Are Loot Boxes Gambling? New EU Report Suggests an Alternate View

Are loot boxes gambling? This is a hot question within the gambling, gaming, and political worlds.

Last year, we reported how the Gambling Commission ruled that loot boxes did not constitute gambling under current UK laws. But this year, we reported on a recent House of Lords Select Committee that made it clear that they believe the Gambling Commission got it wrong. Consequently, they’re seeking to redefine Loot Boxes as gambling.

It’s a bit confusing in the UK!

Although the UK is no longer part of the EU, it’s interesting to compare their views with those of the UK. Perhaps our gambling and gaming industries could benefit from a novel approach?

Are Loot Boxes Gambling? What the EU Thinks

The EU had originally intended to classify loot boxes as gambling for a select number of nations, including the Netherlands. However, their latest report into the issue concludes that they should scrap these measures in favour of rules that cover the entire bloc.

Most significantly, from a gambling perspective, they believe it’s counterproductive to view loot boxes as gambling. Instead, nations should view the ‘problem’ of loot boxes as a gaming design issue that requires consumer protection laws.

This is a different approach to those used currently by both the UK and EU. Rather than attacking the gambling industry for something that’s beyond its control (the video game companies – e.g. EA, Activision – design and profit from loot boxes), it will take the issue into the realm of consumer protection.

As well as the gambling industry breathing a sigh of relief (less bad press), the video game industry must be likewise doing the same. After all, if governments choose to reclassify loot boxes as gambling, video games companies would need to get rid of loot boxes altogether or obtain a gambling licence. The latter comes with a lot of red-tape and potentially more headaches than it’s worth.

Why the Change of Heart?

In 2018, Belgium banned the use of loot boxes in video games. Companies that break the law can now face fines of up to €800K and up to 5-years in prison. Because they can draw on the lessons learned by Belgium, the EU now has 2-years’ experience in banning loot boxes from video games.

What were the results of the ban?

Well, it didn’t exactly go as expected. Whilst it did eradicate in-game gambling, a side-effect was a loss in gaming revenue because the gaming companies released fewer games – or reduced in-game content, which in turn negatively affected Belgium’s video game industry.

Rather than the gaming companies creating different games for the new type of market, they simply removed elements of the game or removed games entirely.

Although players were overall supportive of the ban (because they see loot boxes as giving players an undeserved competitive advantage), the ban did affect player satisfaction; they are unhappy with the loss of content and reduced access to games.

What’s Does the Future Hold?

The report advises a broader perspective when considering if loot boxes are gambling. The aim should be consumer protection, rather than outright bans. They suggest initiatives such as greater transparency of in-game purchases, publishing the odds for obtaining decent loot box prizes, and increasing parental controls.

They acknowledge that, because this is a departure from the existing model, it requires trialling and testing to establish best practice.

The idea is to regulate the more damaging effects that loot boxes have on consumers without interfering too much in gameplay.

Will the UK follow suit? It’s difficult to tell. The recent report from the House of Lords seems to indicate that we are firmly on the path to a ban…but maybe they’ll pay attention to a different approach?

It might just offer the ideal solution.

A picture of boxes to represent loot boxes

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