of 58.0% of the top games on the Google Play store contained lootboxes, 59.0% of the top iPhone games contained lootboxes and 36.0% of the top games on the Steam store contained lootboxes; 93.1% of the Android games that featured lootboxes and 94.9% of the iPhone games that featured lootboxes were deemed suitable for children aged 12+. Age ratings were more conservative for desktop games. Only 38.8% of desktop games that featured lootboxes were available to children aged 12+.

Lootboxes in online games and their effect on consumers, in particular young consumers (opens in a new tab) Cerulli-Harms et al, Policy Department for Economic, Scientific and Quality of Life Policies, European Parliament, June 2020

• “Lootboxes are not necessarily targeted at children. There are, however, games which are targeted at children that contain lootboxes and there are games that contain lootboxes which are targeted at adults and also played by children. The Swedish Consumer Agency (2019) has presented evidence that many parents consciously let children play games which are rated for older age groups.”

Lootboxes are again linked to problem gambling: Results of a replication study (opens in a new tab) David Zendle and Paul Cairns, PLOS ONE, March 2019

• The results of this study provide further evidence of a potentially important relationship between problem gambling and lootbox spending. Overall, there was a significant link between participants’ scores on the Problem Gambling Severity Index and their lootbox spending (p<0.001, η2 = 0.051). Individuals who did not have gambling problems spent significantly less money on lootboxes than those who were problem gamblers, or at risk of problem gambling.

eSports, skins and lootboxes: Participants, practices and problematic behaviour associated with emergent forms of gambling (opens in a new tab) Joseph Macey and Juho Hamari, New Media and Society, 21 (1), January 2019

• This study assesses participation rates and demographic characteristics of eSports spectators who gamble via an international online survey (N = 582). The sample highlighted the prevalence of young, often under-age, males in eSports-related gambling activities. Participation in gambling, and gambling-like activities, was found to be 67%, with rates of problematic and potentially problematic gambling in the sample being 50.34%.

The Relationship Between Video Gaming, Gambling, and Problematic Levels of Video Gaming and Gambling (opens in a new tab) James Sanders and Robert Williams, Journal of Gambling Studies, 35 (2), June 2019

• Despite having similar profiles, overlap between problematic levels of gaming and gambling was modest, with only 10.5% of the 466 problem gamblers also being problem video gamers and 24.1% of the 203 problem video gamers also being problem gamblers. In general, the evidence would suggest that although the risk factors and manifestations of problem gaming and problem gambling are similar, involvement and/or over involvement in one is not a strong predictor of involvement and/or over involvement in the other.

The relationship of lootbox purchases to problem video gaming and problem gambling (opens in a new tab) Li et al, Addictive Behaviours, October 2019

• Results from a series of path analyses revealed that lootbox purchasing was directly related to problem video gaming and problem gambling severity as well as indirectly through increased video gaming/online gambling engagement, which in turn is related to elevated psychological distress. The present findings provide insight into the role of lootbox purchasing in the transition from recreational engagement in video gaming and online gambling to problem video gaming and/or problem gambling.

Are Video Games a Gateway to Gambling? A Longitudinal Study Based on a Representative Norwegian Sample (opens in a new tab) Molde et al, Journal of Gambling Studies, 35 (2). June 2019

• Using an autoregressive cross-lagged structural equation model, we found a positive relationship between scores on problematic gaming and later scores on problematic gambling, whereas we found no evidence of the reverse relationship. Hence, video gaming problems appear to be a gateway behaviour to problematic gambling behaviour. In future research, one should continue to monitor the possible reciprocal behavioural influences between gambling and video gaming.

Problem gamblers spend less money when lootboxes are removed from a game: a before and after study of Heroes of the Storm (opens in a new tab) David Zendle, October 2019

• In general, when lootboxes were removed from Heroes of the Storm, problem gamblers appeared to spend significantly less money in-game in contrast to other groups. These results suggest that the presence of lootboxes in a game may lead to problem gamblers spending more money in-game. It therefore seems possible that links between lootbox spending and problem gambling are not due to a general lack of regulation in in-game spending amongst problem gamblers, but rather are to do with specific features of lootboxes themselves.

Lootbox engagement and problem gambling among adolescent gamers: Findings from a national survey (opens in a new tab) Kristiansen and Severin, Addictive behaviours, April 2020

• There was a significant positive correlation between lootbox engagement and problem gambling severity when controlling for core demo-graphic factors.

Annex B: Extract from ABSG advice (published July 2019)

Full version of the Reducing online harms: ABSG’s response to the Government’s White Paper (PDF) (opens in new tab).

Lootboxes are in-game features which allow players to stake either real world money or in-game items for a chance of winning something of an unknown value (see Case study 2). Nearly a third of 11 to 16-year-olds have paid money or used in-game items to open lootboxes.³⁷

Research has found a repeated association between the amount that gamers spent on lootboxes and the severity of their problem gambling status, suggesting that those who buy lootboxes and also gamble on other activities are at increased risk of experiencing gambling-related harms.⁴¹⁴²

The similarities between lootboxes and gambling are clear, and some jurisdictions are already taking steps to ban the provision of these games to under-18s. For example, Belgium has already imposed laws which has led to Nintendo removing games from that jurisdiction⁴³. In the USA, a ‘Protecting Children from Abusive Games Act’ is being proposed which would prohibit video game companies from allowing under-18s to access lootboxes and ‘minor-oriented’ games to include pay-to-win features.⁴⁴

There are additional concerns around lootboxes, as the information offered to players is not regulated and therefore consumers will not always have the necessary information to make informed decisions. In some jurisdictions there is now a mandatory requirement to provide more information. For example, in China, a new rule was introduced requiring lootboxes to display the odds of obtaining different prizes.⁴⁵

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³⁷ Young people and gambling, Gambling Commission, November 2018

³⁸ Star Wars Battlefront 2's Lootbox Controversy Explained (opens in a new tab), Gamespot, November 2017

³⁹ EA games: Lootboxes are not gambling, they are just like a Kinder Egg (opens in a new tab), BBC News, June 2019

⁴⁰ Lootboxes, a striking new element in the ongoing gamblification of video games (opens in a new tab), Johnson, Alberta Gambling Research Institute, 2018

⁴¹ Lootboxes are again linked to problem gambling: Results of a replication study (opens in a new tab), Zendle, Cairns, PLOS One, 2019

⁴² Adolescents and lootboxes: links with problem gambling and motivations for purchase (opens in a new tab), Zendle, Meyer, Over, June 2019

⁴³ Nintendo removes two mobile games in Belgium (opens in a new tab), BBC News, May 2019

⁴⁴ Bill to ban the sale of lootboxes to children presses forward with bipartisan support (opens in a new tab), The Verge, May 2019

⁴⁵ China's new law forces Dota, League of Legends, and other games to reveal odds of scoring good loot (opens in a new tab), The Verge, May 2017