UKGC Forms Multistate Pact to Investigate Loot Boxes

Loot boxes are back in the news and this time the whole of Europe is in on the investigation fronted by the UK Gambling Commission (UKGC).

 Overwatch loot box.

The UKGC has joined forces with a network of gaming regulators to investigate the state of loot boxes like this one from the game Overwatch. (Image: Microsoft)

Announced on September 17, the “declaration of gambling regulators” is the first multistate effort to tackle the issue of gambling content in video games. As part of the initiative, the UKGC will work alongside the Malta Gaming Authority, the Norwegian Gaming Authority and 14 other regulators from Europe and the US.

“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,” reads the UKGC’s press release.

Gambling and Gaming Become Synonyms

Gambling content and video games have become increasingly connected over the last two years, primarily through a feature known as loot boxes. Essentially add-ons users can win or pay, the boxes contain random prizes such as character upgrades and in-game credits.

Although players aren’t required to purchase loot boxes, an April 2018 report by Juniper Research concluded that spending on these upgrades could top £32 billion by 2022.

These items have value depending on rarity and popularity within game communities. On PCs, skins are traded for real money via Steam’s Marketplace; the platform has 125 million registered users globally,” reads the report.

The fact loot boxes can be sold and traded on third-party skins is one of the main issues the UKGC and its regulatory partners want to investigate. Beyond this, the way in which prizes are distributed is also a problem.

According to an investigation by the Belgium Gaming Commission, loot boxes don’t guarantee a return with a value equal to its cost. In other words, players are paying money for the boxes but the prizes can be worth more, the same or less than the amount they paid for it.

Loot Box Gambling is a Matter of Perspective

For the likes of Conor Rhys Deeley who petitioned to have the matter discussed by the UK parliament, this is tantamount to gambling.

Responding to the petition in October 2017 the UKGC ruled that loot boxes do share some similarities to other forms of gambling. However, because the items can’t be “traded or exchanged outside the game platform,” game developers don’t require an iGaming licence.

Because gaming companies only allow players to buy loot boxes and not sell their rewards, they aren’t technically breaking any laws in the UK. However, third-party sites that do provide options to sell in-game upgrades could be in breach of gambling laws.

The new regulatory alliance is going to investigate these practices across the gaming industry. As well as working to define whether or not loot boxes are a form of gambling, the alliance wants to protect children.

Unlike lotteries, casino games and sports betting, video games are available to minors. For the UKGC and its peers, this is a problem and something that needs to be addressed.

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