UK Gambling Commission restates that loot boxes are not gambling

The UK Gambling Commission has waded deeper into the increasingly murky waters of loot boxes in videogames with a blog post detailing its position on whether or not they constitute gambling, and what it can ultimately do about them. Interestingly, in contrast to recent opinions out of Europe and Australia, executive director Tim Miller said that under UK law, loot boxes do not qualify as gambling, and are thus not subject to regulation by the commission.

"Our starting point in deciding our position with any product is to look closely at whether or not it falls under UK gambling law. The definition of what is legally classed as gambling is set by Parliament rather than by us," Miller wrote. "Our role is to apply that definition to activities that we see and any changes to that definition need to be made by Parliament." 

"A key factor in deciding if that line has been crossed is whether in-game items acquired 'via a game of chance' can be considered money or money’s worth. In practical terms this means that where in-game items obtained via loot boxes are confined for use within the game and cannot be cashed out it is unlikely to be caught as a licensable gambling activity. In those cases our legal powers would not allow us to step in." 

Miller also acknowledged, however, that many parents (and, I would add, many who are not parents) don't particularly care whether or not loot boxes meet a certain legal definition. The real problem is the potential risk they pose, and Miller said that the Gambling Commission is "concerned with the growth in examples where the line between videogaming and gambling is becoming increasingly blurred." 

"Where a product does not meet that test to be classed as gambling but could potentially cause harm to children, parents will undoubtedly expect proper protections to be put in place by those that create, sell, and regulate those products," he wrote. "We have a long track record in keeping children safe and we are keen to share our experiences and expertise with others that have a similar responsibility." 

That sounds like an approach similar to the one suggested earlier this week by an analyst at the Victorian Commission for Gambling and Liquor Regulation, who said that even though conventional enforcement methods probably wouldn't be effective in curtailing loot boxes, the commission could work with Australia's Classification Board, which provides age ratings for videogames, "to ensure than any product that does that and monetizes it gets an immediate R rating." 

The UK Gambling Commission actually touched on this matter in a position paper released in early 2016 (and apparently updated in March of this year). It focuses primarily on esports and skin gambling, but there is a section on loot boxes that acknowledges their mechanical similarity to gambling—although it also notes, as Miller did, that they do not fall under the legal definition of gambling. 

"One commonly used method for players to acquire in-game items is through the purchase of keys from the games publisher to unlock 'crates', 'cases', or 'bundles' which contain an unknown quantity and value of in-game items as a prize. The payment of a stake (key) for the opportunity to win a prize (in-game items) determined (or presented as determined) at random bears a close resemblance, for instance, to the playing of a gaming machine," the paper states.

But while games that enable items to be cashed in would likely be classified as gambling and thus subject to regulation, "where prizes are successfully restricted for use solely within the game, such in-game features would not be licensable gambling, notwithstanding the elements of expenditure and chance."