Mentioned in this article Games: Overwatch

UPDATE 13/12/2017: The UK Gambling Commission published its annual survey of youth gambling, which showed that about 25,000 minors in Great Britain, aged between 11 and 16, are problem gamblers, while another 36,000 are at risk of developing an addiction. Fruit machines are still the most common children’s introduction to gambling, at 24 percent, but according to the study “participation in skin betting is increasing.”

Almost six in ten boys (59 percent) were aware of the possibility to bet with in-game items when playing video games, while for the girls the percentage was significantly smaller (31 percent).

The survey found that 11 percent of the young people under the age of 16 have betted with in-game items, while it is interesting that kids who have been involved in other more traditional kinds of betting were more inclined to purchase loot boxes.

Tim Miller, the UK Gambling Commission Executive Director, went on the record late last week about his organization’s view on loot boxes. With the gaming industry turning increasingly to “post-sale revenue” from microtransactions and DLC, government bodies are now expressing concern about how these are presented, especially to children.

[perfectpullquote align=”right” cite=”” link=”” color=”” class=”” size=””]Any regulation that explicitly bans or forces changes to loot box systems would have a substantial impact on the esports industry.[/perfectpullquote]

“A key factor in deciding if that line has been crossed is whether in-game items acquired ‘via a game of chance’ can be considered money or money’s worth,” Miller explains. “In practical terms this means that where in-game items obtained via loot boxes are confined for use within the game and cannot be cashed out it is unlikely to be caught as a licensable gambling activity. In those cases our legal powers would not allow us to step in.”

That said, Miller brings to light a new way of thinking for the UKGC that could indicate the commission will expand its regulatory powers in the future:

“However, many parents are not interested in whether an activity meets a legal definition of ‘gambling’. Their main concern is whether there is a product out there that could present a risk to their children. We are concerned with the growth in examples where the line between video gaming and gambling is becoming increasingly blurred… Where a product does not meet that test to be classed as gambling but could potentially cause harm to children, parents will undoubtedly expect proper protections to be put in place by those that create, sell and regulate those products. We have a long track record in keeping children safe and we are keen to share our experiences and expertise with others that have a similar responsibility. Whether gambling or not, we all have a responsibility to keep children and young people safe.”

In essence, Miller is saying that the fine line between items with liquidity like poker chips and illiquid items like an Overwatch skin may not matter when it comes to gambling regulation. Within the context of video game features, players being able to buy loot boxes that randomly give out rewards functions similarly to actual gambling. The fact that a gambler can walk away with chips and convert them back into cash is largely a meaningless distinction to the psychology of gambling—addiction is addiction, and the rush of dopamine when you win from a loot box is exactly the same as when you win from a slot machine.

Other countries are already acting on this premise. China has ruled that all game developers must publish loot box rates, and Belgium recently flat out designated loot boxes as gambling—and is pushing for a Europe-wide ban. Now, the UK may join in and move to regulate loot boxes. The UKGC definitely hasn’t hesitated before when it comes to enforcing regulation.

Loot boxes are largely a function of the games industry, but it is true that most esports titles do have some form of loot box, especially the popular ones. Furthermore, many esports companies are seeking to use similar tactics, such as Twitch’s plans to incorporate in-game items into giveaways to Prime subscribers. Any regulation that explicitly bans or forces changes to loot box systems would have a substantial impact on the esports industry.