Call for evidence outcome

Government response to the call for evidence on loot boxes in video games

Updated 18 July 2022

Ministerial foreword

The UK is one of the best places in the world to develop and play video games. I am proud of our world class video games industry and its contribution to the UK’s cultural landscape and creative economy. The UK games sector contributed £2.9 billion to the UK economy in 2019, growing hugely from a figure of £400 million in 2010. This government recognises the sector’s huge potential and we are committed to supporting its growth and strengthening its position as a global leader in game development, technological innovation, and the creation of iconic British intellectual property.

Video games are also contributing more to our shared culture, with millions across the UK enjoying video games as a form of entertainment, competition and as a means of socialising. Popular games can attract millions of players online who form communities built on shared experiences and passions. As the sector continues to innovate and new generations of players pick up a controller to jump into classic and new games, we can only expect video games to become an even more important part of the UK’s social and digital landscape.

The scale and reach of the video game sector brings with it responsibility to strive for the highest standards in consumer protection, age appropriate design for children, and safe and inclusive protections for players of all ages. This government is committed to ensuring that the UK is one of the safest places to be online, and this includes video games. We want all players, especially children and vulnerable people, to have the tools and information they need to enjoy games safely.

To reflect the pace of technological change, the regulatory landscape in the UK is continuing to evolve to protect children and consumers, notably through the introduction of the Online Safety Bill and the implementation of the Age Appropriate Design Code. Alongside this, the 2019 manifesto committed to review issues around loot boxes in video games.

With this in mind, DCMS launched the call for evidence on loot boxes in video games in September 2020, in light of concerns about the potential for loot boxes to cause harm. It has been developed alongside our review of the Gambling Act. The call for evidence has brought together evidence from a wide range of sources. I am grateful to all those that submitted evidence, and in particular those who shared personal testimonies regarding difficult personal experiences.

We have carefully considered and analysed the perspectives and evidence submitted. The call for evidence has strengthened considerably our understanding of this complex issue, but it has also demonstrated the challenges and limitations in the available research. The call for evidence has found an association between loot boxes and harms, but we have not found whether there is a causative link.

It is particularly important that children and young people are protected. In response to our findings, our view is that children and young people should not be able to purchase loot boxes without parental approval. In addition, all players should have access to spending controls and transparent information to support their gaming.

In recent years, we have seen some games companies and platforms take important steps to strengthen protections for children and young people, and adults. We welcome this, and we welcome the commitments from the Association for UK Interactive Entertainment (Ukie) trade body and its members to go further. Games developers, publishers and platforms operating in the UK must take responsibility for ensuring player safety, and work collaboratively to find tangible industry-led solutions.

The government will work with industry, academics, and third sector partners to take forward these objectives, including through the establishment of a new technical working group, convened by DCMS. We will also launch a new Video Games Research Framework to develop better evidence on the impacts, positive and negative, of loot boxes and video games more broadly.

As the evidence base on loot boxes is still emerging, and direct government intervention may risk unintended consequences, our view is that it would be premature to take legislative action without first pursuing enhanced industry-led measures to deliver protections for children and young people and all players. As a result, the government does not intend to make changes to the Gambling Act or to other statutory consumer protections with regards to loot boxes at this time.

We want to mobilise the industry’s creativity, innovation and technical expertise to deliver tangible progress, improving at pace protections for children and young people and all consumers. If this does not happen, we will not hesitate to consider legislative change.

We expect the games sector to rise to this challenge. We also look forward to continuing to work with the sector as part of our wider strategy to maximise the positive impact of the creative industries in this country, as will be set out in our upcoming Creative Industries Sector Vision. We want to ensure that industry-led innovation will place the UK at the forefront of safe and responsible gaming, and that players of all ages can continue to enjoy their favourite games with confidence.

Rt Hon Nadine Dorries MP
Secretary of State for Digital, Culture, Media and Sport

Executive summary

1. The government wants the video games sector to continue to thrive in the UK, and as part of that it is essential that games are enjoyed safely and responsibly.

2. The call for evidence launched in September 2020 sought to understand the use and impact of loot boxes in video games in the UK. It consisted of a player survey, which received over 32,000 responses from players and parents of children and young people who play games, and 50 submissions from the games industry, researchers, third sector organisations, and other organisations and individuals. In addition, DCMS commissioned an independent rapid evidence assessment of literature and empirical studies on loot boxes, which was conducted by InGAME and has been published alongside the government response.

3. Whilst the response to the player survey was not representative of the UK gaming population, it has provided a valuable insight into the perspectives of many players, and parents of children, who play video games. Nearly all players who responded to the survey said they had opened a loot box (98%).

Loot boxes and the in-game purchases market

4. Loot boxes are features in video games that may be accessed through gameplay, purchased with in-game items or virtual currencies, or purchased directly with real-world money. Their distinguishing feature is the random reward mechanism that allocates apparently randomised items to each purchase. Players do not know what they will get before opening the loot box, but they do know they will get something. There are a variety of ways in which loot boxes are implemented, designed and used within games – including rewards that help players to compete in games and cosmetic rewards.

5. Loot boxes are features in video games that may be accessed through gameplay, purchased with in-game items or virtual currencies, or purchased directly with real-world money. Their distinguishing feature is the random reward mechanism that allocates apparently randomised items to each purchase. Players do not know what they will get before opening the loot box, but they do know they will get something. There are a variety of ways in which loot boxes are implemented, designed and used within games – including rewards that help players to compete in games and cosmetic rewards.

6. Responses to the call for evidence corroborated InGAME’s findings regarding the lack of robust data on the market for loot boxes. At the end of 2019, the loot box market in the UK was projected to be worth £700 million. The UK market for video game software sales was estimated to be £3.85 billion in 2019, growing to £4.55 billion in 2020. These figures, while not calculated on the same basis, suggest that the loot box sales were worth approximately one-fifth of software sales in 2019.

7. Some information and data was provided on the prevalence of loot boxes in games, and how players interact with loot boxes. An Ipsos Mori survey commissioned by an industry trade association found that 7% of players of video games had paid for a loot box over a 12 month period to December 2020, and that 10% of overall monthly spend by players on video games related to paid loot boxes.^{[footnote 1]}

8. The prevalence of loot boxes in video games may vary across different platforms – for example, in both the UK Apple and Google app stores for mobile games, over half of the top 100 grossing games contained loot boxes. For Pan-European Game Information (PEGI) rated games, which covers games rated across Europe predominantly for PC and consoles, only 2.5% of games from August 2020 to May 2022 were awarded the “in-game purchases (includes random items)” descriptor, denoting the presence of paid-for loot boxes. This compares to 15% of titles that were awarded a descriptor for “in-game purchases” by PEGI.

9. Nearly all respondents to the player survey had opened a loot box (98%). A large majority of respondents had purchased a loot box with virtual currency that was bought with real-world money (72%) and a majority of players had directly purchased a loot box with real-world money (63%). The frequency at which respondents to the player survey said they purchased loot boxes ranged from “never” (22%) to “daily” (3%). More than half of respondents said they typically spend less than £10 per purchase on loot boxes (61%).

Loot box impacts and potential harms

10. The evidence we have considered, including the InGAME rapid evidence assessment, has identified a range of potential harms associated with the purchase of loot boxes. This includes harms which have been associated with gambling, but also a range of other potential mental health, financial and problem gaming-related harms. The evidence suggests that the risks of harm are likely to be higher for children and young people.

11. While the evidence base is still emerging, one of the more thoroughly explored harms from loot boxes is the association with “gambling-related” harm. The InGAME rapid evidence assessment found 15 peer reviewed empirical studies that identified a stable and consistent association between loot box use and problem gambling. There is also emerging evidence of a dose-response relationship, where greater loot box spending is related to greater problem gambling severity.^{[footnote 2]}

12. However, there are a range of plausible explanations that could underpin this association between loot box spending and problem gambling behaviours, and research has not established whether a causal relationship exists. Some academic research has also found evidence of “gateway effects” between loot boxes and gambling, whereby loot box purchasing influences subsequent gambling and the reverse. InGAME found that it is difficult to disaggregate which loot box implementations may be particularly problematic, and there are methodological limits to these studies.

13. Some respondents to the call for evidence identified legal, psychological and player-perceived similarities between loot boxes and gambling products. Most loot boxes currently on the market do not meet the definition of gambling under the Gambling Act 2005, as the prize is confined for use within the game and cannot be converted into real-world money. A number of respondents called for the government to expand the definition of gambling to capture all or most purchasable loot boxes, although others have argued against such a change.

14. Beyond the relationship with gambling, InGAME found an evidence base at an early stage of considering other types of harm, including five studies showing a positive association between the use of loot boxes and problem gaming. Some evidence suggests that a small minority of players may spend a disproportionately high amount on purchasing loot boxes relative to other players, and may be at greater risk of experiencing financial harm.

15. 62% of adult respondents (aged 16+) to the player survey responded to the question regarding positive experiences with loot boxes. Examples of positive experiences included: receiving a rare or valuable item, obtaining rewards that progress gameplay conditions, and enhancing gameplay experience and enjoyment.

16. 63% of adult respondents to the player survey reported negative experiences with loot boxes. Negative experiences ranged from general dissatisfaction to reporting that loot boxes cause or contributed towards financial, gambling-related and/or mental health harms. They included contentions that loot boxes: are expensive, encourage unsatisfactory purchases, or are not value for money, come with hidden costs, and were mis-sold, lacked information or players experienced pressure to purchase.

17. Some respondents had a particular focus on the impact of loot boxes on children, and their likely increased vulnerabilities to the associated harms. Respondents highlighted that children generally have less developed impulse control, greater susceptibility to peer pressure, and a more limited understanding of purchasing decisions and probabilities.

Voluntary and statutory protections

18. Video games companies and platforms are subject to consumer protection obligations, such as the Consumer Rights Act 2015. The Competition and Market Authority (CMA)’s Principles for online and app-based games (2014) were cited by several respondents as being of continued relevance for the games sector.

19. Protections for consumers have continued to develop since the government published its call for evidence. The Information Commissioner’s Office (ICO)’s Age Appropriate Design Code, which took effect in September 2021, requires organisations providing online services to take into account the best interests of the child. In September 2021, the Committee of Advertising Practice (CAP) published guidance on advertising in-game purchases, including with regards to loot boxes.

20. Some evidence was provided on international examples with regards to how loot boxes are regulated. Belgium and the Netherlands were cited as notable examples of where loot boxes have fallen within a broader definition of gambling regulation, in comparison to other international markets. Most recently, in Spain, the Ministry of Consumer Affairs has committed to introduce new legislation to restrict the sale of loot boxes.

21. Limited evidence was provided on action being taken in the UK and internationally on consumer rights grounds with regards to loot boxes. Some evidence contended that some practices with regards to loot boxes may be in breach of consumer protection obligations.

22. Games companies and platforms have introduced a number of protections and measures for consumers with regards to loot boxes and in-game spending, which have continued to develop in recent years. Types of protections and measures include: probability disclosures to inform the purchase of loot boxes, parental controls and information, controls and information for adults, information campaigns, data protection and the appropriate use of player data, and broader policies and game design approaches to promote player safety.

23. Evidence was received on how industry-led campaigns have increased awareness and uptake of parental controls, although evidence considered suggests there is inconsistency in how such tools are implemented across different games and platforms. Ipsos Mori research commissioned by the Interactive Software Federation of Europe (ISFE) found that, in major European markets, three-quarters of parents of children who spend money within video games have agreements with their children regarding in-game spending, although only 1 in 5 parents were using parental controls.^{[footnote 3]}

24. The player survey also provided some information on protections for consumers. Of adults responsible for children and young people who responded to specific questions: a large majority were aware of parental controls (84%), a majority had used parental controls (72%), and there were mixed views on the effectiveness of parental controls and how easy they were to find and locate. Of players that responded to specific questions, a majority had placed personal restrictions on their purchases of loot boxes (62%), and a majority had breached self-imposed restrictions (57%). There was mixed awareness of probability rates for specific items that could be obtained from loot boxes. Two-thirds (66%) of respondents were aware of information labels such as the PEGI in-game purchases and paid random items labels.

Conclusions and next steps: summary

25. In response to the findings of the call for evidence, the government wants to see improved protections for children, young people and adults with regards to loot boxes, and to support better longer term research into the impacts of video games. To achieve this, the government’s view is that:

• purchases of loot boxes should be unavailable to all children and young people unless and until they are enabled by a parent or guardian
• all players, including children, young people and adults, should have access to, and be aware of, spending controls and transparent information to support safe and responsible gaming
• better evidence and research, enabled by improved access to data, should be developed to inform future policy making on loot boxes and video games more broadly

26. In considering further actions that could be taken with regards to loot boxes, we have considered three broad types of responses that could be pursued: improved industry-led protections, by games companies and platforms, making changes to the Gambling Act 2005, and strengthening other statutory consumer protections.

Pursuing improved industry-led protections

27. The government welcomes progress made on industry-led protections for children, young people and consumers in recent years, and further commitments from industry trade body Ukie and its members to go further. However, this progress has been uneven, and there is more that can and should be done across games platforms and publishers to mitigate the risk of harm from loot boxes for children and young people and all players.

28. The government’s view is that games companies and platforms have the technical expertise and capability to develop and improve protections, and to communicate with players, parents and children, to support safe and responsible gaming. An industry-led approach, at least in the first instance, avoids the risk of unintended consequences which may be associated with legislation, and can enable the development of tailored tools and information that work across what is a varied sector. Industry-led measures would be adaptable, and may be more able to keep pace with a fast-changing environment for in-game purchases, in comparison to legislative options.

29. Purchases of loot boxes should be unavailable to all children and young people unless and until they are enabled by a parent or guardian. We welcome the commitment from Ukie to explore practical ways of achieving this objective, and call on the wider games industry to ensure that active and informed parental choice supports how children and young people engage with video games. We welcome that some platforms already require parental authorisation for spending by under-18s within games. As part of meeting this objective, games companies and platforms should take steps to strengthen age assurance and reduce reliance on self-declaration.

30. All players, including parents and children and young people, should have access to and be aware of spending controls and transparent information to support safe and responsible gaming. We welcome the commitment from Ukie to increase awareness of spending controls and responsible play, including through a new £1 million multi-year public information campaign. As part of meeting this objective, we expect games companies and platforms to provide information to players and parents that is transparent, balanced and accessible, and to ensure that protections specifically support the minority of players who spend a disproportionately large amount of money on loot boxes, and may therefore be at greater risk of experiencing financial harm.

31. DCMS will convene a technical working group to pursue enhanced industry-led measures to mitigate the risk of harms for children, young people and adults from loot boxes in video games. The technical working group will include representatives of games companies and platforms, government departments and regulatory bodies. It will engage with academics, consumer and third sector groups, to ensure that solutions are workable for parents, children and young people and all consumers. We expect the development of industry-led design norms and best practice guidance with regards to loot boxes to be an output of this work.

32. Our view is that it would be premature to pursue legislation with regards to loot boxes without first pursuing enhanced industry-led protections. We expect games companies and platforms to improve protections for children, young people and adults, and for tangible results to begin to be seen in the near future. If that does not happen, we will not hesitate to consider legislative options, if we deem it necessary to protect children, young people and adults. We will provide an update on the output of the technical working group and progress made to strengthen industry-led measures, by the first quarter of 2023.

Regulation under the Gambling Act

33. The government’s response to the call for evidence on loot boxes has been developed alongside its Review of the Gambling Act 2005. A White Paper setting out the conclusions from the Review and vision for the gambling sector will be published as soon as possible.

34. After careful consideration, the government does not intend to amend or extend the scope of gambling regulation to cover loot boxes at this time. We have considered regulating loot boxes as gambling as one means of mitigating the risk of harm for children, young people and adults, and have concluded that it would come with significant limitations.

35. While many loot boxes share some similarities with traditional gambling products, we view the ability to legitimately cash out rewards as an important distinction. In particular, the prize does not normally have real world monetary value outside of the game, and its primary utility is to enhance the in-game experience. The Gambling Commission has shown that it can and will take action where the trading of items obtained from loot boxes does amount to unlicensed gambling, and it will continue to take robust enforcement action where needed.

36. In addition, changing the Gambling Act with regards to loot boxes would have significant implementation challenges and risks of unintended consequences. For example, it would require substantial changes to the gambling tax system, would dramatically increase the scope and costs of running the Gambling Commission, and it could risk capturing other unintended aspects of video games or activities outside of video games with a random reward mechanism.

Other statutory consumer protections

37. In not taking forward changes to the Gambling Act, the government recognises that other statutory consumer protection obligations will continue to be the relevant regulatory framework for loot boxes and wider issues concerning video games.

38. The government’s view is that the UK’s current consumer and data protection legislation and guidance provides a strong foundation for mitigating the risks of harms associated with loot boxes for children, young people and adults. As set out above, these protections have continued to develop in recent years. However, further legislative change may risk unintended consequences. For example, legislation to introduce an outright ban on children purchasing loot boxes could have the unintended effect of more children using adult accounts, and thus having more limited parental oversight of their play and spending.

39. We will continue to keep this position under review, in light of emerging evidence on harms, progress made in improving industry-led protections, and any specific proposals on increasing statutory protections for consumers. We will not hesitate to consider legislative options, if we deem it necessary to protect children, young people and adults.

Improving the evidence base on the impacts of video games

40. The call for evidence found limitations in the evidence base regarding loot boxes, and more broadly on the positive and negative impacts of video games. Access to industry and player data was identified in the call for evidence as a barrier to enabling better research.

41. The government will launch a Video Games Research Framework to support better research, enabled by improved access to data, on the positive and negative impacts of video games. An improved evidence base will support policymakers, the games industry, and players on future work to maximise the positive impacts of games, and to reduce the risk of negative impacts, including harms. DCMS will develop the Video Games Research Framework with academics, industry representatives and other partners, with the aim of launching it by the end of 2022.

1. Introduction

42. Video games are an important part of our culture and an increasingly popular pastime for people of all ages. Ofcom’s Adults’ Media use and Attitudes 2021 report found that 60% of adults overall, and 88% of 16 to 24 year olds, said that they played games on an electronic device during 2021. Ofcom’s research on children’s media use found that 71% of 5 to 15 year olds played online games in 2020. The Association for UK Interactive Entertainment’s (Ukie) 2022 market valuation report estimates that the UK consumer games market reached a record figure of £7.16 billion in 2021.

43. The government continues to support the growth of the video games sector in the UK, recognising that video games bring economic, cultural and social benefits. The government is providing more than £8 million to expand the UK Games Fund (UKGF), as part of a nearly £50 million package for the creative industries. The UKGF will support new games businesses, intellectual property and talent across the UK.

44. In addition, the Video Games Tax Relief has strengthened the UK’s reputation as one of the leading destinations in the world to make video games. The tax relief was introduced in 2014 to ensure that this highly skilled and innovative industry continues to thrive in the UK. Since then, the tax relief has supported 1,640 games, with UK expenditure of £4.4 billion.

45. The government’s response to the call for evidence on loot boxes has been developed alongside its review of the Gambling Act 2005. A White Paper setting out the conclusions from the Review and vision for the gambling sector will be published as soon as possible.

1.1 Scope of the call for evidence

46. Loot boxes are a feature in some video games that contain apparently randomised items in which the player does not know what they are going to get until they have opened the loot box. In June 2020, the government response to the DCMS Select Committee’s report on Immersive and Addictive Technologies announced that the government would launch a call for evidence to gather information and understand the impact of loot boxes in video games.

Box 1 - In-game purchases and loot boxes

In-game purchases

In-game purchases (or in-app purchases on mobile devices) are purchases made to access new content, game functionality, features and/or upgrades for a particular game. Examples of in-game purchases include: in-game virtual currency, appearance or cosmetic upgrades, extra game content or items to improve functionality or enhance competitive gameplay online. In-game purchases can also be made available as separate items in online stores outside of a game. In some cases, a player can make a purchase (a new item or an upgrade) directly with real-world money, and alternatively in other cases a player can purchase in-game virtual currency with real-world money that can in turn be redeemed for content during gameplay (PEGI, In-Game Purchases).

Loot boxes

Loot boxes are features in video games which may be accessed through gameplay, or purchased with in-game items, virtual currencies, or directly with real-world money. They contain apparently randomised items, so players do not know what they will get before opening them, but they will get something. The items are usually either cosmetic, such as items of clothing for avatars, or “power-ups” to improve the playing experience. Loot boxes vary in the way they are accessed, their cost, how the random reward is selected and in the content they return. Their unique element is the random reward mechanism. For other forms of in-game purchase, players will know what item they will receive in advance of purchase (Loot Boxes in Video Games - Call for Evidence).

47. The call for evidence ran between September and November 2020 to gather information about the use and impact of loot boxes in video games. It aimed to develop the government’s understanding of:

• the size, scale, and function of the loot box and in-game purchasing market in the UK
• the experience of video game players and the impact of loot boxes, including evidence of potential harms
• the impact of current voluntary and statutory protections such as controls to manage spending and access, video games labels, and consumer regulations

48. The call for evidence consisted of two sets of questions aimed at different individuals and organisations:

• a player survey aimed at video games players aged 16+ and adults responsible for a child or young person who plays video games (see Annex B)
• questions for video games businesses, and researchers and organisations interested in video games and loot boxes (see Annex C)

1.2 Response to the call for evidence

49. The player survey received more than 32,000 responses, demonstrating a considerable level of interest in loot boxes. This consisted of:

• 87% who said they were answering the questions as someone who plays video games
• 12% who said they were responding to the questions as both a player and someone responsible for a child or young person who plays video games
• less than 1% who said they were answering only as someone responsible for a child or young person who plays video games, not as a player of games

50. The self-selection of those that responded means that experiences reported in the survey are not representative of all UK players’ experiences with loot boxes. The responses have nonetheless provided valuable insight into the experiences of players and parents.

51. 50 direct submissions were received to the call for evidence, as follows:

• 15 submissions from academics, research groups, universities, and research institutions
• 13 submissions from the games industry, including trade associations, games developers, publishers, and individuals
• 13 submissions from third sector organisations
• 3 submissions from individual businesses and organisations (not directly part of the games industry)
• 2 submissions from parliamentary groups
• 1 submission from a regulator
• 1 submission from a professional medical body
• 1 submission from an international governmental body
• 1 submission from a non-departmental public body

52. In addition to the information received in response to the call for evidence, DCMS has engaged extensively with stakeholders. In November 2020, we held three roundtable discussions as part of the call for evidence with organisations, including:

• games developers, publishers, and industry trade associations
• academics, research institutions, and universities
• third sector groups and health experts
• government departments and regulatory bodies

53. DCMS has engaged with the games sector on industry-led measures to improve protections for children, young people and consumers. This included ministerial roundtables with a number of games sector representatives in June 2021 and March 2022.

54. Some information has been included in the government response regarding information and evidence that has been published or shared with DCMS since November 2020. This includes proposals from the trade body Ukie and its members to address issues identified with loot boxes.

55. The following organisations submitted information to the call for evidence:^{[footnote 4]}

• Activision Blizzard King
• Age Verification Providers Association
• All Party Parliamentary Group for Gambling Related Harm
• The Association for UK Interactive Entertainment
• Carnegie UK Trust
• Children’s Commissioner
• Christian Action Research and Education
• Clean Up Gambling
• Electronic Arts
• EPIC Risk Management
• Evangelical Alliance UK
• First Touch Games
• Gambling Health Alliance
• Gaming the Mind
• Internet Matters
• Jagex
• Mission and Public Affairs Council of the Church of England
• Mobile Games Intelligence Forum
• National Society for the Prevention of Cruelty to Children
• Parent Zone
• Peers for Gambling Reform
• Regulus Partners
• Royal College of Psychiatrists
• Take-Two
• TIGA
• Ubisoft
• United States Federal Trade Commission
• Video Standards Council
• White Ribbon Association
• William Hill
• Young Gamers & Gamblers Education Trust

1.3 InGAME rapid evidence assessment

56. Alongside the call for evidence, DCMS commissioned an independent rapid evidence assessment of loot boxes and the in-game purchases market in video games.

57. The aim of the rapid evidence assessment was to identify, understand and review any existing empirical research that was relevant to this topic. Following an open procurement process the contract was awarded to InGAME and delivered in collaboration with academics from the University of Abertay, the University of St Andrews, and the University of Glasgow.

58. InGAME’s rapid evidence assessment was conducted during February and March 2021. It examined:

• literature relating to the size and characteristics of the loot box market
• existing empirical evidence exploring problematic play and potential adverse consequences, including harms, that might be associated with loot box use

59. InGAME’s systematic search strategy to identify relevant publications for review focused on recent fully peer-reviewed studies. InGAME expanded their review to incorporate conceptual and conference papers for the market analysis section due to the lack of empirical evidence. The problematic play section focused exclusively on fully peer-reviewed journal publications that incorporated empirical studies relating to harmful outcomes from loot boxes.

60. InGAME supplemented the review with expert interviews with senior games developers, game designers and producers of children’s content. These insights have been collated into an ‘Expert Primer’ on loot boxes at (Annex A of the InGAME report).

61. We consider the InGAME report as having reviewed the highest quality evidence available on loot boxes at the time of the report’s completion. Information on some academic studies that were published after the InGAME rapid evidence assessment was undertaken has also been included in the government response.

62. The InGAME report additionally offered suggestions and recommendations on addressing concerns identified with loot boxes. These have been considered as part of developing the government’s response, and will be considered further as part of taking forward actions in the technical working group. The full InGAME report has been published alongside the government response.

1.4 Structure of the government response

63. The information received in response to the call for evidence has been summarised thematically and based on the different types of responses received. We have sought to evaluate different sources, carefully considering the arguments made and the evidence that has been provided to support these.

64. Sections 2, 3, and 4 contain a summary of evidence received from direct submissions in response to the call for evidence and relevant findings from the InGAME rapid evidence assessment and the player survey. Annex A summarises information received from responses to the player survey.

2. Loot boxes and the in-game purchases market

65. The call for evidence considered the size and nature of the market for loot boxes and wider in-game purchases. This section summarises findings on the loot box and in-game purchases market from the InGAME rapid evidence assessment, direct submissions received in response to the call for evidence, and from the player survey.

2.1 InGAME report: market analysis summary

66. InGAME’s rapid evidence assessment aimed to understand how loot boxes in video games can be classified and defined in the context of other in-game purchase mechanisms. InGAME identified and reviewed 34 publications that were relevant.

67. InGAME found from the literature that a consistent definition of a loot box is lacking, though the random reward mechanism can be considered a distinguishing feature of a loot box (InGAME page 4). Although the literature is divided on the precise definition of loot boxes, researchers tend to view loot boxes in context of the ethical or moral consequences of their implementation in games.

68. Loot boxes can be considered a “convergence of user-retention strategies and data analytics with random reward mechanisms which have long been part of game design” (InGAME page 4). Reviewed literature shows the variety of ways in which loot boxes are implemented, designed, and used in games, and they are likely to continue to change as games develop and innovate. For this reason, it is difficult to isolate loot boxes for analysis from other types of in-game purchases.

69. InGAME found that the literature on the size and scale of the loot box market, as a subset of in-game purchases, is scarce. One source cited by InGAME as well as direct submissions was the Juniper Research Report of 2018, which estimates total global spend on loot boxes and “skins gambling” in 2018 to be $30 billion, forecasting that it could reach $50 billion by 2022.^{[footnote 5]}

70.Though not directly comparable, the Juniper Research report of 2021 estimates that revenue generated by loot boxes, not including “skins gambling,” in video games will exceed $20 billion by 2025, up from an estimated $15 billion in 2020. Nonetheless, the literature is unanimous in its view that loot boxes and microtransactions form part of a highly lucrative market for video games.

71. InGAME observed that there are many different approaches to monetising video games using in-game purchases. Loot boxes are one of several revenue elements that a company may deploy: some may derive significant revenue from loot box sales, while others choose not to use them at all, or feature a variety of different types of spending opportunities alongside each other. Some games may implement virtual currencies which add complexity to players’ decision-making around loot boxes.

72. Loot boxes may be present in a variety of different types of games and business models. Loot boxes have increased in prominence with free to play business models where video game players do not make an initial investment to play the game but might make purchases to progress or access features in the game.

73. InGAME found that games developers and publishers employ loot boxes to encourage players’ retention and optimise the player experience. InGAME’s market analysis suggests that the design and implementation of loot boxes in video games has become more sophisticated as data analytics has increasingly been used to determine items available to purchase and promotional offers.

2.2 Direct submissions: loot boxes and the in-game purchases market

74. From the 50 direct submissions received, some original market data was provided including from companies involved in the development and/or publishing of video games (both large multinationals and some smaller companies), and games industry trade associations which represent multiple businesses. Some respondents requested that commercially sensitive information in their submissions remained confidential.

How many and what kind of video games contain loot boxes?

75. Our analysis of the submissions corresponded with InGAME’s findings about the lack of robust data on the loot boxes market. Some data was provided regarding the prevalence of loot boxes across different types of games, which is summarised in this section.

76. Some individual companies responding with original data gave insight into how often, and when, they offered loot boxes in their games. The data received was a small sample that may not be representative of the wider market. Trade bodies also presented some additional new data in relation to loot boxes. Some responses from academics reported findings from their review of publicly available information on popular platforms or from surveys of consumers. However, the data presented varied considerably and appeared to have been collected using a range of different methodologies. In some cases data was only focused on games made available on specific platforms.

77. Ofcom’s Online Nation 2020 report estimated that 4% of adults and 6% of children had purchased a loot box in a free to play game and 4% of adults and 3% of children had purchased a loot box in paid-for games. An Ipsos Mori survey commissioned by an industry trade association found that 32% of players of video games had played games that feature loot boxes, and 26% of players had opened a loot box. 25% of players had opened a free loot box, compared to 7% who had paid for a loot box. Ipsos Mori found 39% of players claimed that all or most of the free to play games they play contain loot boxes, compared to 20% of players who play paid-for games.

78. Ipsos Mori found no significant differences in where loot boxes appear across different device types, across PC, console and smart devices, including mobile and tablets. Some submissions cited data from a 2020 academic publication on the prevalence of loot boxes in mobile games, including that in 2020, in both the UK Apple and Google app stores over half of the top 100 grossing games contained loot boxes. The publication also found that the majority of play sessions on desktop (for PC games), as early as 2014, were on games that featured loot boxes and that 18 of the 50 most-played games on the Steam platform contained loot boxes (accounting for 299 million installations).

79. For PEGI rated games, which covers games rated across Europe predominantly for PC and console, only 2.5% of games from August 2020 to May 2022 (over 1000 games) were awarded the “in-game purchases (includes random items)” descriptor, denoting the presence of paid-for loot boxes. This compares to 15% of titles that were awarded a descriptor for “in-game purchases” by PEGI. It should be noted that these statistics do not consider the relative popularity of the games that do, and do not, contain these descriptors – for example, where the most popular games account for a relatively higher proportion of gaming sessions.

How are loot boxes used in video games?

80. Responses received from the games industry and from academics and research groups were consistent with InGAME’s findings on the complexity and variety of loot boxes and the context in which they are operated. Some businesses responding provided commercially confidential data about their own product ranges. One typology cited by several respondents defines four types of loot boxes, depending on whether aspects are “isolated” within the game or “embedded” in the real world economy (available for purchase using real-world money).^{[footnote 6]}

81. Respondents described a variety of ways in which loot boxes can be accessed by players, including as rewards for meeting objectives, earned through gameplay, earned by watching advertisements, a reward after a specific time period, or paid for through real-world money or through virtual currencies. In some instances players use a combination of these to access loot boxes – for instance, where virtual currency earned through gameplay is “topped up” with virtual currency purchased with real-world money. Some games industry submissions said that purchasing loot boxes within their games was optional, and that a minority of players chose to purchase loot boxes.

82. Some responses noted that items received in loot boxes could be seasonal and/or limited edition in nature. The random rewards in loot boxes described were varied. Rewards generally could be categorised as either (a) rewards which are useful to progress and/or compete in the game or (b) rewards which are purely cosmetic, and offer no material advantage in the game. The rewards received could be more or less desirable to players for a variety of reasons, including their utility within the game and their rarity.

How do loot boxes contribute to and work in conjunction with the wider in-game purchases market?

83. Some responses said that loot boxes were one of several revenue generating strategies that companies may deploy within games, as part of a “games as a service” model. The Juniper Research Report of 2018 that was considered by InGAME was also cited by several respondents, regarding the size of the loot box market.

84. According to Ukie, the UK market for video game software sales was estimated to be £3.85 billion in 2019, growing to £4.55 billion in 2020. At the end of 2019, the loot box market in the UK was projected to be worth £700 million. These figures, while not calculated on the same basis, suggest that the loot box sales were worth approximately one-fifth of software sales in 2019.

85. Some games companies responded to these questions with their own commercially confidential data that gave insights into the monetisation of their specific products and spending patterns of their consumers. All of the information from businesses demonstrated the complexity of the market and the difficulty in comparing data sets, for example across companies, products and loot box types and rewards they contain.

86. Several responses discussed difficulties in fully understanding loot boxes and other in-game spending patterns where virtual currencies were used in games to make purchases. These virtual currencies may be obtained via various methods, including being earned through gameplay, gifted or purchased with real-world money.

87. Responses, particularly from academics and research groups, frequently made the point that access to data held by games companies would help to better answer this question. Several responses noted that published market assessments generally do not distinguish between loot box purchases and other types of in-game spending.

88. Data was provided suggesting a wide range of the extent to which individual games derive their revenue from loot boxes, in comparison to other types of in-game purchases. One respondent, representing a number of companies publishing games for mobile devices, found the proportion of revenue from loot boxes relative to in-game purchase revenue ranged from 6% to 25%. An Ipsos Mori survey found that 45% of all players spend money on video games, with each having an average monthly spend of £20 per month. 10% of overall monthly spend related to paid loot boxes, contributed by 7% of all players who said they had paid for a loot box in the 12 months prior to completing the survey (December 2020).

89. Some data was provided on in-game purchases comprising a higher proportion of revenue for mobile games, compared to a lower proportion of total revenue for PC and consoles. However this data did not disaggregate between loot boxes and other types of in-game purchases.

90. Some games industry submissions said that loot boxes are one of several means available to games companies to generate revenue as a form of in-game feature. Ipsos Mori found that players who purchase loot boxes tend to have a higher monthly spend, but spend less on non-loot box content than other players, with £15 per month spent on loot boxes and £11 for other content types (£26 in total). This compares to the average spend of £20 per month for players who spend money on video games.

To what extent are items received in loot boxes tradable?

91. Some games company submissions said that items received in loot boxes are tradeable within their games but not for real-world money. Some multiplayer games allow the trading of in-game items, including those received from loot boxes, within the constraints of the game or platform on which the game is played. For example, one platform facilitates the trading of in-game and loot box items across different games for the platform’s virtual currency. The majority of other games companies responding said that they did not facilitate the trading of loot box items in their games.

92. All industry respondents who responded to this question said that trading of loot box items, or any game assets, outside of their games is prohibited and is against the terms of their end user licence agreements.

93. Some submissions noted that the trading of loot box items outside of games on third party websites did occur. A response from a games industry trade association said its members were vigilant in addressing the illegal exchange of loot box items for payment. This response said that some actors nonetheless use “illegal workarounds” to sell or trade in-game items despite this being prohibited by platforms’ terms of service. Some responses from academics and research groups also contended that, though trading of loot box items outside of games was typically prohibited, black market trading opportunities were available.

2.3 Player survey: player interaction with loot boxes

94. The player survey included some questions on how players interact with loot boxes, which is relevant to evidence on the loot boxes and in-game purchases market. A full summary of the player survey can be found at Annex A.

95. Nearly all respondents (98%) had opened a loot box, with the majority of respondents opening a loot box in each of the following ways: opened a free loot box (86%), purchased a loot box directly with real-world money (63%), purchased a loot box with in-game currency such as coins or gems earned through gameplay (80%), and purchased a loot box with in-game currency such as coins or gems paid for with real-world money (72%).

96. There was a range in the frequency of which respondents said they purchased loot boxes: 22% of respondents said they never purchase loot boxes, 27% said they purchased loot boxes monthly, 13% said they purchased weekly, and 3% said they purchased loot boxes daily.

97. On spending, 39% of respondents said they typically spend more than £10 on loot boxes per purchase, and 61% said they typically spend less than £10 per purchase.

3. Loot box impacts and potential harms

98. The call for evidence sought to understand the impacts of loot boxes, and potential harms associated with or caused by players purchasing and using loot boxes. This section summarises findings on potential harms from the InGAME rapid evidence assessment, direct submissions received in response to the call for evidence, and the player survey. It also considers related arguments on loot boxes and gambling regulation, on which the government’s view is provided in Section 5 (conclusions and next steps).

3.1 InGAME report: problematic play and potential harms summary

99. InGAME identified and reviewed 22 publications that focused on loot box use and problematic play and potential associations with harms. InGAME’s rapid evidence assessment focused on empirical studies of potential harms associated with loot boxes and did not include theoretical, qualitative, and unpublished work.

100. 15 of the 22 studies examined the relationship between loot box use and problem gambling, largely measured by the Problem Gambling Severity Index (see Box 2). These 15 studies found a stable and consistent association between loot box expenditure and problem gambling behaviours. InGAME also found emerging evidence of a dose-response relationship, whereby greater loot box spending is related to greater problem gambling severit

Box 2 - Problem Gambling Severity Index

The Problem Gambling Severity Index (PGSI) is the most widely used sub-clinical proxy measure to identify whether somebody is experiencing problems with gambling and the severity of these problems. The PGSI consists of nine questions relating to potentially harmful behaviours or outcomes associated with gambling. The responses are assessed against a four-point scale ranging from “never” (scoring 0) to ‘almost always’ (scoring 3). The scale categorises a person scoring over 8 as a person experiencing problem gambling. A person scoring 3-7 is categorised as ‘moderate risk’ and a person scoring 1-2 is categorised as ‘low risk.’

101. 11 of the 15 studies used an adult sample population (aged 18 and over) and found a correlation between loot box expenditure and problem gambling. The remaining four studies used younger sample populations (ranging from 12 to 24 years old), which found similar associations to those observed among adults.

102. InGAME noted that empirical work on loot boxes is still emerging. There are a range of plausible explanations that could underpin the association between loot box spending and problem gambling behaviours and research has not established whether a causal relationship exists. These explanations include that loot box purchasers are heavily engaged in a range of gambling activities, that other factors, like impulsivity, drive this association, that loot box purchases exhibit maladaptive motives for their use, or that loot box purchase itself leads to gambling-related harms.

103. InGAME found two studies that considered other factors that could explain the correlation with problem gambling. One study found that broader gambling behaviours explained the relationship between loot boxes and problem gambling. The other study found a persistent relationship between loot box purchases and problem gambling even after broader gambling and impulsivity behaviours were taken into account.

104. InGAME also found an emerging evidence base considering other harms associated with loot box use. 5 studies found a positive association between “problem gaming” and the use of loot boxes. Several of these studies used the American Psychiatric Association’s Diagnostic and Statistical Manual of Mental Disorders (DSM-5)’s definition of internet gaming disorder (see Box 3). InGAME found the evidence base on broader harms associated with loot boxes, such as impacts on wellbeing, anxiety, depression and psychological distress, to be scant.

Box 3 - Problem gaming or internet gaming disorder

The American Psychiatric Association’s Diagnostic and Statistical Manual of Mental Disorders (DSM-5) defines problem gaming as gaming that must cause ‘significant impairment or distress’ in several aspects of a person’s life. Under the proposed criteria, a diagnosis of internet gaming disorder would require experiencing five or more of the following symptoms within a year:

• preoccupation with gaming
• withdrawal symptoms when gaming is taken away or not possible (sadness, anxiety, irritability)
• tolerance, the need to spend more time gaming to satisfy the urge
• inability to reduce playing, unsuccessful attempts to quit gaming
• giving up other activities, loss of interest in previously enjoyed activities due to gaming
• continuing to game despite problems - deceiving family members or others about the amount of time spent on gaming
• the use of gaming to relieve negative moods, such as guilt or hopelessness
• risk, having jeopardised or lost a job or relationship due to gaming

105. InGAME highlighted methodological limitations with many of the studies considered, which were acknowledged by their authors. Studies often do not differentiate between specific loot box implementations, tend to utilise non-representative or low quality samples, and employ measurements not developed for the context of online gaming. Studies also tended to focus on games made by major publishers, with smaller publishers and mobile developers being under-represented.

106. InGAME found it “difficult to disaggregate which loot box implementations may be particularly problematic, to identify which populations may be particularly at risk of problem gambling (or other harms) when they engage with loot boxes, or to rule out covarying factors that may be difficult to untangle” (InGAME page 44). There is scope for further research to look into which implementations of loot boxes and broader monetisation strategies may be particularly problematic, with regard to which populations, and for greater use of representative UK samples.

107. Since the InGAME report was compiled, further empirical studies have been published that have examined loot boxes and harms, including gambling-related harms. These studies have not been subject to a further systematic evidence assessment, but we have summarised some academic publications below and where relevant in sections 2, 3 and 4 to illustrate how the evidence base has continued to develop.

108. A 2021 study commissioned by Gamble Aware and conducted by the University of Plymouth and University of Wolverhampton found that, from their analysis of data from over 7,000 loot box purchasers, a third of the 5% of players that spent more than £70 per month on loot boxes fell into the PGSI problem gambler category. An academic study published in 2022 found that there is strong evidence to suggest that loot box spend is correlated with problem gambling symptoms and excessive gaming symptoms but there is no evidence to suggest that loot box spend is correlated with either mental wellbeing or psychological distress. An academic study published in 2022 found that loot box purchasing is linked to problem gambling in adolescents when controlling for monetary gambling participation.

109. A 2022 systematic review of the relationship of video game microtransactions and problem gaming and gambling found: links between loot box purchasing and problem gambling, the direction of this relationship is unknown, and the frequency of purchases was a key factor in problematic gambling and gaming.

3.2 Loot box impacts and potential harms: direct submissions

110. The questions on whether loot boxes cause any harm to players received a high response rate in the direct submissions. Some submissions provided qualitative, theoretical, unpublished, and non-peer reviewed work that was not captured by InGAME’s review. Evidence was also submitted that was not in scope of the rapid evidence assessment, as InGAME’s review only captured empirical studies on loot boxes and harm.

Do loot boxes cause any harm to players and what evidence is there to support this?

111.The significant majority of direct submissions addressed the question of whether loot boxes cause harm. Some of the responses said that loot boxes may cause or contribute to harm, whilst others said that there is a lack of evidence supporting the argument that loot boxes cause harm. Definitions of harms were not consistent across the responses. The evidence summarised in this section uses respondents’ own terminology to describe the harms they have considered, rather than presenting an objective definition or framework for categorising those harms.

112. Many respondents said there was a need for better research on loot boxes and harms. Some academic respondents said that access to industry and player data was important for enabling better research.

Problem gambling and gambling-related harm

113. Gambling-related harm is an umbrella term for any harm (including financial, social or psychological in nature) experienced due to participation in gambling. Problem gambling refers to outcomes and/or behaviours specifically related to participation in gambling products (see Box 2 for examples). Problem gambling is a type of harmful gambling, which is an umbrella term used to describe any frequency of gambling that results in people experiencing harm.

114. The majority of respondents that viewed loot boxes as causing or contributing to harm usually referred to or quantified this as “gambling-related harm” as a shorthand for the range of harms which can result from loot box use and are akin to those experienced from harmful gambling. We appreciate that this may not necessarily be accurate if loot boxes are not conceptualised as gambling or otherwise directly contributing to harmful engagement with traditional gambling products, but we are using respondents’ own terminology.

115. Respondents that said loot boxes potentially cause gambling-related harm commonly cited findings from various peer-reviewed studies, many of which are reflected in InGAME’s rapid evidence assessment, that found a positive correlation between spending on loot boxes and measures of harmful gambling, such as PGSI scores.

116. In particular, findings from a meta-analysis which reviewed the existing correlational evidence was commonly cited. This reviewed 15 studies on problem gambling, some of which overlapped with studies considered by InGAME’s drivers of problematic play search, and drew similar findings. One study found a significant correlation between loot box expenditure and problem gambling, and some others found a small-to-moderate relationship between loot box purchasing and problem gambling.

117. In line with InGAME’s findings, Public Health England (PHE)’s 2021 evidence review on gambling-related harms, found evidence of an association between problem gambling and loot box spend (see Box 4). It also found that problem gambling was associated with a wider range of video gaming behaviours.

Box 4 – Public Health England’s evidence review on gambling-related harms (September 2021)

Public Health England (PHE)’s 2021 review analysed evidence relating to the wide-ranging harms associated with gambling. It considered evidence from a variety of data sources and existing research studies and publications on the topic.

It contained a limited review of gaming and gambling. PHE considered four cross-sectional studies that looked at potential associations between gambling-related harms, loot box use, and playing video games more generally (not just loot boxes): these studies reported that problem gambling was significantly associated with problem gaming, video game addiction, loot box spending or frequency of playing video games. PHE noted that cross-sectional studies do not show causality between loot box use and problem gambling. One of these studies was considered as part of the InGAME rapid evidence assessment.

In addition to these, PHE also discussed the findings of one “low quality,” qualitative study of young people aged 11 to 24, which explored the relationship between gambling and video games. The study found participants viewed gambling-like activities in video games, namely loot boxes and skins betting, as addictive and reported instances of excessive spending. PHE noted a number of issues with the study’s sampling methodology which may limit the generalisability of these findings.

118. While some respondents took this correlational relationship as sufficient proof that loot boxes cause gambling-related harm, others handled these findings with more nuance. In keeping with InGAME’s conclusions these respondents recognised that the observed correlations, while noteworthy, could not be used to infer a causal link between loot box spend and problem gambling.

119. In that vein, some responses from academics and researchers echoed InGAME’s findings, emphasising that there are several plausible explanations for this relationship: loot boxes, like traditional gambling products, could play a role in the development of problem gambling, some features of loot boxes could encourage people with pre-existing gambling problems to spend more on loot boxes, or a third variable, such as low impulse control, may be a risk factor for both problem gambling and increased spending on loot boxes. Many industry respondents also expressed concern about the quality of evidence.

120. Beyond the issues outlined above, respondents highlighted that much of the evidence on the relationship with harmful gambling relied on participants to accurately recall and self-report loot box behaviour. Given few studies attempted to independently validate the self-reported information, some questioned the reliability of the findings, including some researchers. Further, some argued findings were muddied as it was not always clear whether respondents in such surveys were answering the PGSI questions in regard to their behaviours on loot boxes or traditional gambling products.

121. Evidence was also submitted on player experience and how some video games players perceive loot boxes as a form of gambling carrying the associated risks such as chasing losses and disordered spending. Some respondents suggested this perceived similarity meant loot boxes may “normalise” gambling behaviours and/or act as a gateway to a harmful relationship with traditional gambling products. This evidence came primarily from third sector organisations that had conducted their own surveys on loot boxes, including surveys of children and young people, which did not always use fully representative samples. The findings also stand in contrast to data shared by some games companies on customer service contacts by players, of which only a very small proportion were regarding reports of potential harms associated with loot boxes. A 2022 academic study found self-reported evidence of gateway effects, including loot boxes influencing gambling and the reverse. This study used a cross-sectional approach, asking participants about the impact of loot boxes retrospectively, and so does not necessarily provide evidence of causality.

Comparisons with gambling, and calls to regulate loot boxes as a form of gambling

122. Many respondents who contended that loot boxes cause or contribute towards gambling-related harms made arguments on whether loot boxes already amount to a form of gambling and whether gambling regulation would be an appropriate response to the risk of harm associated with loot boxes. Many of these respondents, including from third sector organisations, contended that loot boxes should be regulated as gambling. Some respondents, in particular most industry respondents, rejected arguments that loot boxes should be considered as a form of gambling and regulated as such.

123. The Gambling Act 2005 (see Box 5) provides definitions of the activities which constitute gambling. Specifically, some have argued that loot boxes could or should fall within the definition of “gaming.” Section 6 of the Act defines gaming as “playing a game of chance for a prize.” Under Section 6(5), a prize in relation to gaming (except in the context of gaming machines):

means money or money’s worth

includes both a prize provided by a person organising gaming and winnings of money staked

Box 5 - Gambling Act 2005

The Gambling Act 2005 sets out how gambling in Great Britain is regulated. The Act covers arcades, betting, bingo, casinos, gaming machines, society lotteries, and remote gambling (including online gambling). It also created and set the functions and objectives of the Gambling Commission as the principal regulator

124. The Gambling Commission has previously set out its interpretation of the Gambling Act 2005 with regards to loot boxes in its 2017 position paper. As it outlined then, most loot boxes currently on the market are unlikely to meet this definition as the reward is confined for use within the game and cannot be sold or otherwise exchanged for real world currency. Loot boxes may also not necessarily meet the definition of a game of chance. We are aware, for instance, of a recent court case in the Netherlands where the definition of a game of chance within Dutch law has come under particular scrutiny.

125. Relatedly, some respondents questioned whether loot boxes should be regulated as lotteries. These arguments usually highlighted that lotteries under the Gambling Act 2005 do not necessarily need to offer a monetary prize. While a loot box reward could be considered a lottery prize, the individuals purchasing loot boxes would not normally be considered a coherent “class” of participants per section 14 of the Act. Further, loot boxes do not fit into any of the eight categories of permitted lotteries under the 2005 Act.

Enforcement under the existing Gambling Act

126. Some respondents argued that more should be done to apply the existing Gambling Act definition to some loot boxes. In particular, one recurring argument was that loot box rewards already amount to “money or money’s worth” per the definition for a “prize” set out in the Gambling Act 2005.

127. Evidence was submitted that in at least some deployments of loot boxes, the item received can be sold on for real-world money. Some online games include functionality which allow peer-to-peer “trading” of in-game items. While this usually plays a functional role within regular gameplay, we received reports of this feature being used in some instances to transfer items between players without leaving the game, sometimes with associated payments being handled separately in the real world. It was also pointed out that players can sell entire accounts to other players (for instance by sharing account details and passwords), including the in-game items potentially gained through loot box purchases.

128. There was also reference to third party websites which exist specifically to facilitate the exchange of in-game items. This included items gained through loot boxes, which could be sold for money. These websites are reliant on application programming interfaces (APIs) which allow the third party to access and manage an account’s collection of in-game items on the account-holder’s behalf. While the item does not leave the platform, respondents highlighted that APIs materially impact the ease with which in-game items may be exchanged. Some respondents were concerned that integrating with these APIs was unrestricted, often with limited oversight from publishers or platforms around the services they facilitate.

129. However, many industry respondents disagreed and emphasised that such arrangements are in breach of the terms of service for users and their APIs, and that the third parties normally have no affiliation to the publisher. Indeed, some publishers highlighted the work they and their legal departments actively undertake to disrupt these unauthorised third party websites.

130. Some respondents said that their disruption efforts were broadly successful and it was increasingly difficult for players to illegitimately monetise their in-game items. Indeed, while none could provide exact estimates, they suggested that the vast majority of items gained through loot boxes are never even traded, let alone illegitimately monetised. Industry respondents therefore maintained that at the point of purchase loot boxes are not gambling because the items gained are confined for use within the game and not subject to the “money’s worth” definition.

131. Ultimately it is for the statutory regulator, the Gambling Commission, to decide whether to pursue enforcement action against any operations which it believes to be facilitating unlicensed gambling, and potentially then for the courts to rule on the specifics of individual cases. The Commission has shown that where it deems the line has been crossed it can take action, as with the successful prosecution of FutGalaxy. The Commission will continue its risk based approach to the regulation of the gambling sector.

Arguments for changing the Gambling Act with regards to loot boxes

132. Some respondents argued that the strict definitions in the 2005 Act are unsuitable and should be adjusted to bring all or most loot boxes (for instance at least those which are purchased with real-world money) clearly within the scope of gambling regulation. This could be done in various ways, but most argue that the government should clarify in legislation that loot boxes are themselves a game of chance, and that the prize constitutes “money or money’s worth.” Respondents made a variety of supporting arguments which are examined below. These arguments were mainly on the basis that loot boxes share many structural similarities with traditional gambling products, and that incorporating them within the existing regulatory regime for gambling could help mitigate the risk of harms for players and prevent under-18s from purchasing loot boxes.

133. Firstly, a number of respondents felt the focus on “money or money’s worth” was misplaced. Their position was that since people are willing to spend money on loot boxes, they evidently value the contents irrespective of objective worth or saleability. As this perceived value was sufficient to motivate paid participation, they argued that loot box rewards were functionally equivalent to the “prizes’’ offered in traditional forms of gambling. As such, the current definition of a “prize” under the Act was seen as outdated, failing to capture new ways that individuals can be motivated to engage in what some respondents argued amounted to games of chance.

134. Relatedly, survey data was submitted suggesting that some children, young people and adults perceived loot boxes to be a form of gambling. This evidence normally used limited samples that were not representative of the UK population.

135. We also received evidence on the psychological similarities between loot boxes and licensable gambling products. Some respondents focused on specific elements of how some loot boxes are deployed or designed which mirror certain characteristics in traditional forms of gambling. This included variable ratio reinforcement schedules, which encourages repeating learned behaviours for a chance to acquire a valuable item and psychological triggers, such as “near misses” and audiovisual design.

136. An academic study cited by several respondents examined loot boxes in 22 games in relation to 5 psychological criteria for gambling. While it is worth noting that this is only one set of criteria for gambling used in psychology research and is not directly relevant to the scope of gambling regulation in Great Britain, the study found that 10 of the 22 loot box deployments examined met each of the criteria.^{[footnote 7]} However, we also note that over half of the loot box deployments examined did not fully meet the criteria for gambling used in this study.

137. A number of other respondents argued against bringing all purchased loot boxes within the scope of gambling regulation. The lack of evidence of a causal link between loot boxes and problem gambling was a commonly cited reason against regulating loot boxes as gambling. Similarly, some respondents reiterated that items cannot normally be “cashed out” or often even recycled as the stake for the next wager (as in traditional gambling). The certainty of receiving something from a loot box, even if not the desired item, was also highlighted as a difference with nearly all forms of traditional gambling where the entire stake is risked for no certainty of any sort of return. In this regard, some comparisons were made with other consumer purchases with a randomised element (e.g. trading cards) that were also not regulated as gambling.

138. In addition, some respondents argued that such a move would be poorly targeted and could lead to unintended consequences. This included the view that it would be a significant oversimplification to just regulate loot boxes as gambling without further consideration of the specific risks and issues that they may pose, and of differences in how loot boxes are deployed (as set out above). Other respondents highlighted the pace of change and innovation in the video games sector. This could result in new products with similar risks being quickly made available to circumvent whatever new definitions of gambling were introduced.

Financial and mental health harms

139. Several respondents identified financial and mental health harms as a potential risk from loot boxes. Some respondents considered these harms to be “gambling-related,” whilst others considered financial and mental health harms without referring to a relationship to gambling.

140. Whilst there are limitations in the available data, some evidence considered, including games industry data, suggests that a small minority of players spend a disproportionately high amount on purchasing loot boxes relative to other players. For example, one study considered by InGAME found that the top 5% of loot box spenders generated half of the total expenditure on loot boxes, with no evidence that this 5% had greater income than others (InGAME page 33). While high spending does not necessarily lead to financial harm, it holds that the higher the spending on loot boxes (particularly in a short period of time) the smaller proportion of the population that can afford it without negative consequences.

141. Some anecdotal evidence and personal testimonies also provided information on where individuals had spent a high amount on loot boxes which had led to financial and mental health harms. However, some games industry respondents said that relatively high spending on loot boxes by a minority of players should be considered in the context of comparable levels of spending on other leisure activities.

142. Some third sector and academic submissions referred to results from their own surveys and research, including interviews with adult and child players, to support the view that loot boxes are associated with the risk of mental health and financial harms. This included that: loot boxes were or could become addictive, that players did not feel in control of their spending on loot boxes, and that players tried to hide the money they were spending on loot boxes or felt a sense of shame with their spending. One third sector response said that vulnerable players, namely those experiencing mental ill health or at risk of impulsive behaviours, may be at particular risk of harm from loot boxes.

External influences motivating loot box purchases

143. Some submissions said that external factors and motivators, such as peer pressure, as well as the gameplay context in which loot boxes are situated, were relevant to understanding potential harms associated with loot boxes.

144. Of particular concern was the deployment of loot boxes in “pay-to-win” games, where buying in-game items can provide competitive advantages over other players. Pay-to-win games do not necessarily include loot boxes and may allow items to be purchased directly. However, a number of academics and third sector organisations raised concern that the nature of loot boxes can interact with these types of games to produce harmful outcomes. Broadly, these respondents highlighted how the desire to compete with others online motivates people to spend money on loot boxes to obtain valuable items. Yet, due to the randomised nature of loot boxes, in most cases there is no guaranteed level of spend where an item will be reliably acquired. This presents a risk that some players continue buying loot boxes until they obtain the desired items, which in turn could make it more difficult for these players to control their spend.

Whether young people are impacted (by loot boxes) differently to adults, and if so, how?

145. Many submissions responded to the question of whether young people are impacted differently to adults. Nearly all submissions that responded to the question from third sector, parliamentary, and professional medical groups contended that children and young people were more at risk of being negatively impacted by loot boxes compared to adults. Several responses from academics and researchers said that children and young people may be at increased risk from encountering harm from loot boxes.

146. One academic said that in the few studies specifically examining adolescents, the association between loot box purchasing and problem gambling was typically stronger than seen in adult samples.

147. Some responses said that children’s inherent developmental vulnerabilities and inexperience with money put them at particular risk of harm and negative impacts. This includes factors such as children being less capable of controlling their engagement with video games, having less experience with financial transactions and managing spend, and having a more limited understanding of probabilities and the likelihood of receiving desirable items from loot boxes. Several respondents said that loot boxes exploited children’s naivety and inexperience, including through perceived ‘coercive’ or ‘aggressive’ monetisation strategies, and behavioural nudges, such as time-limited promotions.

148. Several submissions said that the influence of peer pressure on children and young people, in addition to inherent vulnerabilities, may increase risk of harm from using loot boxes. One submission referred to results from their own survey that found that children viewed peer pressure as motivating spending on loot boxes. One respondent similarly suggested that peer pressure could interact with the random reward mechanism of loot boxes to increase the risk of uncontrolled spending.

149. Some games industry respondents reiterated that there is lack of evidence on loot boxes causing harm, with regards to children, young people and adults. Industry respondents also highlighted measures developed by industry, including parental controls, and data on parents having agreements in place with their children on their gaming, which are considered further in Section 4.

Whether any harms identified also apply to offline equivalents of chance mechanisms, such as buying packs of trading cards

150. Some respondents said that potential harms identified with loot boxes did not apply to offline equivalents of random reward mechanisms such as physical trading card games that require the purchase of packs of randomised cards. One academic respondent found only one study that has attempted to quantify harms that may be associated with trading card spending (again using participants’ PGSI scores), which found no evidence of the relationship observed with loot boxes.

151. Some responses said there were differences between loot boxes and offline equivalents, including: the immediacy of the loot box purchase and that loot boxes can often be purchased in greater quantities at a faster rate without the “friction” of physical purchase, the online gameplay context incentivising purchases, and accompanying audiovisual cues. However, some games industry responses said that loot boxes were a modern manifestation of purchases with a random element, such as trading cards and some children’s toys.

Whether any harms identified may also apply to other types of in-game purchases

152. Some responses said that harms associated with loot boxes may also apply to other types of in-game purchases. These responses generally did not identify which specific types of in-game purchases may pose a risk of harm to consumers.

153. The harms that were associated with other types of in-game purchase predominantly relate to financial harms, such as to a lack of control over spending. Some responses expressed that monetisation strategies and practices implemented to increase player spending behaviour are applied to other types of in-game purchase features. For example, players might be “nudged” to purchase in-game items from online stores through promotional messaging, time pressure on the availability of particular types of purchases, and advertising. Players may feel peer pressure to obtain items regardless of whether purchased directly or through loot boxes.

154. The implementation of virtual currencies as a means to make in-game purchases was also viewed as contributing to the risk of overspend for all in-game purchases. Some submissions said that virtual currencies impacted consumers’ ability to understand in-game spend in terms of real-world currency and therefore make informed decisions about their purchases.

155. One third sector respondent said that design features in online games could lead to relationships of control and power that could result in grooming, abuse and exploitation.

3.3 Loot box impacts and potential harms: player survey

156. 62% of respondents (aged 16+) to the player survey responded to the question regarding positive experiences with loot boxes.^{[footnote 8]} Examples of positive experiences included: receiving a sought after, rare or valuable item, obtaining rewards that progress gameplay conditions, and enhancing gameplay experience and enjoyment.

157. Nearly two-thirds (63%) of adult respondents who opened a loot box reported negative experiences from the use of loot boxes in video games. 70% of respondents responsible for a child or young person reported a negative experience. As set out in Annex A, the negative experiences reported by players aged 16+ and adults responsible for a child or young person were coded into several categories, and an individual’s response could be coded to more than one category. Figure 1 below illustrates the categories of negative experiences reported, as a proportion of total individuals who reported negative experiences.

Figure 1: Player survey - categories of negative experiences with loot boxes reported

Labels	Players aged 16+	Adults responsible for a child
Loot boxes reduced or ruined enjoyment of the gameplay experience	5%	3%
Loot boxes are expensive, encourage unsatisfactory purchases, or are not value for money	62%	50%
Loot boxes were mis-sold, lacked information, or players experienced pressure to purchase the loot box	12%	20%
Loot boxes caused or contributed towards financial harm	5%	8%
Loot boxes caused or contributed towards gambling-related and/or mental health harm	4%	12%

158. A small minority of players compared their purchasing of loot boxes to problem gambling behaviours, and said they had experienced “obsessive” or “addictive” behaviours. Some players said their engagement with loot boxes had led to them engaging with traditional gambling products. Some other players who identified themselves as problem gamblers said they were more vulnerable to engaging with loot boxes in a problematic manner.

159. Some players said that their loot box purchasing sometimes felt out of control as a consequence of different motivating factors, and that they experienced difficulties in monitoring or managing their spend. Some of these players said they experienced financial harms, such as spending significant amounts of money beyond their means in short gaming sessions. Some players said their engagement with loot boxes caused or contributed to stress, emotional distress, depression and anxiety.

160. Some adults responsible for children and young people, who responded to the player survey, also described financial, gambling-related and/or mental health harms. This included reports of “addictive” and “obsessive” behaviours, with the influence of peer pressure frequently cited. Some of these respondents said that loot boxes may encourage children and young people to develop a poor relationship with money, and that children had a more limited understanding of risk and probabilities, in comparison to adults. Some adults said children showed states of emotional stress and anxiety when engaging with loot boxes, and were concerned by the impacts of what they viewed as harmful behaviours.

4. Voluntary and statutory protections

161. This section summarises evidence and views received from direct submissions in response to questions on voluntary and statutory protections for consumers. The InGAME evidence assessment was not asked to consider these protections. Some evidence considered by InGAME has been included in this section, where relevant. It also contains a short summary of responses to some relevant questions from the player survey.

4.1 Voluntary and statutory protections: direct submissions

Evidence relating to the use and impact of restrictions/protections introduced directly into video games or on video games platforms and devices.

162. Some responses from the games industry highlighted protections for consumers introduced by games publishers and platforms that have continued to develop in recent years. Many industry respondents said that protections and restrictions were tailored for different products and services, and argued against a “one size fits all” approach to introducing further measures.

163. Some respondents welcomed progress on increasing industry-led protections. However, some responses, including from academics and third sector organisations, argued that these were insufficient to mitigate the risk of harms identified for children, young people and consumers.

164. Types of protections and measures considered by the call for evidence include:

• probability disclosures to inform the purchase of loot boxes
• tools which provide controls and information for parents to manage the spend and play of children and young people
• tools which provide controls and information for adults to manage their own spend and play
• information campaigns for parents and players
• data protection and the appropriate use of player data
• broader policies and game design approaches to promote player safety

Probability disclosures

165. Probability disclosures provide information to players of the likelihood of receiving particular items, or categories of items, from a loot box, to help inform their purchasing decisions.

166. Several respondents highlighted steps taken by platforms and games publishers in recent years in implementing probability disclosures. For example, all three major console manufacturers have implemented policies on probability disclosures to inform the purchase of loot boxes on their platforms, and a number of publishers have incorporated probability disclosures into their games. Major platforms for mobile games have also introduced requirements on disclosing probabilities for obtaining loot box items. Some respondents expressed the view that developments in probability disclosures had increased transparency, which was beneficial to consumers.

167. However, some academic and third sector responses said that there were inconsistencies and limitations in how probability disclosures were implemented, including: how and where probabilities were disclosed, including their visibility, prominence and terminology, a lack of specific information on the probability of obtaining specific valuable items (e.g. where probabilities were provided for a “class” or category of items), a lack of information on how much on average a player would need to spend to receive a particular valuable item, and a lack of information on whether and how probabilities may dynamically change, including in response to data obtained from players. Limited evidence was provided on whether and how probability disclosures implemented for loot boxes have impacted player behaviour.

Parental controls, tools and information

168. Parental controls are tools which allow parents or guardians to place limits on a child’s online activity and thereby mitigate the risks that the child might be exposed to, in areas such as in-game spending. In addition to providing controls, parental tools may also provide information to parents on play and spend.

169. Parental controls have been implemented within many platforms and games, with different approaches taken. On some platforms and games, action is required by parents to enable spending by children and young people, whereas on others parental controls are “opt-in” meaning there are no restrictions set by default. There are also differences across platforms and games on the ages for which parental controls were available – for example, under-18s, under-16s or under-13s.

170. On Sony Playstation, parents must set up child accounts for under-18s. Parents can set monthly spending limits, and if they do not set a limit the default is set at £0, preventing children and young people from spending money on in-game purchases, including loot boxes. On Microsoft Xbox, parents must also set up child accounts for under-18s. These offer spending limits and require parental approval for each purchase made by the child by default. Some games publishers, such as Electronic Arts (EA) with FIFA Playtime, have developed tools within games to help players monitor and manage their play and spending.

171. Some evidence was provided on the uptake of parental controls, but only limited evidence was provided on the impact of parental controls. Ipsos Mori research commissioned by Interactive Software Federation of Europe (ISFE), which represents Europe’s video games industry, found that three-quarters of parents of children who spend money within video games have agreements with their children regarding in-game spending. 37% of UK parents of children who spend money on video games were using parental controls, which was the highest of the five European countries surveyed (UK, France, Germany, Spain and Italy). The average usage of parental controls across these five countries was 22%. It should be noted, however, that this data is based on a small sample size.

172. Many games industry respondents said that parental engagement and involvement in shaping how children play and spend money in games, was more effective than “blunt controls” to restrict children and young people from accessing loot boxes. Some industry representatives have argued that seeking to prevent children and young people from accessing loot boxes risked the unintended consequence of children and young people using adult accounts, and thus not being protected by the parental oversight enabled through parental controls.

173. Some respondents called for a precautionary approach to protecting children and young people and argued these groups should be prevented from accessing loot boxes, rather than leaving this to the discretion of parents. Some respondents said that parental controls offered inadequate protection for children and young people because many parents were not aware of the risks associated with loot boxes, and many parents were not using parental controls.

174. In addition, restrictions and controls on what children and young people can access requires effective age assurance measures so that companies know which of their users are children. At present, many games companies and platforms rely on self-declaration techniques which are often ineffective if children and young people do not declare their correct age in order to gain access to games. Research from the ICO (to be published) suggests that about half of parents allow their children to access online services that they are officially too young to access (e.g. because they do not meet minimum age requirements as included in the terms of service).

175. Some respondents argued that controls and tools were most effective at the platform level, as this was where payments were often processed, and platform level measures would provide greater consistency for parents and consumers.

176. Following its engagement with the government, industry trade body Ukie and its members have committed to work with the government to explore practical ways to make purchases of paid loot boxes unavailable to young people, unless and until such purchases are enabled by a parent or guardian.

Controls, tools and information for all players, including adults

177. Games companies and platforms have also developed tools that provide controls and information for adult players to manage their play and spend. Evidence provided on these tools and information for adults, outside of probability disclosures, was more limited in comparison to that for children.

178. Some respondents argued that more could be done to provide adults with greater transparency on their in-game spending, including loot boxes, and provide tools to impose limits on their spending. Some respondents were also critical of how virtual currencies are used in video games, arguing that they obscure how much players are spending, and techniques such as “odd pricing” are used to incentivise further spend.

179. Two games companies had trialled contacting high-spending individuals to check if they were comfortable and aware of their spending. Both of these companies said only a minority of players contacted responded to these messages, and that respondents were generally content with their spending.

180. Some respondents provided information on advertising and marketing practices with regards to loot boxes. This included criticisms from some respondents of what they saw as aggressive advertising and marketing practices with regards to loot boxes.

181. Following a consultation, the Committee of Advertising Practice (CAP) published new guidance on advertising in-game purchases in September 2021. This guidance has considered a number of issues that were raised in the call for evidence, and specifically addressed issues concerning loot boxes (see Box 6).

Box 6 - The Committee of Advertising Practice guidance on advertising in-game purchases (September 2021)

In September 2021, the CAP published new guidance on in-game purchases. The CAP offers guidance on the interpretation of the UK Code of Advertising in relation to broadcast and non-broadcast marketing communications.

The guidance is aimed at ensuring that advertisers know how to avoid misleading consumers about the cost of in-game purchases, whether games contain them, and how they might affect gameplay. It provides guidance on the pricing of in-game purchases, the presentation of in-game purchases, and the advertising of games that feature in-game purchases.

The guidance applies to in-game store fronts where items can be purchased with real-world money or virtual currency that can only meaningfully be obtained through direct, real world-purchase. It does not apply to virtual currencies that can be earned in-game (including where that currency can also be purchased). It also applies to: press, TV, and billboard adverts for games and in-game items for mobile and console app/game stores, online games stores, influencer/advertorial content and websites selling virtual currency.

On ‘messaging relating to random item purchasing,’ the CAP guidance states:

‘Because random-item purchasing can contain an element of chance and, often, opportunities for immediate response, marketers should take care when developing messaging for these items that consumers are not likely to be misled about the chances of receiving a rare item, especially where multiple purchases are concerned. The following treatments are examples of those that are unlikely to be acceptable:

• suggestions, whether direct or implied, that the next purchase will result in a rare/specific item

• where the probability of receiving an item does not vary with multiple purchases, claiming or implying that the next purchase(s) have an increased likelihood of obtaining rare/specific items

• where the outcome is based on chance rather than skill, suggestions that the player almost obtained a rare/specific item’

The guidance states that the presence of in-game purchasing, especially random item purchasing, may be material to the decision of consumers (in particular those with specific vulnerabilities) to purchase the game. Mention of random item purchases should be immediately next to, or part of, information about in-game purchasing more generally and PEGI labelling is likely to be an appropriate way of disclosing this information. It encourages marketers to provide information on the type of in-game purchasing the game involves, including the distinction between ‘cosmetic,’ ‘big ticket,’ and ‘functional’ purchases.

182. Ukie has committed to raise awareness of spending controls and to promote safe and responsible play for players of all ages. As part of this, Ukie has committed to support vulnerable adults, including through working with organisations such as the Money Advice Service.

Information campaigns for parents and players

183. The games industry has delivered information campaigns to inform parents and consumers about play, spending and tools. Evidence was provided from industry on how engagement with such campaigns has helped to increase the awareness of players and parents on measures such as parental controls.

184. For example, evidence was provided on how the “Get Smart about Play” and “Get Set Go!” campaigns contributed towards increased website traffic on Ask About Games. Ask About Games is an information service for players and parents, which includes advice on parental controls and age ratings. It is run in partnership between the Video Standards Council Rating Board and Ukie. Research on the “Play Together/Play Smart” campaign by EA and Internet Matters found that the majority of parents who saw the campaign switched on spending controls.

185. Ukie has committed to promote and raise awareness of spending controls and encourage safe and responsible play for players of all ages through a three-year £1 million public information campaign, which will be launched in 2022.

Data Protection and the appropriate use of player data

186. InGAME’s report found there was a lack of transparency concerning the use of player data and personal information with regards to loot boxes. In addition, some respondents said there was an asymmetry of information between games publishers and players, with players not knowing how their data is being used. For example, whilst players may be provided with probabilities to inform their purchases of loot boxes, they may not know whether and how these probabilities may dynamically change, including in response to player data.

187. Some platforms and publishers have made commitments with regards to the use of player data, such as not using player data to negatively impact the odds of obtaining items from loot boxes. However, this leaves open the possibility that odds may be changed to increase the probability of players receiving particular items. Some respondents argued that changing probabilities could be part of monetisation strategies to incentivise further spend, such as the implementation of ‘pity timers’ (see paragraph 203).

188. The Age Appropriate Design Code became a mandatory requirement in September 2021 for organisations providing online services in the UK that are likely to be accessed by children. This has strengthened protections for how children’s data is used, including several standards that are relevant to loot boxes (see Box 7).

Box 7 - Age Appropriate Design Code

The Age Appropriate Design Code (also known as the “Children’s Code”), introduced by the Information Commissioner’s Office (ICO) took effect on 2 September 2020 with a one year transition period that came to an end on 2 September 2021. The code is now in its supervision stage, and all online services in scope should be complying with the standards of the code. Under this statutory code, organisations providing online services likely to be accessed by children in the UK must take into account the best interests of the child.

The code sets out 15 standards of age appropriate design representing a risk-based approach. It includes the following standards which are of relevance to loot boxes:

• Best interests of the child: the best interests of the child should be a primary consideration when you design and develop online services likely to be accessed by a child

• Age appropriate application: take a risk-based approach to recognising the age of individual users and ensure you effectively apply the standards in this code to child users

• Transparency: the privacy information you provide to users, and other published terms, policies and community standards, must be concise, prominent and in clear language suited to the age of the child

• Detrimental use of data: do not use children’s personal data in ways that have been shown to be detrimental to their wellbeing, or that go against industry codes of practice, other regulatory provisions or government advice

• Parental controls: if you provide parental controls, give the child age appropriate information about this, and if your online service allows a parent or carer to monitor their child’s online activity or track their location, provide an obvious sign to the child when they are being monitored

• Profiling: switch options which use profiling “off” by default (unless you can demonstrate a compelling reason for profiling to be on by default), taking account of the best interests of the child and only allow profiling if you have appropriate measures in place to protect the child from any harmful effects (in particular, being fed content that is detrimental to their health or wellbeing

• Nudge techniques: do not use nudge techniques to lead or encourage children to provide unnecessary personal data or turn off privacy protections

• Data Protection Impact Assessments (DPIAs): undertake a DPIA to assess and mitigate risks to the rights and freedoms of children who are likely to access your service, which arise from your data processing^{[footnote 9]}

On the transparency standard, Article 12 of the UK General Data Protection Regulation requires Information Society Services to provide children with information on how their data is processed in a way in which they can access and understand it.

Broader policies and game design approaches

189. Some publishers have policies on not including loot boxes in their games, or not including loot boxes in games for children below a certain age. Some publishers and platforms have policies on how loot boxes should be implemented within their games or platforms.

190. Some respondents highlighted the importance of embedding harm minimisation and protecting player safety into game design. Some respondents considered how loot boxes are implemented, with criticisms made of what were seen as predatory monetisation strategies in some games.

191. Evidence was provided on broader policies for safe and responsible gaming by platforms, trade bodies and publishers. For example, the trade association TIGA has published its 5 Principles for Safeguarding Players. InGAME’s report included suggestions for future design norms that could be part of a “safety by design” approach to game design.

192. There have been further publications on loot boxes since the call for evidence concluded. Insert Coin: how the gaming industry exploits consumers using loot boxes was published by the Norwegian Consumer Council in May 2022. It contended that the presentation and sale of loot boxes are “exploitative and predatory” for consumers by exploring two case studies of popular games.

Evidence relating to the use and impact of video games information labels such as the Pan European Game Information rating system (PEGI) for in-game purchases and paid random item labels

193. Nearly all of the responses to this question referenced PEGI as the key informative label used in gaming products, with few respondents remarking on any other labels. Many respondents noted that in April 2020, PEGI introduced “paid random items” as a new content descriptor for games that include purchasable loot boxes and other purchasable random reward mechanism features. The label therefore does not cover “free” loot boxes, or loot boxes obtained through gameplay. This followed PEGI introducing an “in-game purchases” content descriptor in 2018 (see Box 8).

194. According to research conducted by the Video Standards Council (VSC) in 2018 and 2019, 4 in 5 parents trusted PEGI ratings all or most of the time and 84% of parents claimed to check age ratings all or most of the time as part of purchasing titles for children.^{[footnote 10]} The VSC said that given the high levels of parental awareness of PEGI ratings it was likely that the “paid random items” label would be noted by parents, though there is not yet any reliable information on its impact. Industry respondents commented that more time would be needed to determine the label’s impact.

Box 8 - PEGI ratings and labels

The Pan European Game Information (PEGI) rating system was introduced for video games in the UK in 2003. The age ratings are PEGI 3, PEGI 7, PEGI 12, PEGI 16 and PEGI 18. The PEGI system is administered in the UK by the Video Standards Council Rating Board.

Under the Video Recordings Act 1984, it is illegal to supply a PEGI 12, 16 or 18 rated game to children below those ages, if the game is supplied on a physical format such as a disc, chip or cartridge within the UK. If a person breaks the law, they could be subject to prosecution, leading to a fine or even imprisonment if convicted. PEGI ratings are also applied voluntarily by industry to many games supplied directly to connected devices, for example downloadable games and browser-based games

In August 2018, PEGI introduced an “in-game purchases” label for games that include in-game purchases. Since April 2020, games that include purchasable items that contain a random reward mechanism (such as loot boxes) are additionally labelled “in-game purchases: includes random items”. These descriptors for “in-game purchases” and “paid random items” are not linked to a specific PEGI age rating.

195. Some third sector respondents provided evidence that age ratings can be circumvented or ignored, including information and data on players playing titles when they were below the designated PEGI age rating. One third sector respondent said that these issues were compounded by the easy access of digital purchasing, where it was possible for a young consumer to bypass age confirmations and that the repercussions on a vendor selling to a minor (albeit indirectly and unknowingly) were limited compared to a physical retailer.

196. Some respondents said that there was scope for the video games sector to implement more effective age assurance, including age verification, using readily available technologies. The government’s Online Safety Bill, which was introduced to Parliament in March 2022, is expected to drive the use of age assurance technologies, including age verification. These tools are expected to be used to protect children and young people from content that is not appropriate for them, such as online pornography.

197. Some respondents said that the PEGI descriptor for paid random items should correspond with a specific minimum age rating, whilst others thought it was appropriate for this descriptor to be alongside age ratings, rather than tied to a specific age rating. Some respondents said that PEGI labelling did not provide adequate information to consumers and parents to inform their use and oversight of loot boxes in games. Suggestions for further information that could be provided to consumers included: the costs of random items, how and where items are purchased in the game, and whether random items were cosmetic or affected gameplay.

Evidence relating to the use, impact and understanding of consumer rights legislation

198. Most games industry submissions responding to the question said that the policies of video games companies are compliant with all existing consumer rights legislation, such as the Consumer Rights Act 2015. See Box 10 for further background on consumer legislation and video games.

Box 9 – Consumer legislation and video games

In general terms, consumer law is aimed at protecting consumers from unfair, unsafe and other illegal practices. A range of public enforcement bodies share powers to enforce those laws, as well as consumers having a range of private rights which, for example, enable them to challenge unfair contract terms or obtain redress if they are misled. A key concept across consumer law is that individuals can make informed choices about their purchases, which requires that traders are meaningfully transparent about what they are offering. This would apply both to the purchase and/or use of particular games, but also economic decisions taken in-game, for example the purchase and use of in-game currency which can be purchased with real-world money.

As well as numerous laws governing particular sectors, products or practices, including gambling, there are three key cross-cutting pieces of consumer protection legislation, which contain a number of key principles as well as more specific rules.

The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 require that information about the product is offered upfront and that consumers are given effective cancellation rights when not buying from a physical shop (the right to cancellation is subject to a number of important exemptions which may be relevant in the context of online gaming).

The Consumer Rights Act mandates that goods, services and digital content meet certain basic standards and provides a route for consumers and enforcers to challenge contract terms that are insufficiently transparent and are unfairly imbalanced against the consumer.

Finally and perhaps most importantly, the Consumer Protection from Unfair Trading Regulations 2008 require that traders do not mislead consumers by action or omission, that they do not coerce or unduly influence consumers into making decisions, that they act with professional diligence and that they avoid a list of 31 practices banned in all circumstances.

Organisations and individuals should seek their own legal advice about compliance. More information can be found about these laws at the Chartered Trading Standards Institute’s Business Companion Website, or from other public consumer enforcers such as the CMA’s Consumer protection enforcement guidance. The CMA has produced guidance on specific pieces of law but also overviews including for digital markets.

In the UK, if someone thinks a business has broken the law or acted unfairly, they can report the business to Trading Standards. Trading Standards use the information provided to investigate unfair trading and illegal business activity. Trading Standards can take businesses to court or stop them operating, but they do not provide redress to the consumer, for example through a refund. Reports can be made to Trading Standards by contacting the Citizens Advice consumer service. Citizens Advice will pass on the report to Trading Standards and can also provide advice about the problem raised.

In the event that lending or credit is involved, the Consumer Credit Act 1974’s provisions will also be relevant – a licence is required from the Financial Conduct Authority to offer credit or credit-related products.

In addition to consumer protection legislation there are other requirements relating to individual privacy, for example in the Data Protection Act 2018 (see above). UK law also requires that individuals are not discriminated against, either directly or indirectly, due to their “protected characteristics” under the Equality Act 2010.

199. The CMA’s Principles for online and app-based games (see Box 10) were cited by several respondents as being of continued relevance for the games sector. One games industry respondent said that typically the details of these consumer rights are included as part of the overall terms of service that players consent to as a condition of playing and purchase.

Box 10 – The Competition and Market Authority’s Principles for online and app-based games

The Principles for online and app-based games (2014) provide guidance to clarify the Competition and Market Authority (CMA)’s view of the online and app-based games industry’s obligations under consumer protection law. They were developed by the Office of Fair Trading (OFT) and subsequently adopted by the CMA.

In summary, the Principles are that:

• information about the costs associated with a game should be provided clearly, accurately and prominently up-front, before the consumer begins to play, download or sign up to it or agrees to make a purchase

• all material information about a game should be provided clearly, accurately and prominently up-front, before the consumer begins to play, download or sign up to it or agrees to make a purchase^{[footnote 11]}

• information about the game business should be provided clearly, accurately and prominently up-front, before the consumer begins to play, download or sign up to the game or agrees to make a purchase

• the commercial intent of any in-game promotion of paid-for content, or promotion of any other product or service, should be clear and distinguishable from gameplay

• a game should not mislead consumers by giving the false impression that payments are required or are an integral part of the way the game is played if that is not the case

• games should not include practices that are aggressive, or which otherwise have the potential to exploit a child’s inherent inexperience, vulnerability or credulity or to place undue influence or pressure on a child to make a purchase

• a game should not include direct exhortations to children to make a purchase or persuade others to make purchases for them

• payments should not be taken from the payment account holder unless express, informed consent for that payment has been given by the payment account holder

200. Several academic respondents said that the terms of service and end user licence agreements that players entered into upon playing games provide games publishers flexibility in how they respond to refund requests. One academic respondent said that, under these terms, users are not purchasing the actual digital content, but instead a limited licence to use the digital content. As such, the publisher technically has the power to revoke that licence, even if they decide to not issue a refund. This meant there could be limited recourse for consumers if they are not satisfied with their purchase of a loot box.

201. Some games industry respondents said that many companies offer recourse for refunds if players are not satisfied with any of their purchases, including loot boxes. Some games industry submissions said that they encouraged consumers to contact their customer support team if they were not satisfied with a purchase they have made. Refund requests were treated on a case-by-case basis and were at the discretion of the publisher. These respondents said they applied lenient refund policies, either providing no-quibble refunds for ‘unused’ products or helping to establish whether content was unknowingly purchased before offering refunds.

202. Limited evidence was provided on action being taken in the UK and internationally on consumer rights grounds with regards to loot boxes. Some academic respondents contended that some loot box practices may be in breach of consumer rights obligations. In particular, examples were cited in relation to the Consumer Protection from Unfair Trading Regulations 2008 which prohibits unfair commercial practices including misleading actions, misleading omissions and automatically unfair practices. Examples of practices identified by respondents that may be in breach of consumer law with regards to loot boxes are set out below.

203. ‘Pity timers’ change the probabilities of obtaining items from loot boxes as players make more purchases. It was argued that not providing appropriate notice to the player of the use of pity timers, and how such mechanics and player data are used to change probabilities (both beneficial and detrimental) may be a misleading action or a misleading omission. One academic response said that around two thirds of games containing loot boxes in China used pity timers, and said there was a reasonable expectation that such practices may be similarly prevalent in the UK. It was also argued that use of player data to incentivise further spend on loot boxes may be considered a predatory monetisation scheme.

204. Misleading tutorials were identified as where developers ‘simulate’ the experience of buying loot boxes through mandatory tutorials and give players an unrepresentative understanding of the likelihood of winning rare prizes from loot boxes. It was argued that misleading tutorials may be a misleading action.

205. Some respondents argued that not disclosing probabilities at all, or failing to disclose the exact probabilities of each potential reward, may be a misleading omission, as the probabilities would be material information to make an informed decision.^{[footnote 12]} It was argued that stating probabilities as for example “less than 1%” was not transparent with regards to whether, for example, the chance of obtaining a specific item was 0.9% or 0.001%.

206. On limited time offers, falsely stating that a product will only be available for a very limited time is a prohibited unfair commercial practice.^{[footnote 13]}

207. In addition, a 2022 academic study disaggregated different types of monetisation strategies that may be problematic in games. Its authors found that several of the reported practices seemed to not align with existing UK consumer protection regulations.^{[footnote 14]} A 2021 research article considered the effectiveness of self-regulation in the video games industry from a policy and law perspective, concluding that the law should set out a minimum acceptable standard of consumer protection in relation to loot boxes, and industry self-regulation should strive to achieve an even higher standard.^{[footnote 15]}

Evidence of the effectiveness of mandatory and voluntary measures relating to the use and purchase of loot boxes in other jurisdictions

208. Several respondents provided information on measures that have been introduced with regards to loot boxes in different countries. Some jurisdictions have taken steps to increase mandatory restrictions and protections on loot boxes, and others have considered and decided against imposing further restrictions.

209. A 2020 report commissioned by the European Parliament’s Committee on Internal Market and Consumer Protection was cited as providing information on the approach taken by authorities and the games industry across the EU. Evidence was provided on industry-led measures related to loot boxes across different international markets, including those measures considered earlier in this section.

210. A number of international examples were cited where most loot boxes were not in scope of gambling regulations. Many respondents highlighted Belgium and the Netherlands as notable exceptions, where a different approach to defining a prize for the purposes of gambling regulations has brought certain loot box deployments in scope.

211. In Japan, items gained from buying loot boxes are “prizes” even if they do not have real-world value. In 2012, Japan prohibited a type of loot box under consumer protection law which required players to collect specific items from loot boxes to obtain other rarer items.

212. In Belgium, the prize received from a gambling activity does not need to hold monetary value, so could include items which are confined for use in a video game. In the Netherlands, a prize is still defined as having money’s worth, but regulators have taken a relatively broad interpretation. As well as in-game items that can be effectively “cashed out,” items which cannot leave the game but can be exchanged between players are considered to have market value, and are thus in scope for gambling regulations.

213. In Spain, in 2022, the Ministry of Consumer Affairs committed to introduce new legislation to regulate loot boxes in video games. This includes specific provisions on video game prizes that aim to recognise loot boxes as ‘devices that have an economic value in a real or fictitious market and whose random prize can be resold or exchanged.’

214. Respondents who were in favour of loot boxes being regulated as gambling often welcomed the broader definition of the prize requirement, and welcomed their impact in leading to some games being edited or removed from these markets. However it was highlighted that national restrictions could easily be circumvented by using a virtual private network (VPN). A recent court case in the Netherlands has also put the definition of “a game of chance” within Dutch law under particular scrutiny.

215. Respondents who were opposed to loot boxes being regulated as gambling highlighted what they viewed as adverse consequences of the approaches taken in Belgium and the Netherlands. Some respondents were critical of how they created an international disparity in certain games or game features being made unavailable in some markets. Some respondents argued that restrictions in Belgium were too broad in their application and risked any game with randomised elements being classified as gambling.

216. Some respondents said that the approach in the Netherlands has allowed games with purchasable loot boxes to continue, but has required games to remove in-game trading of loot box items between players (e.g. through an auction house) to remain out of the scope of the gambling regulations. Evidence was provided that this meant that players may need to purchase more loot boxes to obtain a particular item, as they were unable to obtain a desired item via trading with other players.

217. Some respondents commented on the mandatory requirement introduced in China for games companies to disclose the probabilities of obtaining loot box rewards to players. Respondents highlighted some issues with the approach, including that companies were given wide discretion regarding how probabilities were disclosed, and how accessible they were to players. Evidence was also provided about how one company circumvented the requirement by offering loot boxes exclusively as a “bonus” through the purchase of virtual currencies with real-world money.

4.2 Voluntary and statutory protections: player survey

218. The player survey included some questions on protections for consumers. Information received regarding negative experiences with loot boxes, including potential harms, has been summarised in Section 3.

219. Of adults responsible for children and young people who responded to the specific questions on these topics, 84% said they were aware of parental controls, and 72% said they had used parental controls. There were mixed views on the effectiveness of parental controls and how easy they were to find and locate: 14% said “very easy,” 18% said “easy”, 41% said “moderate,” 18% said “difficult,” and 9% said “very difficult.” Of players that responded to specific questions, 62% had placed personal restrictions on their purchases of loot boxes, and 57% had breached self-imposed restrictions.

220. Respondents had mixed awareness of probability rates relating to specific items in loot boxes that they had considered purchasing: 30% said they were aware, 32% said they were not aware, and 38% said they were sometimes aware. Two-thirds (66%) of respondents were aware of information labels such as the PEGI “in-game purchases” and “paid random items” labels, whereas one-third (34%) of respondents were not aware.

221. 78% of respondents said they had not raised an issue or complaint with games companies after purchasing a loot box, compared to 22% who said they had raised an issue or complaint.

5. Conclusions and next steps

222. This section sets out conclusions and next steps in light of the evidence considered and summarised in the preceding chapters.

223. The government wants the UK to be one of the safest places in the world to be online. This includes video games, which are an increasingly popular and important part of the UK’s economic, social and cultural landscape. We want to ensure that protections are in place to mitigate the risk of harms from video games for all players, and for children and young people in particular.

224. The call for evidence has shown that loot box purchases may be linked to a variety of harms. In particular, there is robust evidence of an association with problem gambling. However, research has not established whether a causal relationship exists between loot box purchases and problem gambling and there are a range of plausible explanations that could underpin this association.

225. The evidence we received also convincingly highlighted children and young people’s inherent vulnerabilities that may increase their risk of experiencing harms from loot boxes – such as less developed impulse control, susceptibility to peer pressure, and a generally more limited understanding of purchasing decisions and probabilities.

226. In response to the findings of the call for evidence, the government wants to see improved protections for children, young people and adults, and to support better longer term research into the impacts of video games. The government’s view is that:

• purchases of loot boxes should be unavailable to all children and young people unless and until they are enabled by a parent or guardian
• all players, including children, young people and adults, should have access to, and be aware of, spending controls and transparent information to support safe and responsible gaming
• better evidence and research, enabled by improved access to data, should be developed to inform future policy making on loot boxes and video games more broadly

227. In considering further actions that could be taken with regards to loot boxes, we have considered three broad types of responses that could be pursued: improved industry-led protections, by games companies and platforms, making changes to the Gambling Act 2005, and strengthening other statutory consumer protections. Each of these responses is considered below.

5.1 Improved industry-led protections

228. The government welcomes progress made on industry-led protections for children and young people and consumers in recent years, and further commitments from industry trade body Ukie and its members to go further. However, this progress has been uneven, and there is more that can and should be done across games platforms and publishers to mitigate the risk of harms from loot boxes for children and young people and all players.

229. In particular, on the Xbox and Playstation platforms, parental permission is required for under-18s to spend money within games, and steps have been taken to improve the intuitiveness and accessibility of parental controls. However, on other games and platforms, parental controls are “opt-in” and not required by default for children. This means that some children are purchasing loot boxes without active parental oversight on whether and how they do so. Evidence also suggests that only a minority of parents are using parental controls.

230. In addition, whilst progress has been made in the information that is provided to consumers, such as through probability disclosures, players often lack accessible and transparent information to help inform their engagement with loot boxes. For example, it is often challenging for players to understand the rarity of specific valuable items, the anticipated average spending normally required to obtain valuable items, and whether and how their data is being used.

231. The government’s view is that some games platforms and developers have demonstrated the sector’s technical expertise and capability to develop and improve protections to support safe and responsible gaming. We want to see these efforts replicated across the sector, and to see further progress made by those at the forefront of strengthening protections.

232. The government is calling on games companies and platforms to improve protections for children, young people and adults and for all players. An industry-led approach, at least in the first instance, avoids the risk of unintended consequences which may be associated with legislation, and can enable the development of tailored tools and information that work across what is a varied sector. Industry-led measures would be adaptable, and may be more able to keep pace with a fast-changing environment for in-game purchases, in comparison to legislative option.

Protections for children and young people

233. Purchases of loot boxes should be unavailable to all children and young people unless and until they are enabled by a parent or guardian. We welcome the proposal from Ukie to explore practical ways of achieving this objective, and call on the wider games industry to ensure that active and informed parental choice supports how children and young people engage with video games. We welcome that some platforms already require parental authorisation for spending by under-18s within games. Parents should be enabled to make informed choices, including on whether to prevent children and young people from purchasing loot boxes.

234. To help achieve this objective, we welcome commitments from Ukie: to improve the accessibility, functionality and uptake of parental controls, to ensure that parents and guardians can set spending limits for purchases, to provide parents and guardians with oversight and control of spending through various tools, and to the application of lenient refund policies where spend has occurred without parental authorisation.

235. As part of meeting this objective, there is an opportunity for games platforms and publishers offering loot boxes to take steps to strengthen age assurance, and reduce the reliance on self declaration. Regulatory requirements under the Age Appropriate Design Code place expectations on companies taking a risk-based approach to recognising the age of their users to protect children’s privacy, and additional requirements will be set by the Online Safety Bill for services to provide protections for children on their service. Such requirements are expected to drive the use of age assurance technologies, which will support how children and parents interact with games.

Protections for all players

236. All players, including children, young people and adults, should have access to and be aware of spending controls and transparent information to support safe and responsible gaming. Harm minimisation and player safety should be embedded into game design, and the protections and tools that are available to all players.

237. As part of meeting this objective, we expect games companies and platforms to provide information to players and parents that is transparent, balanced and accessible. This information should include how loot boxes are deployed within games, probabilities of obtaining valuable items that can be understood in terms of real world spending implications, and whether and how loot box chances are informed by player data. This information should set out the risks associated with loot boxes, and how tools and controls can help players and parents to mitigate these risks, and enable safe and responsible gaming more broadly.

238. In addition, the government expects industry to ensure that protections and information specifically supports the minority of players who spend a disproportionately large amount of money on loot boxes, and may be at a greater risk of harm. Information should be provided on how players can raise concerns with companies and platforms, and seek refunds and redress, with the expectation that a lenient approach to refunds is applied where spending controls and information provided is insufficient in mitigating the risk of experiencing financial harm.

239. Controls and information should be communicated effectively so that it is understood by players. We welcome the proposal from Ukie to raise awareness of spending controls and encourage safe and responsible play for players of all ages through a multi-year £1 million public information campaign that will be launched this year.

240. To support this objective, DCMS will work with games industry representatives and regulatory bodies, including the CMA and the ICO, to promote industry-led best practice on meeting consumer and data protection obligations.

Technical working group

241. DCMS will convene a technical working group to pursue enhanced industry-led solutions to mitigate the risk of harms for children, young people and adults from loot boxes in video games.** The technical working group will include representatives of games publishers and platforms, and government departments and regulatory bodies. It will engage with academics, consumer and third sector groups, to ensure that solutions are workable for parents, children and young people and all players.

242. We expect the working group to facilitate tangible industry-led progress in making purchases of loot boxes unavailable to children and young people without active and informed parental consent and in ensuring that all players have access to spending controls and transparent information to support safe and responsible gaming. This work should inform the development of industry-led design norms and best practice guidance with regards to loot boxes, which also considers suggestions made by InGAME in its report. We expect games companies and platforms to improve protections for children, young people and adults, and for tangible results to begin to be seen in the near future.

243. While our view is that it would be premature to pursue legislative options with regards to loot boxes without first pursuing enhanced industry-led protections, we will not hesitate to consider such options if we deem this necessary to protect children, young people and adults.

5.2 Regulation under the Gambling Act

243. A number of stakeholders have argued that loot boxes should be categorised as gambling and regulated under the Gambling Act 2005. This government’s response to the call for evidence has been developed alongside its Review of the Gambling Act 2005. A White Paper setting out the conclusions from the Review and vision for the gambling sector will be published as soon as possible.

244. After careful consideration, the government does not intend to amend or extend the scope of gambling regulation to cover loot boxes at this time. In doing so, we have considered regulating loot boxes as gambling as one means of achieving some of our objectives to mitigate the risk of harms for children, young people and adults, and have concluded that it would come with significant limitations which make other policy solutions to achieve the same ends preferable.

245. First, whilst many loot boxes share some similarities with traditional gambling products, we view the ability to legitimately “cash out” rewards as an important distinction. This is not to say that some loot box deployments may not meet the existing definition (it is ultimately for the Gambling Commission and/or courts to decide), but on the basis of the evidence considered our view is that the user experience of most loot boxes is materially different from gambling. In particular, the prize does not normally have real-world monetary value outside of the game, and its primary utility is to enhance the in-game experience. The Gambling Commission has shown that it can and will take action where the trading of items obtained from loot boxes does amount to unlicensed gambling, and it will continue to take robust enforcement action where needed.

246. Second, there would be significant implementation challenges and risks around unintended consequences from changing the Gambling Act with regards to loot boxes. Video games and in-game purchases are a varied and innovative market, so there is a risk that the scope of legislation could be too narrow or too broad in its scope. A narrow gambling lens focused on certain chance-related features of loot boxes, potentially to the exclusion of other potentially problematic monetisation methods, would not necessarily address the risks and harms identified above.

247. Further, any widened definition of gambling designed to capture loot boxes would need to be suitably broad to mitigate against this risk, as well as capture the wide array of loot box deployments already on the market. However, a broad and principles-based definition also comes with the potential for unintended consequences such as bringing other activities within the scope of gambling regulation where there is a functionally similar random reward mechanism. For example, consumer products ranging from football stickers to trading cards, or even some subscription services such as ‘wine of the month’ clubs, rely on a mechanism whereby the real value or utility of the ‘prize’ is not necessarily known at the point of purchase. While careful legislative drafting could help single out loot boxes, they do not necessarily have well defined boundaries which clearly demarcate them from comparable products.

248. Third, bringing loot boxes within scope of gambling laws would amount to an unprecedented expansion of the Gambling Commission’s remit. The NERA Economic Consulting 2021 report estimated such a move would nearly double the Commission’s annual costs. The report also highlights significant upfront delivery costs such as development of new capabilities and processes for regulating the video games sector, including monitoring for the illegal provision of unlicensed loot box content across all gaming platforms.

249. Alongside this, like all other licensable gambling, loot box sales would be subject to gambling duties, which could be complex to implement as loot boxes do not have a quantifiable “gross gambling yield” on which to base duties. First, loot boxes are often purchased through virtual currencies that can be purchased with real-world money or earnt through gameplay and the purchase of virtual currency is normally separate from the loot box transaction. Second, as considered above, the prize does not have an objective monetary value on which basis to calculate winnings. Collecting gambling tax could therefore require the creation of a bespoke system which sought to ascribe monetary value to different loot box rewards.

250. Our expectation is that if loot boxes were brought within the scope of gambling regulation, many publishers would simply redevelop their games or cease offering them in Great Britain (as we have seen in other jurisdictions), rather than applying for and maintaining Gambling Commission Licences for the company and key staff. While some stakeholders may see this or even an outright ban as a good outcome, it would not negate the need for the Gambling Commission and HMRC to develop and maintain procedures to handle loot boxes. This would raise questions over whether the costs associated provide good value for money for taxpayers, especially when outcomes to mitigate the risk of harm for children, young people and adults may be achieved through different and less costly means.

251. Finally, we remain strongly of the view that games companies must avoid offering unlicensed gambling products under the current definition in the Gambling Act. Games companies and platforms should be vigilant in preventing players from “cashing out” items obtained from loot boxes, including on third party websites. Where a loot box prize can be readily exchanged for cash, it can be considered money or money’s worth and this might bring the loot box within definitions of gambling. We welcome steps taken by some games companies and platforms to prevent this activity and strongly encourage them and others to continue in this regard. The Gambling Commission has shown that it can and will take action where the trading of items obtained from loot boxes amounts to unlicensed gambling, and it will continue to take robust enforcement action where needed.

5.3 Other statutory consumer protections

252. In not taking forward changes to the Gambling Act 2005, the government recognises that other statutory consumer protection obligations will continue to be the relevant regulatory framework for loot boxes and wider issues concerning video games.

253. The UK already has high consumer standards, with consumers benefiting from a strong set of rights. The government is taking forward measures to enhance consumer rights and address digital economic harms, as set out in the government’s response on Reforming Competition and Consumer Policy (April 2022). The Competition and Markets Authority is considering how digital design can harm competition and consumers, in its emerging work on online choice architecture. The government has also introduced the Online Safety Bill which will increase protections for children from harmful user-generated content, including in video games.

254. In addition, ICO supervision of the Age Appropriate Design Code started in September 2021 for organisations providing online services that are likely to be accessed by children in the UK. This has introduced several standards relevant to children engaging with loot boxes, such as on: transparency, detrimental use of data, and parental controls (see Box 8). Conforming to the standards set out in this code will be a key measure of games companies’ compliance with data protection laws.

255. The Committee of Advertising Practice (CAP) published new guidance on advertising in-game purchases in September 2021, which considered a number of issues that were raised in the call for evidence, and specifically addressed issues concerning loot boxes. This includes messaging about the chances of receiving a rare item, and displaying information on the presence of random item purchasing, which may be material to the decision of consumers to purchase a game (see Box 7).

256. The government’s view is that the UK’s current consumer and data protection legislation and guidance provides a strong foundation for mitigating the risks of harms associated with loot boxes for children, young people and adults. As set out above, these protections have continued to develop in recent years. However, further legislative change may risk unintended consequences. For example, legislation to introduce an outright ban on children and young people purchasing loot boxes could have the unintended effect of more children and young people using adult accounts, and thus having more limited parental oversight of their play and spending.

257. We will continue to keep this position under review, in light of emerging evidence on harms, progress made in improving industry-led protections, and any specific proposals on increasing statutory protections for consumers. We will not hesitate to consider legislative options, if we deem it necessary to protect children, young people and adults.

5.4 Improving the evidence base on the impacts of video games

258. Better evidence and research, enabled by improved access to data, should be developed on the positive and negative impacts of video games to inform future policy making on loot boxes and video games more broadly. To support this, the government, working in collaboration with academics, industry and other partners, will launch a Video Games Research Framework. We will continue to develop the Framework with the aim of launching it by the end of 2022.

259.The call for evidence found limitations in the evidence base regarding loot boxes, and more broadly on the positive and negative impacts of video games. Access to industry and player data was identified as a barrier to enabling better research.

260.There is scope for further research to look at which loot box implementations and other monetisation strategies may be particularly problematic, and to which populations and for greater use of representative UK samples. An improved evidence base would support both government policymakers and games developers in reducing the risk of harm for players.

261.The Framework will establish broad areas of focus for future research, including monetisation approaches within games, harms, and protections for consumers. It will support research into how and why people play games, how and why games are designed in different ways, and the effectiveness of measures that reduce the risk of negative impacts including the risk of harms, and that promote positive impacts.

262.The Framework will create a shared understanding of methodologies that can accurately and robustly measure the impact of video games, to support academics in delivering research. It will seek to establish a consistent foundation for future data collection, to facilitate data sharing between the games industry, academics and players.

Annex A: Response to the player survey

1. The player survey was aimed at people aged 16+ who play video games, and adults with responsibility for children or young people who play games. The purpose of the survey was to gather information about players’ personal experiences with loot boxes.

2. The player survey asked a mixture of multiple choice and open questions. This annex covers:

• a quantitative analysis of responses to multiple choice questions of players aged 16+ and adults responsible for a child or young person
• a summary of experiences with loot boxes from a coding exercise that examined survey responses from players aged 16+ and adults responsible for a child or young person to open text questions relating to negative experiences from loot boxes, including concerns about harm

1. Quantitative analysis of responses to multiple choice questions

3. The section contains a summary of the quantitative analysis of responses to the player survey multiple choice questions.

1.1 Player survey respondent demographics (figures 2 to 3c)

4. The reported demographics relates specifically to responses to the player survey. The self-selection of those that responded means that experiences reported in the survey are not representative of all UK players’ experiences with loot boxes.

5. 76% of people responding to the survey indicated that they were between the ages of 18 and 34 (see Figure 2). 7% of respondents reported that they were aged 16 to 17, and 13% said they were aged 35 to 44.

6. Figure 3a shows that approximately 1% of respondents (aged 16+) said they were answering the survey as someone responsible for a child or young person. 12% of respondents said they were answering both as someone responsible for a child or young person and as a video game player. The remaining 87% responded as someone who plays video games (see Figure 3b).

7. Figure 3c shows that of respondents responsible for a child or young person: 74% were responsible for a child aged 0 to 11, 30% for a child aged 12 to 15, and 10% for a child aged 16 to 17.

Figure 2: Demographic breakdown of responses to call for evidence player survey

Age 16 to 17	7%
Age 18 to 24	35%
Age 25 to 34	41%
Age 35 to 44	13%
Age 45 to 54	3%
Age 55 to 64	0% (0.3%)
Age 65+	0% (0.1%)

Response count: 27,286
Percentages do not add up to 100 due to rounding.

Figure 3a: Are you answering these questions as someone who plays video games or as an adult responsible for a child or young person who plays video games?

I play video games	87%
I am responsible for a child/young person who plays video games	1%
Both	12%
Neither	0%

Response count: 27,220

Figure 3b: Do you have responsibility for a child or young person who plays video games?

Yes	15%
No	85%

Response count: 27,220

Figure 3c: How old is the child or young person you have responsibility for?^{[footnote 16]}

Age 0 to 11	74%
Age 12 to 15	30%
Age 16 to 17	10%

Response count: 3,823
Respondents were asked to select all options that apply and 465 selected multiple options.

1.2 Player interaction with loot boxes and video games (figures 4 to 8)

8. Figure 4 shows that nearly all adult respondents (aged 16+) said that they played video games regularly: 83% of adult respondents said they played video games daily and 15% said they played video games on a weekly basis. This compares with nationally representative polling completed by Savanta in 2020 which estimated that 86% of people aged 16 to 69 have played computer or mobile games.

9. Figure 5 shows that 98% of respondents said that they had opened a loot box. Figure 6 shows that more than half of respondents have opened loot boxes in each of the following ways: 86% opened a free loot box, 63% purchased a loot box directly with real-world money, 80% purchased a loot box with in-game currency such as coins or gems earned through gameplay, and 72% purchased a loot box with in-game currency such as coins or gems paid for with real money.

10. Figure 7 shows that: 22% of respondents said they never purchase loot boxes, 27% said they purchased loot boxes monthly, 13% said they purchased weekly, and 3% said they purchased loot boxes daily.

11. Figure 9 shows the range of reported typical spend on loot boxes per purchase. 39% of respondents said they typically spend more than £10 on loot boxes per purchase which compares to 61% who said they spend less than £10 per purchase.

Figure 4: On average, how often do you play video games?

Daily	83%
Weekly	15%
Monthly	1%
Other	1%

Response count: 26,102

Figure 5: Have you ever opened a loot box?

Yes	98%
No	2%

Response count: 26,903

Figure 6: In what ways have you opened loot boxes?^{[footnote 17]}

Opened a free loot box	86%
Purchased a loot box directly with real money	63%
Purchased a loot box with in-game currency such as coins or gems earnt through gameplay	80%
Purchased a loot box with in-game currency such as coins or gems paid for with real money	72%
Other	2%

Response count: 26,136
Respondents were asked to select all choices that apply.

Figure 7: On average, how often do you buy loot boxes?

Never	22%
Daily	3%
Weekly	13%
Monthly	27%
Other	36%

Response count: 25,993

Figure 8: How much do you typically spend on loot boxes per purchase?^{[footnote 18]}

<£1	19%
£1 - £4.99	24%
£5 - £9.99	18%
£10 - £14.99	12%
£15+	27%

Response count: 23,953
This includes loot boxes bought with virtual currency.

1.3 In-game purchasing restrictions and parental controls (figures 9 to 17)

12. Figure 9 shows that 67% of adult respondents responsible for a child or young person said that they were aware of their dependant buying loot boxes. Figure 10 shows that 88% of respondents said they had refused a child or young person permission to purchase loot boxes. Figure 11 shows that 78% of adult respondents responsible for a child or young person placed personal restrictions on purchases of loot boxes made by their dependant.

13. Figure 12 shows that 84% of respondents said they were aware of parental controls and tools to manage spending and access in video games and devices. Figure 13 shows that 72% of respondents said they have used parental controls in video games. Figure 14 shows that there were mixed views on the effectiveness of parental controls and how easy they were to find and locate: 13% said “very easy,” 18% said “easy,” 41% said “moderate,” 18% said “difficult,” and 9% said “very difficult.” Figure 15 shows that 46% of respondents said parental controls were an effective way to manage access to video games content and spending, 23% said parental controls were not effective, and 31% said parental controls were sometimes effective.

14. Figure 16 shows that 62% of responses from players aged 16+ said they had placed personal restrictions on their own purchases of loot boxes compared to 38% who said they had not. Figure 17 shows that 57% of players said they had breached personal restrictions, such as self-imposed spending limits, which compares to 43% who said they had not.

Figure 9: Are you aware of a child or young person you have responsibility for opening or buying loot boxes?

Yes	67%
No	33%

Response count: 3,355

Figure 10: Have you ever refused a child or young person you have responsibility for permission to purchase a loot box?

Yes	88%
No	12%

Response count: 3,361

Figure 11: Do you place personal restrictions on purchases of loot boxes made by the child or young person you are responsible for?

Yes	78%
No	12%
Sometimes	10%

Response count: 3,311

Figure 12: Are you aware of parental controls and tools to manage spending and access in video games and devices?

Yes	83%
No	17%

Response count: 3,307

Figure 13: Have you ever used parental controls in a video game?

Yes	72%
No	28%

Response count: 2,758

Figure 14: How easy were parental controls to local and use?

Very easy	13%
Easy	18%
Moderate	41%
Difficult	18%
Very difficult	9%

Response count: 1,940

Figure 15: Did you find parental controls to be an effective way to manage access to video game content and spending?

Yes	46%
No	23%
Sometimes	31%

Response count: 1,893

Figure 16: Have you ever placed personal restrictions on your purchases of loot boxes?

Yes	62%
No	38%

Response count: 20,187

Figure 17: Have you ever breached your personal restrictions?

Yes	57%
No	43%

Response count: 12,438

1.4 Awareness of probability rates, information labelling, and raising complaints with video games companies (figures 18 to 20)

15. Figure 18 shows that respondents had a mixed awareness of probability rates relating to specific items in loot boxes that they had considered purchasing: 30% said they were aware, 32% said they were not aware, and 38% said they were sometimes aware.

16. Figure 19 shows that, with respect to awareness of video games information labelling, such as PEGI’s in-game purchases and paid random item labels, 66% of responses said they were aware and 34% said they were not aware of any information labelling.

17. Figure 20 shows that 78% of respondents said they had not raised an issue or complaint with games companies after purchasing a loot box. 22% of respondents said they had raised an issue or complaint.

Figure 18: Are you aware of probability rates for receiving specific items in loot boxes that you or the child or young person you have responsibility for have considered purchasing?

Yes	30%
No	32%
Sometimes	38%

Response count: 20,597

Figure 19: Are you aware of any video games information labels such as the PEGI in-game purchases and paid random items labels?

Yes	66%
No	34%

Response count: 20,207

Figure 20: Have you ever made a complaint or raised an issue with the video games developer, platform or device operator after purchasing a loot box?

Yes	22%
No	78%

Response count: 20,294

2. Summary of experiences with loot boxes

18. This section contains a summary of responses to the player survey regarding respondents’ personal experiences with loot boxes in video games. Given the volume of response, we undertook a coding exercise to understand the main themes and issues reported by respondents relating to negative experiences with loot boxes. Figures for positive and negative experiences are not directly comparable as analysis of negative experiences used manual coding of responses to categories whereas positive experiences did not. The summary includes sentiments expressed by respondents and illustrative examples of issues experienced with using loot boxes for each coding category.

Positive experiences

19. Out of more than 32,000 responses to the player survey, we received approximately 16,816 responses from players aged 16+ (62% of players aged 16+) and 2,423 responses from adults responsible for a child or young person (60% of all adults responsible for a child or young person) to the question about positive experiences from using loot boxes in video games.^{[footnote 19]} Information on positive experiences with loot boxes included:

• the excitement of receiving a sought after, rare or valuable item
• obtaining rewards that progress gameplay conditions
• loot boxes enhance gameplay experience and enjoyment

Negative experiences

20. We received 19,720 responses from players aged 16+ (75% of the sample of players who opened a loot box) and 1,805 responses from adults responsible for a child or young person (84%) to the question about negative experiences from using loot boxes in video games.^{[footnote 19]} Of these, 16,579 responses from players aged 16+ (63% of total respondents), and 1,503 responses from adults responsible for a child or young person (70% of total respondents), reported information on negative experiences and were coded.

2.1 Method

21. Given the priority to consider evidence of harms and the volume of responses received, we have analysed responses regarding negative experiences, and not undertaken such analysis on responses regarding positive experiences.

22. The analysis primarily focused on information received from players aged 16+ and adults responsible for children and young people in response to the following question: “Please provide details of any negative experiences you or the child or young person you have responsibility for encountered from their use of loot boxes. This could include, for example, any concerns around harms experienced.”

23. There were two separate approaches to coding responses from players and adults responsible for children and young people.

Players aged 16+ coding

24. For players aged 16+ respondents, only responses that had also answered “Yes” to “Have you ever opened a loot box?” were coded. Information received from respondents’ answers to the following open text questions was also evaluated alongside the negative experiences question to support the coding exercise:

• why do you purchase loot boxes?
• what is your approximate lifetime spend on loot boxes?
• over what time has this spend occurred?

25. A total of 16,579 responses from players aged 16+ that responded to the question on negative experiences were coded into one or more categories.

Adults responsible for a child or young person coding

26. For adults responsible for a child or young person, the coding focused on respondents who had answered the question about negative experiences. Information received from respondents’ answers to the following open text questions was also evaluated to support the coding exercise (see full list of questions, Q10 to Q12, at Annex B):

• have you ever refused a child or young person permission to purchase a loot box?
• why did you refuse permission?
• do you place personal restrictions on purchases of loot boxes made by the child/young person you have responsibility for?
• have you ever used parental controls or tools to manage access to video game content and spend?
• what do you use parental controls and tools for?
• did you find parental controls and tools to be an effective way to access video content and in-game spend?

27. A total of 1,503 responses from adults responsible for a child or young person responding to the question on negative experiences were coded.

Coding categories

28. Individual responses to the above questions were individually assessed and manually coded across six categories. The categories were developed following an initial evaluation of the survey response to determine the main issues, including types of potential harms experienced, as reported by respondents. Responses could be assigned multiple categories, as the issues the categories describe are not mutually exclusive. Respondents that did not directly answer the question or provided information that was not based on a personal experience were not assigned one of these six categories.

29. The following is a description of the six categories and how they were applied to individual responses through the coding exercise.

Category 1: Loot boxes reduced or ruined enjoyment of the gameplay experience

30. Used when the respondent described loot boxes in video games as reducing or ruining enjoyment of their gameplay experience. For example, where the responses raised complaints about the implementation of loot boxes reducing their enjoyment of the video game experience more generally.

Category 2: Loot boxes are expensive, encourage unsatisfactory purchases, or are not value for money

31.. Used when the respondent reported complaints about loot box pricing in video games and an experience of dissatisfaction with their purchases. The category includes complaints about the items received from the loot box not being value for money and that loot boxes encourage players to make more unsatisfactory purchases. For example, needing to make repeat purchases to obtain rewards that are desired by the player.

Category 3: Loot boxes come with hidden costs, such as needing items to complete or compete in the game or needing to access additional content

32. Used when respondents described loot boxes as a hidden cost in video games and for complaints that the deployment of loot boxes as an in-game purchase obscured the true cost of playing the video game. This includes instances where respondents were not aware that items were required to progress in the game or that additional content was only accessible through loot box purchases.

Category 4: Loot boxes were mis-sold, lacked information, or players experienced pressure to purchase the loot box

33. Used for responses that reported complaints about a loot box purchase being mis-sold or that there was a lack of disclosure of relevant information needed for respondents to make informed purchasing decisions, such as the disclosure of probabilities for obtaining items. The category also includes instances where respondents reported experiencing pressures, such as from time-limited offers or from peers, to purchase loot boxes.

Category 5: Loot boxes caused or contributed towards financial harm

34. Used where respondents provided information on an experience of purchasing loot boxes which they said caused, or contributed to, financial harms. The financial harm category was only applied to responses where substantive information was provided by the respondent about their experience of harm and how the harm related to loot boxes. Experiences of financial harm include encountering financial hardship, such as not being able to pay household bills, or accumulating debt.

Category 6: Loot boxes caused or contributed towards gambling-related and/or mental health harm

35. Used where respondents provided information on an experience of purchasing loot boxes which they said caused, or contributed to, gambling-related and/or mental health harm. As above, the category was only applied to responses where substantive information was provided in relation to how loot boxes caused or contributed to the experience of what respondents said was gambling-related and/or mental health harm. Some respondents described mental health harms that they related to gambling, whilst others described mental health harms that they did not relate to gambling.

36. We do not view the results from the player survey coding exercise as representative of all players and adults responsible for children’s experiences with loot boxes in video games. Duplicate responses to the questions were removed from the sample. The results from the coding were verified by an intercoder reliability exercise.^{[footnote 20]}

37. The following summary contains information on personal testimonies and experiences that respondents provided in their response to the survey. The cited examples were selected to illustrate the issues identified through the coding exercise and are not necessarily representative of all respondents’ negative experiences with loot boxes.

2.2 Category 1: Loot boxes reduced or ruined enjoyment of the gameplay experience

Players aged 16+

38. Approximately 1 in 20 (5%) responses from players aged 16+ were coded for Category 1 where information was provided about loot boxes negatively impacting the enjoyment of their gameplay experience.

39. Broadly, players’ responses coded for Category 1 expressed negative sentiments towards instances where loot boxes were implemented in video games as a monetisation feature. For example, some respondents communicated their dissatisfaction with feeling “forced” by games developers to purchase loot boxes to fully enjoy the gameplay experience. Some respondents described the implementation of loot boxes in video games as reducing their enjoyment of being able to progress game conditions freely.

40. Some respondents expressed criticism towards the perceived “pay-to-win” aspects of video games where items from loot boxes offered competitive advantages to players and felt this was unfair. Players communicated that loot boxes impacted the “skill” element of the gameplay which negatively impacted their enjoyment.

Adults responsible for a child or young person

41.. Approximately 1 in 30 (3%) responses from adults were coded for Category 1 where information was provided about loot boxes negatively impacting the enjoyment of the gameplay experience for the child or young person they were responsible for.

42. Responses from adults coded for Category 1 described how loot boxes reduced the child or young person’s perceived enjoyment of the video game. Some responses focused on how loot boxes detracted from the child or young person’s enjoyment of the gameplay where game content was accessed through using loot boxes. Some respondents said that their dependant did not understand the speculative nature of the random reward mechanism and the probabilities of receiving the item they wanted.

2.3 Category 2: Loot boxes are expensive, encourage unsatisfactory purchases, or are not value for money

Players aged 16+

43. Approximately 3 in 5 (62%) responses from players aged 16 + were assigned Category 2 where respondents expressed a negative experience from loot boxes in relation to loot boxes being expensive, encouraging unsatisfactory purchases, or not being value for money.

44. Players’ responses assigned Category 2 were generally critical of having to spend more on a loot box as a speculative purchase to obtain a desired item than they would if they could purchase it directly. Examples of other negative experiences highlighted in the response included:

• players not getting the item they wanted
• the item they received being perceived as not helpful for game progression or to compete online
• the item having less perceived value than the money spent
• the player receiving a duplicate of a previously obtained item
• regretting wasting money on a loot box purchase where it could have been spent elsewhere

Adults responsible for a child or young person

45. Approximately 1 in 2 (50%) responses from adults responsible for a child or young person were coded for Category 2 where respondents expressed sentiments concerning loot boxes being expensive, encouraging unsatisfactory purchases, or not being value for money.

46. Some responses assigned Category 2 said that the child or young person was often dissatisfied with or regretted their purchase of the loot box when they did not get a desired item. Some respondents expressed concerns that children and young people were easily influenced by incentives to purchase loot boxes, or may not understand the probabilities of receiving loot box items. These respondents said children may continue to make purchases despite the dissatisfaction of earlier purchases.

47. Some respondents said that younger children in particular were not able to make informed purchasing decisions about loot boxes. Reasons why include younger children not possessing a developed understanding of probabilities, monetary values and financial implications, or not being able to effectively control their behaviour.

2.4 Category 3: Loot boxes come with hidden costs, such as needing items to complete or compete in the game or needing to access additional content

Players aged 16+

48. Approximately 1 in 8 (13%) responses from players aged 16+ were assigned Category 3 where they described a negative experience in relation to loot boxes being a hidden cost in video games.

49. Some of these players felt it was unreasonable that, following an initial purchase, additional spending through loot boxes was needed to access additional content, progress in the game, or compete online. Some said that information on all in-game purchases required to access content should be included in the upfront price of the game. Some respondents suggested this was not specific to loot boxes, and was also an issue with the broader in-game purchasing market in video games.

50. A number of players criticised what they viewed as their progress being artificially or unfairly stymied by what some termed as unnecessary “paywalls.” Of particular concern were instances where players felt they had invested significant time and/or money into the game only to be presented, at a future time, with the requirement to purchase loot boxes to continue their progression.

51. Some players said that, from their experience, it was easy to start an initial cycle of spending on loot boxes. Over the long term and after investing a significant amount of time and money, some respondents found it difficult to curb and manage their spending effectively. These respondents expressed a view that it was sometimes difficult to anticipate or assess what additional future investments in loot boxes might be required. For example, not being fully aware of the need to maintain a high level of spend to remain competitive online, or to continue an accustomed rate of progression as new items are introduced into the game or game conditions change. Some respondents were also critical about how items received through loot box purchases lost perceived value or utility as new content was released.

Adults responsible for a child or young person

52. Approximately 1 in 10 (9%) of responses from adults were assigned Category 3 where they described a negative experience in relation to loot boxes being a hidden cost in video games.

53. Some respondents were particularly critical of situations where they believed a child or young person would need to continue to purchase loot boxes to access additional video game content. A number of respondents said that, as the adult responsible for the child or young person, they were not always aware of the extent to which the content would need to be accessed by purchasable loot boxes. This includes, for example, loot boxes found in some online multiplayer games that offer items that give the player competitive advantages.

54. Some respondents were concerned about children and young people being influenced to make repeated purchases of loot boxes, and that they may be particularly vulnerable to such instances. This included instances where a child or young person’s purchases had amounted to what respondents considered unacceptable levels of spend, and criticisms of games companies for not imposing default spending limits for the child or young person.

2.5 Category 4: Loot boxes were mis-sold, lacked information, or players experienced pressure to purchase the loot box

Players aged 16+

55. Approximately 1 in 8 (12%) responses from players were assigned Category 4 where they expressed sentiments that loot boxes had been mis-sold, lacked information, or the player experienced pressure to buy loot boxes.

Lack of information

56. Some players were dissatisfied with the lack of disclosure or what some perceived as a misrepresentation of information relating to their loot box purchases. For example, the lack of the clear display of odds or probabilities of winning certain items from the loot box prior to purchase. Some respondents said that they had, in some instances, made repeat purchases of loot boxes to obtain a specific item only to discover that the probability of receiving it was very low.

57. Examples of criticisms include the perceived lack of easily accessible information relating to the amount they had spent on loot boxes and other in-game features. For some respondents, not having a clear and easy way to access purchasing history made it difficult to monitor their spending during gaming sessions and over their longer-term engagement within and across games.

58. Some respondents said that virtual currencies obscured the true cost of items or loot boxes and made it more difficult to effectively track and manage their spending. Examples of complaints included the need to buy virtual currencies at pre-set volumes, with in-game items priced so as to leave a small amount of virtual currency remaining from a purchase. These players viewed this design, known as “odd pricing,” as unfairly encouraging the purchase of more virtual currency to use up remaining funds.

Experiencing pressure

59. Some players were unhappy with the way games promote, advertise, and encourage the purchase of loot boxes in video games, and said that they felt unfairly pressured to make purchases. Examples of criticisms included: the perceived aggressive use of promotional or advertising techniques and the employment of frequent in-game messages and notification systems to encourage the purchasing of loot boxes.

60. Some respondents complained about what they viewed as aggressively marketed, short-term offers for loot boxes available for a limited duration, for example offering holiday themed items. More broadly, some respondents referred to games companies unfairly creating what they termed as a “fear of missing out” to further “pressure” players to purchase loot boxes. Respondents said these situations encouraged “compulsive” buying before the offer was withdrawn. The complaints were directed at the broader in-game purchases market as well as loot boxes specifically.

61. Some respondents viewed certain games as designed to exert pressure on players to purchase loot boxes. For example, offering loot boxes as a means to rapidly unlock progression or obtain items to better compete with other players made some players feel unfairly “forced” or “compelled” to continue to invest in loot boxes. Some respondents recognised that loot box contents were often obtainable freely through gameplay. However, they considered the time needed or “grind” to obtain desired items as purposefully impractical. Players were incentivised to spend money instead because of the scale of the time investment required. Some respondents said that games companies made it easier to obtain loot boxes through gameplay at the beginning of the game which gave the false impression that their progression through the game could be maintained without spending money.

Adults responsible for a child or young person

62. Approximately 1 in 5 (20%) responses from adults responsible for a child or young person were assigned Category 4 where they expressed sentiments that loot boxes had been mis-sold, lacked information, or the child or young person experienced pressure to buy loot boxes.

Lack of information

63. Some respondents said that children and young people have a limited understanding of how the loot box random reward mechanism works compared to adults, and therefore do not have an adequate understanding of information presented to them to make informed purchasing decisions. For example, not being able to make a reasonable assessment of the risks and costs, including probabilities, involved with purchasing loot boxes to obtain a desired reward.

Experiencing pressure

64. Some respondents highlighted particular concern about children and young people’s vulnerabilities to marketing influences. Comments reflected particular concern about children and young people being exposed to “predatory” and “exploitative” promotional strategies to encourage loot box purchasing. Some respondents said that children and young people may be influenced more acutely by peer pressure and described how it negatively drives children and young people to purchase loot boxes to, for example, keep up with peers.

2.6 Categories 5 & 6: Financial, gambling-related and/or mental health harms

65. Narrative summaries for Category 5, on financial harm, and Category 6 on gambling- related and/or mental health harm have been summarised together, as there was considerable overlap on the examples of harms reported by respondents. The proportion of respondents in categories 5 and 6 is set out below, followed by these summaries.

Category 5: Loot boxes caused or contributed towards financial harm

Players aged 16+

66. Approximately 1 in 20 (5%) of player responses were assigned Category 5 where respondents provided substantive information on how they believed loot boxes had caused or contributed to an experience of financial harm.

Adults responsible for a child or young person

67. Approximately 1 in 12 (8%) of responses from adults responsible for a child or young person were assigned Category 5 where respondents provided substantive information on how they believed loot boxes had caused or contributed to an experience of financial harm.

Category 6: Loot boxes caused or contributed towards gambling-related and/or mental health harm

Players aged 16+

68. Approximately 1 in 25 (4%) of player responses were assigned Category 6 where respondents provided substantive information on how they believed loot boxes had caused or contributed to their experience of what they perceived as gambling-related and/or mental health harms.

Adults responsible for a child or young person

69. Approximately 1 in 10 (12%) of responses from adults were assigned Category 6 where respondents provided substantive information on how they believed loot boxes had caused or contributed to their child or young person’s experience of what they perceived as gambling-related and/or mental health harms.

Categories 5 & 6: Financial, gambling-related and/or mental health harms - summary

Players aged 16+

70. Players who expressed sentiments that they had experienced financial, gambling-related and/or mental health harms referred to a variety of influences that they believed had contributed to instances of harm from using loot boxes.

71. Some players explained how they believed the harmful behaviours were associated specifically with the loot box random reward mechanism, with repeat purchases made seeking to obtain particular items. This predominantly related to loot box items that:

• offered competitive gameplay advantages in online multiplayer games
• progressed gameplay conditions and offered access to further game content
• offered rare or popular cosmetic or aesthetic items

72. Some players said that they bought loot boxes to seek a “buzz” or “thrill” at the chance of receiving sought-after loot box rewards and a feeling of “excitement” when they received a rare or valuable reward from a purchase. Examples also included descriptions of “chasing losses” and continuing to make repeat purchases after significant investment had been made due to the “sunk cost” effect.

Financial harms

73. Some players said that their loot box purchasing sometimes felt out of control as a consequence of different motivating factors, and experienced difficulties in monitoring or managing their spend. Examples include how their purchasing had led to instances where they: - could not afford basic bills or amenities - had accumulated debt - had borrowed or stolen money - spent large amounts of their savings or student loans - spent most of their monthly or weekly wages on loot boxes

74. Some players said they had spent significant amounts of money, beyond their means, in short gaming sessions. For example, this included having difficulties controlling their spend after committing to an initial cycle of loot box purchases. Players said they often experienced “compulsive” or “impulsive” behaviours towards loot box purchases in pursuit of a desired item.

75. Some players said that their use of loot boxes had negatively impacted close relationships, and in some instances led to relationship breakdown. Some players said that they had purchased loot boxes without their partner’s or family’s knowledge. In some cases, respondents said they had stolen money to fund their loot box purchasing, including from loved ones. Some respondents described how they required interventions from family members or partners to curb their problematic purchasing behaviours. Players described feeling “embarrassment,” “guilt” or “shame” about these situations and where they were not able to control their purchasing.

Gambling-related and/or mental health harms

76. Some players compared their purchasing of loot boxes to problem gambling behaviours where they said they had experienced “addiction” or “obsessive” behaviours. This was predominantly focused on where loot boxes were purchased with real-world money, including via virtual currencies purchased with real-world money.

77. Some players said that their loot box use had led to them engaging with traditional gambling products, such as online slots. Conversely, others identified themselves as experiencing problem gambling and said this made them vulnerable to engaging with loot boxes in a problematic manner that was similar to their experience with gambling products. Relatedly, some players expressed frustration that the inclusion of loot boxes meant some video games offered no respite from the issues they encountered with gambling.

78. Some players said that their engagement with loot boxes had a harmful impact on their mental health. Some respondents said that they believed their use of loot boxes had contributed to their experience of states of stress or emotional distress. Some players referred to how their use of loot boxes was associated with their experience of depressive states and anxiety.

Adults responsible for a child or young person

79. Many responses from adults responsible for a child or young person described how their dependent appeared to show what they termed as “addictive” or “obsessive” behaviour towards using loot boxes and a persistent desire to make repeated purchases of loot boxes. This was predominantly in relation to the child or young person wanting to obtain loot box rewards to continue to progress in the game, better compete online or keep up with peers. The influence of peer pressure was referred to frequently as contributing to a child or young person’s harmful encounters with loot boxes. In the context of these different motivating factors, adults respondents identified the loot box random reward mechanism as encouraging children and young people to engage excessively with loot boxes and make excessive purchases.

Financial harms

80. Some respondents said that children and young people’s exposure to loot boxes and the random reward mechanism may encourage the development of a poor relationship with money, and how children and young people manage money. Some respondents expressed concern about how much the child would spend on loot boxes, and that without imposed limits by the parent, it would reach unacceptable levels. In this context, respondents said that children and young people have a more limited understanding of the risk of making repeat and excessive purchases in order to obtain desired items, in comparison to adults.

Gambling-related and/or mental health harms

81. Some respondents described how children and young people showed states of emotional stress and anxiety with respect to purchasing loot boxes, particularly after they did not receive the loot box reward they wanted. In reference to an experience of harm, some respondents made the comparison with gambling addiction, or expressed concern that these behaviours might lead to a harmful relationship with gambling in later life.

82. A number of respondents commented on witnessing severe behavioural and emotional reactions after restricting access to loot box purchases for children and young people or when funds had been exhausted. These included examples of low moods, frustration, and agitation. Some respondents described instances where a child or young person had made unauthorised purchases of loot boxes, in some cases spending significant amounts and more than the respondent could reasonably afford. Broadly, these respondents were concerned about children and young people showing what they viewed as harmful behaviours and harmful mental health impacts during their formative years and that these behaviours were beginning to have negative impacts on wider aspects of their lives.

Annex B: Player survey questions

Are you answering these questions as someone who plays video games, or as an adult responsible for a child/young person who plays video games?

Q1. Have you ever opened a loot box?

Q1a. In what ways have you opened loot boxes? (select as many as apply)

Q2. On average, how often do you play video games?

Q3. On average, how often do you buy loot boxes?

Q4a. How much do you typically spend on loot boxes per purchase (including approx amount of real money spent per purchase where loot boxes are bought with in-game currency such as coins or gems)?

Q4b. What is your approximate lifetime spend on loot boxes?

Q4c. Over what time period has this spend occurred?

Q5. Where do you buy your loot boxes? Please specify all relevant video games and video games platforms and devices.

Q6. Why do you purchase loot boxes?

Q7a. Please provide details of any positive experiences you have encountered from your use of loot boxes. This could include, for example, enhancements to your enjoyment playing video games.

Q7b. Please provide details of any negative experiences you have encountered from your use of loot boxes. This could include, for example, concerns around harms you may have experienced.

Q8a. Are you an adult responsible for a child/young person who plays video games?

Q8b. How old is the child/young person you have responsibility for? Where you have responsibility for more than one child/young person, please select all age categories that apply.

Q9. Are you aware of a child/young person you have responsibility for opening/buying loot boxes?

Q10. Have you ever refused a child/young person you have responsibility for permission to purchase a loot box?

Q10a. Why did you refuse them permission to purchase a loot box?

Q11. Do you place personal restrictions on purchases of loot boxes made by the child/young person you have responsibility for, e.g. through imposing spending limits?

Q11a. Please provide details on why you have made this decision regarding personal restrictions on purchasing loot boxes.

Q12. Are you aware of parental controls and tools to manage spending and access in video games and devices?

Q12a pt1. Have you ever used them in a video game?

Q12a pt2. Why did you decide not to use them?

Q12b. How easy were parental controls to locate and use?

Q12c. What did you use them for?

Q12d. Did you find them to be an effective way to manage access to video games content and spending? Please provide further details where relevant.

Q13a. Please provide details of any positive experiences you or the child/young person you have responsibility for encountered from their use of loot boxes. This could include, for example, enhancements to their enjoyment playing video games.

Q13b. Please provide details of any negative experiences you or the child/young person you have responsibility for encountered from their use of loot boxes. This could include, for example, any concerns around harms experienced.

Q14. Are you aware of the probability rate for receiving specific items in loot boxes that you or the child/young person you have responsibility for have considered purchasing?

Q14a. If you have been aware of probability rates, what impact has this had on your decision to purchase loot boxes?

Q15. Are you aware of any video games information labels such as the PEGI in-game purchases and paid random item labels?

Q15a. If you answered yes, what impact have they had on your decisions around purchases of loot boxes?

Q16. Have you ever made a complaint or raised an issue with the video games developer or platform or device operator after purchasing a loot box?

Q16a. What was your concern?

Q16b. What was the response?

Q17. Have you ever placed personal restrictions on your purchases of loot boxes e.g. through self-imposed spending limits?

Q17a. Have you ever breached your personal restrictions?

Q17b. Why did you breach your personal restrictions?

Annex C: Direct submission questions

Loot box harms questions

1. Do loot boxes cause any harm to players and what evidence is there to support this? Issues to consider include:

a. What are the harms and how are they caused by loot boxes?

b. Whether young people are impacted differently to adults, and if so, how?

c. Whether any harms identified also apply to offline equivalents of chance mechanisms, such as buying packs of trading cards.

d. Whether any harms identified may also apply to other types of in-game purchases.

In-game purchases market questions

2. How many and what kind of video games contain loot boxes? Information that would be useful to receive includes:

a. How often paid and free loot boxes appear in popular and bestselling games.

b. Whether loot boxes are more likely to be found on certain platforms and devices/within specific genres of game/within games using certain payment models (free to play, subscription etc) and if so, which platforms or device/genres/payment models?

3. How are loot boxes used in games? Information that would be useful to receive includes:

a. How loot boxes are deployed in games e.g. through time specific offers, part of games involving the performance of repetitive tasks known as “grind”, a combination of paid and free loot boxes, whether items provided are cosmetic or substantial items to enhance gameplay.

b. The way loot boxes work alongside other in-game purchases in video games e.g. can items normally be purchased directly, can they be gained for free?

4. How do loot boxes contribute to the market for in-game purchases? Information that would be useful to receive includes:

a. The percentage of in-game purchase revenue from UK customers that comes from loot boxes in the UK.

b. The percentage of revenue from UK customers that comes from all in-game purchases.

c. The value of loot boxes to different business models e.g. free to play.

d. The average spend and frequency of loot box purchase per customer in the UK.

e. The average price of loot boxes available in the UK and the average price of the most popular loot boxes in the UK including:

i. Loot boxes with the highest number of total purchases

ii. Loot boxes purchased by the highest number of individual players

5. How do loot boxes work in conjunction with the wider in-game purchases market? Information that would be useful to receive includes:

a. Whether people buying loot boxes in the UK spend more than the average for players who purchase any type of in-game purchase in the UK.

b. The percentage of players in the UK buying a loot box who will also make another type of in-game purchase in the same session.

6. To what extent are items received in loot boxes tradable? Information that would be useful to receive includes:

a. How often items from loot boxes are tradable for other in-game items, including those which might have been purchased with real-world money?

b. How often items from loot boxes are bought or sold for real-world money, including which games and platforms this may be easier and more prevalent on?

c. What actions have been taken by industry to prevent the trading of items outside of games and how successful have these been?

Current protections questions

7. Please provide any evidence relating to the use and impact of restrictions/protections introduced directly into video games or on video games platforms and devices. Information that would be useful to receive includes:

a. Where video games companies have introduced restrictions/protections in relation to loot boxes, why were these introduced, what measures were used and what impact have they had on sales and the behaviour of players?

b. Where video games companies have not introduced restrictions/protections in relation to loot boxes, why were they deemed unnecessary?

8. Please provide any evidence relating to the use and impact of video games information labels such as the Pan European Game Information rating system (PEGI) in-game purchases and paid random item labels. Information that would be useful to receive includes:

a. Impacts on behaviour when purchasing games / in game content.

9. Please provide any evidence relating to the use, impact and understanding of consumer rights legislation. Information that would be useful to receive includes:

a. How do company policies align with existing consumer rights legislation and what options are available to players if they are not satisfied with their purchase of a loot box?

b. What rights do players have when purchasing loot boxes and how is this information made available?

c. Are you aware of any action having been taken in relation to loot boxes on consumer rights grounds in the UK and/or internationally, and if so, what were the reasons for and outcome of this action?

10. Please provide any evidence of the effectiveness of mandatory and voluntary measures relating to the use and purchase of loot boxes in other jurisdictions.

Annex D: Glossary

Cosmetic item	An aesthetic in-game item or “skin” that is applied to a character model or avatar, such as clothing.
Free to play (F2P)	A video game model that gives players access to a significant amount of game content freely and often offers additional content through optional in-game purchasing features.
Game platform	A console system, device or digital platform used to purchase and play video games.
In-game / in-app purchase	Purchases made directly in a video game or app with real-world or virtual currencies bought with real-world money.
Loot box	Features in video games which may be accessed through gameplay, or purchased with in-game items, virtual currencies, or directly with real-world money. They contain randomised items, so players do not know what they will get before opening them, but they will get something.
Odd pricing	When increments of two types of related purchase do not match each other, for example, a virtual currency available for purchase only in units of 50 credits, and items available in increments of 20 credits.
Paywall	Restricting access to content unless a purchase is made.
Pay-to-win	Video games that allow players to purchase items that offer advantages in the game or over other players.
Parental controls	Tools which allow parents or guardians to place limits on a child’s online activity and thereby mitigate the risks that the child might be exposed to, in areas such as in-game spending.
Pity timer	Where the probabilities of obtaining items from loot boxes change in the player’s favour as they make more purchases.
Random reward mechanism	A mechanism that allocates apparently randomised items to each purchase.
Rapid evidence assessment	An assessment that provides a structured and rigorous search and quality assessment of the evidence to a short timeframe.
Skins gambling	The wagering of in-game items such as cosmetic “skins,” for instance betting on the outcome of competitive video game matches or on games of chance.
Virtual currency	Digital currency used within a game or system, often referred to as “credits,” “gold,” or “points” which may or may not be purchasable with real-world money, and can be used to purchase in-game content and items.

1. Ipsos Mori, ‘Loot boxes: A request for evidence presented by Ipsos, Fieldwork: 6 - 11 December 2020’ (not published) (2020) ↩

2. Zendle D, Cairns P, Barnett H, McCall, C. ‘Paying for Loot Boxes Is Linked to Problem Gambling, Regardless of Specific Features like Cash-out and Pay-to-Win,’ (2021) ↩

3. The figure for the use of parental controls in the UK was 37%, based on a small sample size. ↩

4. Information contained within submissions that was marked confidential by respondents has not been included in the government response. Organisations who requested not to be named have not been included in this list. Names of individuals who responded to the call for evidence have not been published. ↩

5. Skins gambling is the wagering of in-game items such as cosmetic “skins,” for instance betting on the outcome of competitive video game matches or on games of chance. ↩

6. Nielsen R K L, Grabarczyk P. ‘Are loot boxes gambling? Random reward mechanisms in video games,’ page 193 (2019) ↩

7. Drummond A, Sauer, J D. ‘Video game Loot Boxes are psychologically akin to Gambling,’ (2018) ↩

8. Some responses to the positive experiences question did not provide information relating to a positive experience from using loot boxes, and with about 1,600 respondents aged 16+ actually replying “None,” “No,” or “N/A.” ↩

9. The Data Reform Bill will introduce proposals to amend statutory DPIA requirements to provide greater flexibility to businesses to assess and mitigate personal data risks. ↩

10. Independent research commissioned by this respondent took the form of six two-hour focus groups with teenage gamers and parents of gamers (held in London and Birmingham, 2018), and quantitative research featuring an online survey of over 1000 adults who bought games for children or teens (early 2019). ↩

11. “Material information” includes information about the main characteristics of the game and any other information necessary for the average consumer to make an informed decision to play, download or sign up to the game or to make a purchase. ↩

12. See Consumer Protection from Unfair Trading Regulations 2008, SI 2008/1277, Regulation 6 for the definition of a “misleading omission.” ↩

13. The Consumer Protection from Unfair Trading Regulations 2008, SI 2008/1277, Schedule 1, Paragraph 7 is a prohibited practice: “Falsely stating that a product will only be available for a very limited time, or that it will only be available on particular terms for a very limited time, in order to elicit an immediate decision and deprive consumers of sufficient opportunity or time to make an informed choice.” ↩

14. Petrovskaya E, Zendle D. ‘Predatory monetisation? A categorisation of unfair, misleading and aggressive monetisation techniques in digital games from the player perspective,’ (2021) ↩

15. Xiao L Y. ‘Regulating loot boxes as gambling? Towards a combined legal and self-regulatory consumer protection approach,’ (2021) ↩

16. Respondents were asked to select all options that apply and 465 selected multiple options. ↩

17. Respondents were asked to select all choices that apply. ↩

18. This includes loot boxes bought with virtual currency. ↩

19. Some responses to the positive experiences question did not provide information relating to a positive experience from using loot boxes, and with about 1,600 respondents aged 16+ actually replying “None,” “No,” or “N/A.” ↩ ↩²

20. Results were assessed through the double-coding of approximately 10% of responses by an independent coder (not involved in original analysis) in line with methods set out by O’Connor and Joffe (2020). ↩