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UK Government responds to petition to regulate "loot boxes" in video games

What constitutes illegal gambling?

Gamers launch a petition to regulate

The UK Government has responded to a petition to regulate "loot boxes" in video games

At the start of this month, a petition was submitted to the UK's official Government and Parliament petitions platform that called for existing gambling legislation to be adapted to further regulate gambling in video games, specifically the practice of using "loot boxes" in games. 

So far this petition has received almost 15,000 signatures, which is unsurprising given how strongly many gamers feel about "loot box" systems in games, especially in soon to be released titles like Middle Earth: Shadow of War and Star Wars: Battlefront II. This has placed this petition well over the required 10,000 signatures that are required to receive an official response from the government. 

In the eyes of many, these "loot box" systems are seen as harmful, especially given the fact that many of these games are targeted at children, with the FIFA series' Ultimate Team mode acting as a huge point of contention given the game's low age rating of 3+. In extreme cases, some of these in-game items can be traded for real money, which eventually led to illegal gambling economy based on these in-game items, with FIFA coins and CSGO items acting as a gambling medium, both of which could be traded for real-world currencies. 

In less extreme cases the odds of getting specific items and other useful pieces of information are not widely displayed, creating an ecosystem where in-game "loot box" systems can be designed in a very exploitative way. While most of these games do not offer the ability for items to be tradable to become real-world currency, their similarities to "gambling" make the practice questionable at best.  

Below is the contents of the petition, which is titled "Adapt gambling laws to include gambling in video games which targets children". 



Many video game companies in recent years have introduced mechanics which are essentially gambling of which are targeted at children and vulnerable adults. While not currently considers gambling by law they do copy many traits to make them as addictive and can lead to real money being lost/earned.

Gambling in video games mostly involves 'loot boxes' where players use virtual currency (often bought with real money) to earn in game items often worth less than what they paid (sometimes more) hence its gambling. 
Currently only china has introduced new laws to force companies to display the odds of winning which had been standard in the uk gambling industry for years.

  
The UK government has taken note of this petition and has delivered a lengthy response to it, courtesy of the government's Department for Digital, Culture, Media and Sport. Be prepared for a long read. 

Also note that the Government's official response posted a link to a website that does not exist. We have fixed their link and included it in their response below. 


The Gambling Commission has strong powers to regulate gambling and is monitoring convergence between gambling and video games closely. The government is committed to protecting children from harm.

Protecting children and the vulnerable from being harmed or exploited by gambling is a core objective of the regulation of gambling in Great Britain, and a priority for the government. The Gambling Commission, as the regulator for gambling in Great Britain, has powers to regulate online gambling, and is committed to using its powers and expertise to contribute to creating a safer internet.

The Gambling Commission released a position paper in March 2017 detailing existing protections in relation to virtual currencies, eSports and social casino gaming. The paper can be found on the Gambling Commission’s website at the following address: 

http://www.GamblingCommission.gov.uk/PDF/Virtual-currencies-eSports-and-social-casino-gaming.pdf

Where gambling facilities are offered to British consumers using in-game items that can be converted into cash or traded for items of real-world value, then such activities must be licensed by the Gambling Commission and adhere to strict requirements for the protection of children and the vulnerable, which include measures to prevent underage gambling. It is an offence to invite a child to gamble, and where there is a failure to prevent underage gambling, the Commission will take regulatory and/or criminal action.

Where the facility exists for players of video games to purchase a key to unlock a bundle containing an unknown quantity and value of in-game items as a prize, and where there are readily accessible opportunities to cash in or exchange those awarded in-game items for money or money’s worth, then these elements of the game are likely to be considered licensable gambling activities. In contrast, where prizes are restricted for use solely within the game, such in-game features would not be licensable gambling. The Gambling Commission is committed to working with the video game industry to prevent gambling-related harm related to their platforms.

Consumers are also protected by the Consumer Protection from Unfair Trading Regulations 2008. This includes a requirement on businesses not to subject anyone to misleading or aggressive marketing practices, or, for example, direct exhortation to buy products, such as games content, including in-game purchases such as loot boxes. The government is committed to ensuring that consumers are properly protected and that children’s vulnerability and inexperience is not exploited by aggressive commercial practices.

The Video Standards Council (VSC) Rating Board is the designated body for classifying video games, and applies the Europe-wide PEGI ratings to video games supplied in the UK. The PEGI criteria currently make provision for games depicting simulations of traditional gambling, and such games would generally attract a minimum PEGI rating of 12. The VSC Rating Board is discussing these issues with the PEGI Council and its Experts Group to determine whether any changes to the PEGI criteria need to be made.

The Gambling Commission monitors the participation of children in gambling through a range of data sources including complaints, academic research and the annual Young People and Gambling Survey, which in 2017 included specific questions in relation to eSports and video gaming. The results of the survey are due to be published soon. The Gambling Commission has also asked the Responsible Gambling Strategy Board to examine the wider relationship between children and gambling.

On 11 October the government published the Internet Safety Strategy, setting out plans to make the UK the safest place in the world to be online. The Strategy outlines how the government will work with online platforms, game publishers and game developers, and with agencies such as the VSC Rating Board, to continue to improve online safety in games. This includes promoting further awareness and understanding of PEGI age ratings, parental controls and advice on safe gaming.

The government recognises the risks that come from increasing convergence between gambling and video games. The Gambling Commission is keeping this matter under review and will continue to monitor developments in the market.

Department for Digital, Culture, Media and Sport

 
Two Youtubers have been fined in the UK for gambling offences
 
 
This response states that in-game loot boxes are likely to be considered as a "licensable gambling activity" when the in-game goods can be "readily" "cash[ed] in or exchange[d]" for "money or money's worth". In contrast, if the "prizes are restricted for use solely within the game, such in-game features would not be licensable gambling."

For now, this means that so long at in-game loot/items cannot be traded outside the game or for real money, the practice of "loot boxes" will not be regulated further, unless existing gambling regulations/legislation is changed. This will be seen as a terrible response by some users, as it can be argued that in-game accounts could be sold for cash, or that TCG (Trading Card Games) like Magic the Gathering are a form of gambling given how readily rare cards can be traded for cash. 

The government has also pointed towards existing consumer protection laws, with the Unfair Trading Regulations Act of 2008 requiring businesses to "not to subject anyone to misleading or aggressive marketing practices, or, for example, direct exhortation to buy products, such as games content, including in-game purchases such as loot boxes."

The long and short of this response is that "loot boxes" are similar to gambling but are not directly covered by existing legislation in the UK, though the UK's Gambling Commission does have this matter under review to monitor the developments within the market, especially as the line between gambling and video games gets thinner and blurred further. 
 
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