When Does Gaming Become Gambling?

Traditional video games now feature mechanics that some have described as akin to gambling products.

Concerned parties have been discussing loot boxes, which are digital containers filled with goods such as ‘skins’ and ‘weapons,’ that players may purchase independently or as is mostly the case – opt for a loot box and get a reward based on a randomised outcome.

Attitude towards such mechanics has been different across the world. In Belgium and the Netherlands, lawmakers have struck against loot boxes deeming them a form of gambling. Australia has also found loot boxes to be closer to a game of chance than anything else.

Not least of all, the UK Gambling Commission (UKGC) and Agenzia delle dogane e dei Monopoli (ADM) have established a disconcerting link between gaming and gambling, mostly through the use of loot boxes. While the UKGC has not classified loot boxes as an outright form of gambling or online casino, concerns abound.

Members of Parliament (MPs) have also been wary of the issue. Loot boxes and the digital goods they contain, however, have one legal justification. Since they cannot be exchanged for real money, they are not defined as a form of gambling under English law.

UKGC’s Brad Enright has confirmed that loot boxes aren’t in violation of current statures, but this could easily change if there is enough political support.

Esports Gambling Increases 

Underage individuals worldwide are interacting with gambling products at an unprecedented rate. Other than loot boxes, 45% of all under 16-year-olds who participate in electronic sports, or simply esports, respond to Tweets promoting gambling in one form or another.

The numbers were pulled by the University of Bristol as part of a new study looking into social media, esports and how vulnerable children are to such products. In the United Kingdom alone, 25,000 children aged 11-16 are considered to be problem gamblers. Some 550,000 children also participate in some form of gambling.

The question this leaves is whether loot boxes can be seen as a conduit of gambling behaviour similar to playing free slot machines such as Book of Ra Deluxe. Many children admit to participating in buying loot boxes in pursuit of the newest skins and weapons, as they don’t want to feel left out.

Meanwhile, experts believe the ‘randomness’ of the outcome and the fact real money has to be paid for loot boxes, already classifies them as a form of gambling.

Addressing Loot Boxes and Skins in the United States

While no comprehensive studies on children attitude towards loot boxes have been done with a similar intensity in the United States as have been conducted in the United Kingdom, lawmakers are open to the issue.

Back in 2016, Valve faced a major class-action lawsuit over allegedly facilitating underage gambling by not banning third-party skin-trading and betting websites. The developer denied wrongdoing but it issued an immediate cease-and-desist letter warning 50 websites to shut down operations immediately.

Nearly all websites on the list have obliged. Some new entrants went rogue, and despite Valve’s efforts, there are still venues that tempt players into gambling with their skins.

Meanwhile, Sen. Maggie Hassan has requested a formal investigation into loot boxes from the Federal Trade Commission (FTC), a move to which the Commission has agreed in November, 2019.

Moving forward, loot boxes will be subject to closer scrutiny. It’s not unlikely for even more liberal markets, such as in Italy, to start suspending the use of such boxes. Epic Games, the developer of blockbuster Battle Royale game Fortnite, has decided to start phasing out loot boxes pre-emptively.

Nevertheless, many games today depend on the microtransactions generated by the use of loot boxes.

Yet the question remains – is that hurting children?

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