Lootboxes: To ban or not to ban?

This summer, after a 22 month consultation, the British government released a report on video game loot boxes; the bright, often flashy boxes that can be purchased with virtual currency or real world money and contain anything from colourful skins that make a character stand out, to weapons and skills that might help them complete a quest, to a pack of players that can be added to a football roster. 

Loot boxes are designed to be enticing: they often appear as glittering treasure chests or decks of cards, and the contents are randomised so players don’t know what they’re going to get. If a loot box gives them something juicy, players are able to show off their good fortune to friends and competitors in the game and some box prizes directly impact the gameplay experience, allowing players to progress through the game more quickly which further incentivises buying loot boxes. 

But there is increasing evidence that loot boxes are doing more than adding to a player’s in-game experience. According to the recent government report, they are “structurally and psychologically akin” to gambling. 

15 empirical, peer reviewed studies into the behaviour of gamers who buy loot boxes showed a clear correlation between the use of loot boxes and problem gambling behaviours, under the Problem Gambling Severity Index (PGSI) measure. Further academic research has also found evidence of “gateway effects” where buying loot boxes influences later gambling behaviour, and the reverse.

This is particularly troubling given how many players are children, considering the consistent links with financial and psychological harm. Of the 93 percent of children that play video games, up to 40 per cent of them open loot boxes, and this can quickly lead to a spending spiral. For example, the probability of receiving a FIFA Gold 84 Player in a loot box can be as low as 4.2%, so if a child becomes determined to collect a particular player it can lead to unhealthy and over the top spending in hopes of a very unlikely reward. 

Despite these findings the British government decided not to ban loot boxes, instead discussing “industry-led” protections with the UK’s £7bn gaming sector. The issue has proven difficult to regulate, largely because loot boxes aren’t legally considered gambling. 

According to the Gambling Commission, the Gambling Act 2005 doesn’t cover loot boxes because the prizes won cannot be exchanged for real life money (although there are third party sites that do just that). This means that the Gambling Commission can’t use any of its regulatory power to take action.

The UK isn’t the only nation wrestling with the loot box issue: 18 European countries have called for regulation of the boxes. At present, they are banned in both Belgium and the Netherlands, though a recent study has questioned the ban’s effectiveness. It might not be a perfect solution, but relying on an industry—especially one that stands to make billions off the boxes—to self-regulate doesn’t seem like the right solution either.