UK House of Lords calls for loot boxes to fall within the scope of gambling legislation

On 2 July 2020, the House of Lords Gambling Committee has issued a report titled "Gambling Harm - Time for Action" (the "Report") covering "the social and economic impact of the gambling industry". The Report is wide-ranging, covering the entire gambling industry, but also specifically addresses the topic of loot boxes in video games.

In particular, the press release of the House of Lords Gambling Committee advises the UK "Government to act immediately to bring loot boxes with the remit of gambling legislation and regulation."

The Report makes two specific recommendations in relation to loot boxes in games:

·      The report provides that "Ministers should make regulations under section 6(6) of the Gambling Act 2005 specifying that loot boxes and any other similar games are games of chance, without waiting for the Government’s wider review of the Gambling Act."

·      The report further notes that the "recommendation above will deal with the immediate issue of loot boxes, but gambling operators or gaming companies may develop new products which blur the distinction between video gaming and gambling. If these products cannot be brought within the legislative definition of a ‘game of chance’, they will not be regulated as gambling. […] To ensure that all future gambling-like products are regulated as gambling, Ministers must have a power analogous to section 6(6) of the Act to specify that any activity which has the characteristics of gambling, even if not similar to a game of chance, should be brought within the purview of the Act."

The Report further notes that "loot boxes first appeared in video games in the early 2010s, and despite growing concerns about their impact on children and young people, action has yet to be taken to regulate them in Great Britain. It is crucial that any future developments in gambling, video gaming or other products that may contain gambling-like elements, which would not currently fall within the definition of gambling, should be brought within the remit of the Gambling Act as they appear. It is too late to regulate a product as gambling, when it has already caused harm to children and young people. Neither the Government nor the Gambling Commission can afford to wait years before bringing new ‘gambling-like’ products within the remit of the Act."

The Report follows the UK Government's formal response last month (June 2020) to the Department for Digital, Culture, Media and Sport (DCMS) Select Committee's report on immersive and addictive technologies, whereby the UK Government announced that a call for evidence in relation to the impact of 'loot boxes' would take place later this year (see our note on this here).

In addition, the European ratings board, known as Pan European Game Information (PEGI), launched in April 2020 its new “paid random items” rating, while the Entertainment Software Rating Board (ESRB) in the US announced its new "In-Game Purchases (Includes Random Items)" rating (see our note on the PEGI and ESRB rating here).