After going through exhaustive research into the loot box and microtransaction business, the House of Commons’ Digital, Culture, Media and Sport Committee published a lengthy 84-page report on September 9th, 2019 detailing their thoughts and suggestions on how to deal with the budding loot box issue plaguing the gaming industry.

Majority of their solutions were reasonable, mostly deferring back to ratings boards and existing gambling regulations to deal with loot boxes, this includes applying existing gambling laws in the U.K., to loot boxes and having PEGI responsibly label games that contain premium loot boxes that can be acquired for real money. Oh, and they also suggested that games containing loot boxes for real money be prohibited from being sold to underage gamers.

The report can be read in full over on the U.K. Parliament website.

YouTuber Bellular News covered all the important parts without padding out the video, and it still clocked in at around 14 minutes. You can check it out below.

The whole report covers a wide range of subject matter, mostly related to online services and nascent technologies related to online interactivity and safety. However, 20 or so pages in they begin to discuss the issues of people becoming addicted to certain mechanisms in games that result in them spending real money. They talk about gambling addiction and how these mechanisms being implemented into games and exploited through loot boxes is a real problem.

They explained in the report…

“In considering the way that some games facilitate gambling-like behaviours among players, it is important to acknowledge the distinction between licensed online gambling, social casino-style games that “have the look and feel of traditional gambling” but may not be licensed as such, and games containing features akin to gambling as one aspect of the overall product or game experience rather than the predominant quality.132 Our inquiry has focused on the latter, although the other two are both important issues that merit further consideration.

“Many games contain features that are highly similar to conventional gambling products, without gambling being the primary aim of the game. However, there are concerns that being exposed to such features from a young age might normalise gambling. One parent expressed concern that the game Bricky Farm, which is rated suitable for children,contains a gambling-like feature.”

They also cited recent research about 31% of kids potentially being on the hook for problem gambling due to early exposure to premium loot boxes in games.

Now the DCMS did not immediately call for bans or regulation, but did suggest that more research was required and opted to task a group with putting together evidence-based reviews and reports on the effects that gambling can have on persons actively using such services. They also requested that the report be done in a timely enough manner so that the information can be presented to the government to help with any forthcoming legislation relating to online gambling mechanisms.

In the next segment they specifically address loot boxes, noting that companies like Electronic Arts exploit loot boxes in games like FIFA, where players have to rebuild their ultimate team in each new iteration using the loot box system, which pretty much works like a slot machine or roulette.

Electronic Arts’ vice president of legal, Kerry Hopkins, tried to mitigate any blame away from the company by saying that loot boxes were “fun”, but thankfully gamers informed the DCMS that EA’s system in FIFA works like a slot machine, with the report stating…

“We put some of these concerns to Kerry Hopkins from Electronic Arts, who responded that the way they have implemented this mechanic in FIFA ‘is quite ethical and quite f u n’. Yet this is noticeably out of step with the attitude of many of the gamers who contacted us following our evidence session, including those who vehemently rejected her characterisation of packs not as loot boxes but as “surprise mechanics”.

“One gamer called the company’s testimony to us ‘a bare face lie’, and another told us that the company has: ‘Heavily marketed and referred to their systems as ‘loot boxes’ for several years and […] the mechanics of the system are exactly the same no matter what they choose to call it.’”

FIFA is also notorious for getting gamers hooked on trying to earn the best cards by paying real money for the loot packs. Unlike physical trading cards there’s no way to purchase distinctly separate packs or identify cards before purchasing a pack. You also can’t trade the cards in-game to make back what you spent the way you can with real-life trading cards.

What’s more is that there have been multiple reports of kids stealing their parent’s credit card to buy more ultimate team packs, as reported by USA Today back in 2016, Techspot back in 2017, and the BBC this past July.

The DCMS – in addition to requesting more research ahead of legislation – also want premium loot boxes to be regulated like typical gambling and prohibited from being implemented in games aimed at kids…

“We recommend that loot boxes that contain the element of chance should not be sold to children playing games, and instead in-game credits should be earned through rewards won through playing the games.In the absence of research which proves that no harm is being done by exposing children to gambling through the purchasing of loot boxes then we believe the precautionary principle should apply and they are not permitted in games played by children until the evidence proves otherwise.

“[…] Loot box mechanics are integral to major games companies’ revenues and evidence that they facilitate profiting from problem gamblers should be of serious concern to the industry. We recommend that working through the PEGI Council and all other relevant channels, the UK Government advises PEGI to apply the existing ‘gambling’ content labelling, and corresponding age limits, to games containing loot boxes that can be purchased for real-world money and do not reveal their contents before purchase.”

“[…] We agree with the Gambling Commission that games companies should be doing more to prevent in-game items from being traded for real-world money, or being used in unlicensed gambling. These uses are a direct result of how games are designed and monetised, and their prevalence of undermines the argument that loot boxes are not a form of gambling. Moreover, we believe that the existing concept of ‘money’s worth’ in the context of gambling legislation does not adequately reflect people’s real-world experiences of spending in games.

“We consider loot boxes that can be bought with real-world money and do not reveal their contents in advance to be games of chance played for money’s worth. The Government should bring forward regulations under section 6 of the Gambling Act 2005 in the next parliamentary session to specify that loot boxes are a game of chance. If it determines not to regulate loot boxes under the Act at this time, the Government should produce a paper clearly stating the reasons why it does not consider loot boxes paid for with real-world currency to be a game of chance played for money’s worth.

It’s hard to argue with any of those points.

If you’re playing a game of chance with real money (which is exactly what happens with premium loot boxes) then you’re gambling. If publishers want to include gambling mechanisms in their game, they can. However, they should be beholden to existing gambling regulations and laws regarding betting and spending money on games of chance.

I also think the DCMS is right in deferring labels to PEGI, holding them accountable for properly rating games that contain premium loot boxes and keeping them out of the hands of underage gamers.

Whether or not U.K., parliament will heed the call from the House of Commons’ DCMS committee is a completely different topic, but they at least seem to be heading in the right direction.

(Thanks for the news tip MaverickHL)