- A detailed report from the UK Parliament’s Digital, Culture, Media and Sport Committee says that video games that sell loot boxes, a common name for randomised packs of digital items, should be labelled as gambling.
- Loot box mechanics are available in a variety of games and bring in revenue by charging players a small fee to unlock new content. However, because the content is randomised, it can be difficult to unlock rare items without a spending a lot of money, time, or both.
- Lawmakers around the world have expressed concern that loot boxes could be exposing children to gambling at an early age, and taking advantage of adults who suffer from gambling addiction.
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In an effort to avoid exposing young gamers to gambling, lawmakers in the United Kingdom say that video game makers should avoid selling loot boxes and other randomised microtransactions for real world money, and allow gamers to earn those rewards through playtime instead.
A lengthy report published earlier this week by the UK Parliament’s Digital, Culture, Media and Sport Committee examined the relationship between video games, gambling, and addictive behaviour. The report gathers years worth of data and testimony from industry professionals and offers several recommendations for new research and regulations.
Though the DCMS committee said it “struggled to get clear answers and useful information” from the gaming industry, it made clear policy suggestions to make companies accept more responsibility for how their games impact players. The report acknowledges that there’s still much more research to be done on the relationship between video games and gambling, but the committee recommends pre-emptive action to protect children from potentially predatory practices.
Lawmakers around the world have been adopting new methods to regulate video games as the industry adopts new business models. Many of the world’s most popular video games are free to play, but they can earn billions through small microtransactions that charge players for extra content. Those microtransactions can offer anything from cosmetic items and unlockable characters to extra lives and level skips.
As controversy mounts, major video game publishers have been slowly moving away from loot boxes and adopting new strategies for microtransactions. However, the use of loot boxes in some of the world’s most popular games has launched a global conversation about the monetisation methods used in video games.
Buying loot boxes isn’t a requirement and you’re guaranteed a few prizes, but they make unlocking rare items into a game of chance.
Games with loot boxes offer a randomised collection of items for sale, with different odds for receiving each item. For example in the game “Overwatch,” players can purchase a loot box for $US2 to unlock four items, but there are hundreds of items in the game. A player could buy a dozen of loot boxes in search of a specific rare item, but the odds of it appearing are a fraction of a per cent.
Of course players don’t have to spend their money, and “Overwatch” is one of many games that rewards players with loot boxes just for playing. However, regulators have expressed concerned that the randomised nature of loot boxes could be introducing young gamers to a form of gambling.
Adult players who suffer from gambling addiction can spend an exorbitant amount of money purchasing loot boxes as well.
“Loot box mechanics are integral to major games companies’ revenues and evidence that they facilitate profiting from problem gamblers should be of serious concern to the industry,” the report reads.
The UK Parliament’s DCMS Committee said that games publishers should offer in-game currency as a reward instead of loot boxes, and games that offer microtransactions should be clear about what items will be unlocked prior to purchase.
The DCMS committee said that games should not offer microtransactions without revealing which items will be unlocked before purchase, and games that include loot boxes should be age-restricted and carry a content warning for gambling. The committee also recommends that new regulations be introduced to force video game companies to share player data for the purpose of safety and identifying unhealthy habits.
“We recommend that loot boxes 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,” the DCMS committee report reads.
Some games allow players to trade or bet what they find in loot boxes, creating a black market where rare items can be worth hundreds of dollars.
Some games allow players to exchange their in-game items for real-world cash, which leads to trades and bets between players. The DCMS said that the growing market around digital video game items represents a form of unlicensed gambling and further suggests that some games are designed to encourage gambling-like behaviour.
“We agree with the Gambling Commission that games companies should be doing more to prevent in-game items from being traded for real-world money, or being used in unlicensed gambling,” the report reads. “These uses are a direct result of how games are designed and monetized, and their prevalence of undermines the argument that loot boxes are not a form of gambling.”
The DCMS report is the latest voice in a global conversation about video games and gambling. The U.S. is considering its own regulations, and China has strict rules in place.
Parliament will still need to decide whether turn these recommendations into policy and legislation, but the report marks a growing desire for more oversight in the video game industry.
Earlier this year Sen. Joe Hawley introduced a bill that would ban the use of loot boxes in games marketed towards children. The U.S. Federal Trade Commission held its own workshop to discuss loot boxes and microtransactions in August, with several hours of testimony from industry experts. The workshop came at the request of Sen. Maggie Hassan, who also expressed concerns that loot boxes were introducing children to gambling.
During the workshop the Electronic Software Association, the organisation responsible for representing the political interests of video game companies in the U.S., said that Sony, Microsoft, and Nintendo will require all games on their consoles to disclose their odds for loot boxes by the end of 2020.
China has strict regulations on new video games released in the country, and has been implementing mandatory time limits for players under the age of 18. China also requires publishers to disclose the odds of items contained in loot boxes.
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