INSIGHT
“The payment of a stake (key) for
the opportunity to win a prize (in-game
items) determined (or presented as
determined) at random bears a close
resemblance, for instance, to the playing
of a gaming machine.
“Where there are readily accessible
opportunities to cash in or exchange
those awarded in-game items for money
or money’s worth those elements of the
game are likely to be considered licensable
gambling activities.”
This would seem to suggest that it
is aware that there are circumstances
where the items contained in loot boxes
do have value outside the game and in
those circumstances these should fall
under its scope.
Indeed, Fitchford says: “I’ve got
friends in their mid 30s who still open
these boxes because they love the buzz
of potentially getting a really expensive
skin and all they will do is go and sell it
straight away. That to me is gambling,
it is 100% gambling. You are risking £2
to potentially win something worth £100
and then go and sell it.”
The letter of law
Ned Lewis, associate at law firm
Lewis Silkin, says the GC’s view is
correct, but acknowledges there could
be an issue if the contents of boxes are
tradeable. “If the loot box is very much
used in a closed loop fashion and there
is no way a customer or a gamer is able
to cash out or trade or convert any
in-game item or skin into cash, then
on that basis I see it very much as
something that from a regulator’s
perspective is not gambling. That said,
the problem with these boxes is that
there are ways they can be converted
and then we are falling into the territory
of that being gambling.
“The Gambling Commission doesn’t
want to put a blanket rule and say loot
boxes or anything like that type of
facility is gambling, otherwise that
causes a lot of issues for people who
are creating these boxes that generally
don’t allow people to convert them.”
This is a fair point, but if regulators
adopt a default position that loot box
contents aren’t tradeable, isn’t there
a danger that the cases where they
are will slip by unnoticed? And is
anyone regularly making an effort to
monitor this?
as gambling but banned altogether.
However, David Clifton of the Clifton
Davies Consultancy points out the
definition of gambling is not consistent
across all countries. “Other countries
may have good grounds to take a different
view, dependent on their statutory
definitions of gambling or gaming.”
Many have taken the view that
whether gambling or not under the letter
or the law, features such as loot boxes,
particularly when presented in a slot
“If regulators adopt a default position that loot box
contents aren’t tradeable, isn’t there a danger that
the cases where they are will slip by unnoticed?”
Fitchford, who was previously a
professional gamer, says part of the
problem is that “it is one of these things
that unless you are in the game and you
see it happen and are participating in
it and you understand everything that
comes from it such as the secondhand
markets and so forth, I don’t think you
can really grasp how widespread a
problem it is”.
It’s perhaps for this reason that
some countries do want to take a
more blanket stance. The Isle of Man,
for example, says that if the contents
of a loot box are determined by chance
and the prize is money or money’s
worth (and it says in-game items
have a real-world value whether
convertible to cash or not) then the
operator of such a game will need a
gambling licence.
The Victorian government in
Australia has also declared it considers
loot boxes gambling, although there’s
no legislation in place to allow it to
prosecute overseas companies.
Representatives from the Belgian,
Dutch and Hawaiian governments have
called for loot boxes not only to be licensed
machine fashion with RNG elements,
pose a risk of normalising gambling for
vulnerable people.
“There are other ways we need to
protect the consumer using them,
particularly given the transitional element,”
says Lewis. “People conditioned to enjoy
those sorts of games often go on to gamble
later. I think that there is an element of
onboarding towards gambling so my view
is there is a consumer protection angle.”
Of course, such protection would not
be the responsibility of the Gambling
Commission and for it to take regulatory
action simply to protect children even
where it believes an activity does not
constitution gambling would be an
obvious example of “regulatory creep”,
says Clifton.
However, just as the skins scandal
last year exposed a level of interaction
between gaming and gambling that
had previously gone under the radar,
the loot box controversy has the same
explosive potential.
It will certainly be interesting to see
what results from the investigations of
governments and gaming authorities
over the next few months.
iGB Affiliate Issue 66 DEC 2017/JAN 2018
55