Loot boxes should be classed as gambling, says House of Lords

The House of Lords has published a report recommending the UK Government should reclassify loot boxes as gambling.

The House of Lords Select Committee on the Social and Economic Impact of the Gambling Industry says the government "must act immediately to bring loot boxes within the remit of gambling legislation and regulation". Alongside recommendations for other gambling concerns, the report argues loot boxes should be classified as "games of chance", which means they would fall under the Gambling Act of 2005 and be regulated by the Gambling Commission.

While the UK Government previously promised it would "focus on issues around loot boxes" as part of a potential overhaul to the Gambling Act (and last month called for evidence), the loot box section of the House of Lords report argues the issue "requires more urgent attention". It recommends ministers "should make regulations under section 6(6) of the Gambling Act 2005 specifying that loot boxes and any other similar games are games of chance, without waiting for the government's wider review of the Gambling Act". It also recommends ministers should be given the power "to specify by regulations that any activity which in their view has the characteristics of gambling should be treated as gambling for the purposes of the Act".

"There is academic research which proves that there is a connection, though not necessarily a causal link, between loot box spending and problem gambling," the report states. "We echo the conclusions of the Children's Commissioner's report, that if a product looks like gambling and feels like gambling, it should be regulated as gambling.

"The liberalisation of gambling by the Gambling Act 2005, the universal adoption of smartphones, and the exploitation of soft-touch regulation by gambling operators has created a perfect storm of addictive 24/7 gambling."

The new report also echoes the comments made by the The Department for Digital, Culture, Media and Sport Committee in September last year, which also recommended the UK Government should regulate loot boxes under the Gambling Act.

Ukie, the industry body that represents game companies in the UK, said it had been "working hard to address the concerns raised in the Lords Select Committee report". The statement highlighted the 'Get Smart About P.L.A.Y. Campaign', which aims to increase the use of family controls to limit spending, along with a commitment by major platforms to publicly disclose loot box probabilities, and the new 'paid random item' descriptor in the PEGI age rating system.

"The majority of people in the UK play video games in one form or another, so we take these concerns seriously", said Ukie CEO Dr. Jo Twist. "We've worked hard to increase the use of family controls on consoles which can turn off or limit spending and we will be working closely with the DCMS during its review of the Gambling Act later this year".

If the UK were to classify loot boxes as gambling, it wouldn't be the first country to do so. Belgium reclassified loot boxes as a form of gambling in September 2018, forcing companies to rethink or (in the case of FIFA) even fully suspend their microtransactions. Back in 2017, the UK Gambling Commission stated it could not classify loot boxes as gambling due to the inability to "cash out", and that it was up to parliament to change the law. Yet due to the recommendations made by both the DCMS Committee and the House of Lords, and statements made by the Children's Commissioner and the NHS Chief expressing concerns loot boxes are "setting kids up for addiction", there is a sense the tide is beginning to turn. We'll have to see whether the UK Government agrees.