Government criticized for allowing companies to self-regulate gambling-like features following expert’s discovery of multiple breaches
The UK government’s choice to allow tech firms to self-regulate loot boxes in video games, akin to gambling, is under scrutiny. Several developers tasked with creating new industry standards have already violated these regulations, including Electronic Arts (EA), a prominent developer. Over the past six months, the advertising regulator has upheld complaints against three such companies for not disclosing the presence of loot boxes in their games. An expert who filed the complaints discovered hundreds more breaches but chose to bring only a few to the attention of the Advertising Standards Authority (ASA) to underscore the issue.
Loot boxes are features within games that enable players to use real money or virtual currency to unlock digital containers containing random rewards, such as character outfits or weapons.
Despite expert warnings that loot boxes pose similar risks to gambling, the Department for Digital, Culture, Media and Sport decided in July 2022 not to classify them as gambling products, a move taken by other countries like Belgium.
Nadine Dorries, the former culture secretary, cautioned against regulating loot boxes, which studies have linked to gambling-related harm, citing potential unintended consequences. Instead, the government formed a “technical working group,” involving video game companies and tech firms, which released a set of 11 principles on loot boxes in August 2023.
These guidelines include a mandate to clearly disclose the presence of paid loot boxes in game advertisements. The working group last convened in June 2023. Since then, Leon Xiao, an expert on loot box regulation and a PhD fellow at the IT University of Copenhagen, found that hundreds of game adverts, over 90% of those he reviewed, did not comply with the group’s own disclosure rule.
The games were available for download on Apple’s and Google’s online stores, both of which are part of the industry’s loot box working group. Some of these games were promoted on social media platforms like Facebook, Instagram, and TikTok.
The ASA upheld four complaints filed by Xiao regarding games developed by EA, Hutch, and Jagex, all of which contributed to the creation of industry guidelines as members of the government’s working group. The four games in question were F1 Clash and Rebel Racing by Hutch, EA’s Golf Clash, and RuneScape by Jagex.
EA explained to the ASA that “human error” led to the issue and that it did not reflect their overall compliance with the guidelines. Jagex stated that there was insufficient space in its Facebook ad to provide full disclosure and that it had done so elsewhere. Hutch informed the ASA that they had misunderstood the advertising guidelines and would update their ads accordingly.
Xiao noted that these incidents were not isolated, stating, “I could have filed 268 individual complaints, but I had limited resources.”
His findings raise questions about “whether the working group can be trusted to achieve its goal of better protecting players and children.”
He mentioned, “Those members are meant to set an example, not break the rules themselves.”
Don Foster, the chair of the House of Lords group Peers for Gambling Reform, emphasized, “It is abundantly clear that self-regulation does not work and that the government must intervene to properly regulate loot boxes and their marketing to protect children.”
A Department for Culture, Media and Sport spokesperson stated that the government had been firm in its stance that video game companies need to do more to safeguard children and adults from the harms associated with loot boxes. They added that the government would assess the impact of the industry guidelines and would consider potential future legislative options.
The UK gaming trade body Ukie mentioned that its members aimed to implement their new guidelines by July 2024 to enhance protections for all players and demonstrate the industry’s dedication to safe and responsible gaming. They noted that these principles were part of the industry’s long-standing practice of self-regulation and complemented the existing tools and support available to players for responsible gaming.
EA stated, “We have a well-established history of adhering to loot box disclosure requirements, and we promptly rectified the two isolated omissions due to human error. We believe it is crucial for players to have the necessary information to make informed decisions about our games before purchasing or downloading them. We are dedicated to providing players and parents with the tools and information required for safe and responsible gaming.”
