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Why the government should move to classify loot boxes as gambling

Young person sitting facing the camera, holding a controller and playing a video game

By Geraldine Bedell

The Department of Culture, Media and Sport is currently reviewing evidence prior to deciding whether to classify loot boxes in online games as gambling.

Their concern follows work that we, and others, have done on the ways in which loot boxes exploit children.

We very much hope the government will decide to legislate. If loot boxes were classified as gambling, it would no longer be legal to make them available to under-18s.

What are loot boxes?

Loot boxes are virtual treasure chests in online video games. They contain add-ons for the game and may be bought with in-game or real-world currency. Sometimes the contents help game-play; sometimes they are cosmetic, such as skins (costumes or appearances for characters).

Not only do loot boxes resemble gambling; many of the techniques used to encourage children to keep on opening them are also taken from the gambling industry. (Variable-rate reinforcement, for example, is common to both loot boxes and slot machines.) In our view, children should not be exposed to this sort of psychological manipulation.

Our own research, The Rip-Off Games, found that the issue has the potential to affect almost all children (93% of 10-16-year-olds play online games). More than half (57%) of those who are aware of loot boxes would prefer to buy the items rather than open them.

Meanwhile, a growing body of research links loot boxes to problem gambling.

If it looks like gambling and works like gambling, why isn’t it gambling?

In the past, the government has argued that the contents of loot boxes stay inside the game. In this respect, they say, they resemble football cards.

But as our work on skin gambling showed, this is not actually true. Skins can be used as currency in online casinos then redeemed via a complex ecosystem of sites, both legal and illegal, that have proved hard to regulate.

Aside from that, the arguments for classifying loot boxes as gambling are persuasive:

  • the outcome is unknown
  • the result is down to chance
  • no productive work is involved in getting the reward
  • losses can be avoided by not taking part

All these are elements of definitions of gambling used by some regulators.

The upshot is that through mechanisms that look like gambling, and which encourage gambling-type behaviour, a generation of children is being taught to gamble.

Long-term effects

A number of academic studies have demonstrated links between loot boxes and problem gambling. Given that loot boxes have only been around a few years, it’s too soon to prove a causal link, but the correlations are strong.

One study found a stronger link between problem gambling and loot boxes than between problem gambling and alcohol abuse, drug use, or depression.

Young people are known to have a higher tolerance of risk and lower impulse control than adults. The rapidly developing limbic system of adolescents also places a premium on appetite and pleasure-seeking. For these reasons, children and young people may be particularly susceptible to inducements to gamble.

A number of other countries have already introduced legislation to classify loot boxes as gambling. In the face of overwhelming evidence that shows the similarity of loot boxes to gambling, we believe the precautionary principle should prevail. Loot boxes should be classified as gambling, making it illegal to offer them to under-18s. The government should prioritise the long-term wellbeing of children.

Read our submission to the DCMS call for evidence

Read our research report, The Rip-Off Games, into the ways in which online games are exploiting children, including via loot boxes.

Image: Svyatoslav Lypynskyy/stock.adobe.com