Loot Boxes in Video Games

Opposition to Gaming Loot-Box Situation Continues to Grow

The ongoing controversy revolving around the proliferation of “loot box” reward systems within games often played by underage customers has received another boost in visibility in recent days, this time with a joint announcement by regulators in 16 prominent jurisdictions that the “blurring of lines between gambling and gaming” must be addressed. The “International Gaming and Gambling Declaration 2018” was spearheaded by the United Kingdom Gambling Commission (UKGC), an co-signed by regulators in 14 other countries and the US state of Washington.

Overwatch Loot Box

Overwatch Loot Box
Image credit: us.battle.net

The declaration and its hidden promise or enforcement against the gaming industry poses a dark cloud that, in some ways, is long overdue. The addition of gambling-themed elements within products targeted at gamers, a large percentage of whom are underage, has been a key element of the financial success of those games. And, as gaming-industry pros have long known but have been loath to acknowledge publicly, such soft-gambling elements have been a part of the gaming scene — in one form or another — since that scene itself has existed. Loot-box offerings are widely seen as one the most gambling-themed elements in modern gaming, with the games’ players being induced to purchase (or offer consideration) the boxes, which contain prizes of indeterminate value for use within the games.

“Our authorities are committed to the objectives of their public policies with regard to consumer protection, prevention of problem gambling and ensuring the safety of underage persons,” the regulators’ joint statement begins. “While each regulator has distinct duties and powers within our own national gambling frameworks, we share a number of common principles including the need for gambling to be regulated to ensure high standards of integrity, fairness and consumer protection, in particular in relation to children.

“Given these shared principles, we are increasingly concerned with the risks being posed by the blurring of lines between gambling and other forms of digital entertainment such as video gaming. Concerns in this area have manifested themselves in controversies relating to skin betting, loot boxes, social casino gaming and the use of gambling themed content within video games available to children.”

What the regulators see jointly is that the offering of skins and loot boxes and so on appears to be crossing a line between entertainment and outright gambling, where the “kiddie lottery” element of many popular games has become, in some ways, the greatest focus of the games’ existence. As the statement notes: “This common action by gambling regulators will raise parental and consumer awareness regarding the transition between gaming for leisure and entertainment and the offering of gambling possibilities.”

Though led by the UKGC, the statement includes a broad collection of noted regulatory agencies among its co-signers. The sixteen regulators and its heads include:

  • Signe Birne, Director of Lotteries and Gambling Supervisory Inspection of Latvia
  • Karel Blaha, Director of the State Oversight Over Gambling Department, Czech Republic
  • Steve Brennan, Chief Executive, Gambling Supervision Commission, Isle of Man
  • Charles Coppolani, Chair of the French Online Gaming Regulatory Authority (ARJEL)
  • Juan Espinosa García, CEO, Directorate General for Gambling Regulation, Spain
  • Heathcliff Farrugia, Chief Executive Officer, Malta Gaming Authority (MGA)
  • Jason Lane, Chief Executive, Jersey Gambling Commission
  • Andrew Lyman, Executive Director, Gambling Division, HM Government of Gibraltar
  • Brendan Mac Namara, Principal Officer, Gambling Policy Division, Department of Justice and Equality of Ireland
  • Teresa Monteiro, Vice-President of Turismo de Portugal, I.P
  • Henrik Nordal, Director Deputy General, Norwegian Gaming Authority
  • Jan Suyver, Chair of the Board of Directors of the Netherlands Gambling Authority
  • Neil McArthur, Chief Executive Officer, UK Gambling Commission
  • Paweł Gruza, Undersecretary of State in the Ministry of Finance, Poland
  • Alfred Hacker, Director, Federal Ministry of Finance, Austria
  • David Trujillo, Director, Washington State Gambling Commission

The joint declaration represents the establishment of a platform offering communication channels to “responsible game developers” and the threat of enforcement action against those developers who are rather less responsible. “We anticipate that it will be in the interest of these companies whose platforms or games are prompting concern, to engage with [gambling] regulatory authorities to develop possible solutions,” the statement pointedly notes.

Neil McArthur, Chief Executive and signatory for the Gambling Commission on the declaration, added: “We have joined forces to call on video games companies to address the clear public concern around the risks gambling and some video games can pose to children. We encourage video games companies to work with their gambling regulators and take action now to address those concerns to make sure that consumers, and particularly children, are protected.

“We want parents to be aware of the risks and to talk to their children about how to stay safe online. For example, unlicensed websites offering skins betting can pop up at any time and children could be gambling with money intended for computer game products.”

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