Call for evidence on loot boxes and ministerial roundtable on Esports best practice

The Government has published its response to the Digital, Culture, Media & Sport Select Committee Report on Immersive and Addictive Technologies that was published in September 2019, as previously reported by us here.

This serves to confirm the following:

  1. Loot boxes: As was indicated by Oliver Dowden, the Secretary of State for Digital, Culture, Media & Sport, in the House of Commons on 4 June 2020, the government will be launching a call for evidence on loot boxes in order to support its forthcoming review of the Gambling Act 2005 and its wider programme of research about video games and “to ensure government policy is based on a sound understanding of the issue and its place in the wider policy framework”. It also envisages holding “a series of roundtables to discuss issues and solutions in detail, including the most effective approaches to protect users from any harms identified”.
  2. Esports: the government will “bring forward plans for a ministerial roundtable with a range of esports stakeholders to discuss the opportunities and barriers to market-driven growth in the UK and how industry is working collectively – or can work in future – to encourage best practice in areas such as player well-being and esports integrity”.

You can download below the full government response, but we set out below those parts of the response that specifically address the Committee’s recommendations in relation to (a) Loot boxes and gambling and (b) Esports.

Loot boxes and gambling

The Committee’s recommendations

● We recommend that loot boxes that contain the element of chance should not be sold to children playing games, and instead in-game credits should be earned through rewards won through playing the games (paragraph 79)

● We recommend that working through the PEGI Council and all other relevant channels, the UK Government advises PEGI to apply the existing ‘gambling’ content labelling, and corresponding age limits, to games containing loot boxes that can be purchased for real- world money and do not reveal their contents before purchase (paragraph 86)

● The Government should bring forward regulations under section 6 of the Gambling Act 2005 in the next parliamentary session to specify that loot boxes are a game of chance. If it determines not to regulate loot boxes under the Act at this time, the Government should produce a paper clearly stating the reasons why it does not consider loot boxes paid for with real-world currency to be a game of chance played for money’s worth (paragraph 98)

Government response

22. Technology in this space is constantly evolving and it is important that this is reflected in the government’s policy development. The government believes the approach to protecting young people and vulnerable people – and any relevant regulation – should be based on evidence.

23. To guide this approach, it will be important to understand fully the existing research around loot boxes, and how current protections and legislation work in a fast-moving environment. That is why the government announced in the Queen’s Speech in December 2019 our intention to carry out a review of the Gambling Act 2005, with a particular focus on tackling issues around loot boxes.

24. To support this review of the Gambling Act 2005 and our wider programme of research about video games, and to ensure government policy is based on a sound understanding of the issue and its place in the wider policy framework, the government will be launching a call for evidence on loot boxes. This will examine, for example, the size and variation of the market, the design of mechanisms, the context in terms of other types of in-game spending, the impact on consumers and particularly young people including links to problem gambling, and the effectiveness of the current statutory and voluntary regulation. In addition to a written call for evidence, we envisage also holding a series of roundtables to discuss issues and solutions in detail, including the most effective approaches to protect users from any harms identified. Full details of the call for evidence and how to respond will be announced in due course.

25. The call for evidence follows a number of reports examining the ties between video games and gambling, often with particular focus on loot boxes. We note that since the Committee published its report, the Children’s Commissioner has also published a report – Gaming the System9 – which looked at children’s experience of games, seen through the eyes of a sample of 29 children and which made some similar recommendations to the Select Committee about loot boxes. The Royal Society for Public Health also published a report – Skins in the Game10 – which examined the attitudes of over 1,100 young people towards concerns over the normalisation of gambling in video games.

26. The results from the call for evidence will be considered alongside the review of the Gambling Act 2005. The government stands ready to take action should the outcomes of the call for evidence support taking a new approach to ensure users, and particularly young people, are protected.

27. Whilst the call for evidence will create a more complete picture of the current landscape to guide policy development, the government notes that industry is already progressing some important initiatives including the following:

● We welcome a recent decision by PEGI to change the way they age classify games featuring simulated gambling. Following a six month transitional period, new games classified by PEGI that include relevant depictions will be given an automatic PEGI 18, rather than PEGI 12 as currently. This should be fully implemented by summer 2020 and we will be taking a close interest in the impact of this new approach.

● We also welcome the additional announcement by PEGI11 in April 2020 to inform consumers where games include “paid random items”. This adds to the existing in-game purchase descriptor label offering further transparency on the nature of the items available to purchase and will apply to physical and digital sales.

● In August 201912, the games companies Sony Interactive Entertainment, Microsoft and Nintendo announced that all future titles on their Playstation, Xbox and Switch consoles will be required to disclose the relative probability of receiving the randomised virtual items in loot boxes, with a planned implementation date of 2020. This will make it far easier for consumers to understand what they are likely to get from their purchase.

● We welcome the additional commitment now being made by major games publishers through their trade association Ukie13 to disclose the relative rarity or probability of obtaining in-game virtual items from purchased loot boxes by no later than the end of 2020.

● Trade association TIGA published its “Five Principles for Safeguarding Players”14 in February 2020. The Principles are devised for games businesses to follow when operating games in the UK, in order to safeguard players from potential harms, and include principles like treating consumers fairly and enabling spend and time management.

● Looking more broadly at safeguarding and design best practice, we note that a number of games companies are giving their expertise to an innovative new project led by Abertay University Dundee. Working with a range of partners including Unicef, Ukie, the National Society for the Prevention of Cruelty to Children, the National Crime Agency and Internet Matters, this project will understand and improve youth safeguarding and age-appropriate design standards for the games industry. Based on the research findings, the project will produce educational materials and share best practice amongst professionals to create virtual worlds that are safer for young people.

● We believe that industry can do far more to help consumers take advantage of the tools already available to them on devices to disable and set spend limits on in-game purchasing, including loot boxes. Parental controls can also help parents monitor and, if they wish, limit the time their children play video games and prevent children accessing games with particular PEGI age ratings. We therefore welcome Ukie’s launch in January 2020 of their “Get Smart About P.L.A.Y.”15 public campaign in social and traditional media aimed at encouraging more parents to use parental controls on devices and take an active role in their children’s gaming.


The Committee’s recommendation

We ask the Department for Digital, Culture, Media & Sport to lay out within the next six months how a similar framework to the duty of care practices enshrined and enforced by the governing bodies of other sports can best be applied within esports (paragraph 167)

Government response

28. Esports has the potential to develop as an area of real national strength in the UK, building on our world-class video games, entertainment, and sports sectors. The steep growth in online esports audience figures and the increasing number of esports events and investments in the UK indicate the existence of a solid foundation to build on. Esports has also come to the fore during the COVID-19 lockdown, offering entertainment and a way to connect with others. This has included notable link-ups with traditional sports including the ePremier League Invitational event in April 2020 and the Formula 1 virtual Grand Prix series.

29. To help this burgeoning industry deliver on its potential, the government will continue to develop its relationship with the sector, helping to identify, promote, and exploit the areas that offer the most opportunity to the UK. This includes examining the ways in which esports can drive innovation and public engagement. It will also involve addressing key concerns around issues that include talent working and competing in the UK, access to venues, and ensuring esports can be conducted in a safe and fair manner for competitors and audiences.

30. As a first step, the government will bring forward plans for a ministerial roundtable with a range of esports stakeholders to discuss the opportunities and barriers to market-driven growth in the UK and how industry is working collectively – or can work in future – to encourage best practice in areas such as player well-being and esports integrity.

31. We note that trade body Ukie is already working with a number of global trade bodies – the Entertainment Software Association in the US, the Entertainment Software Association of Canada, the Interactive Games and Entertainment Association of Australia and New Zealand and the Interactive Software Federation of Europe – to devise a set of broad principles of engagement for esports, outlining general best practices already undertaken by the sector and starting to address some of the emerging concerns.

32. In October 2019 the British Esports Association also issued new guidance16 about esports, designed specifically for parents who want to know more about competitive gaming.

The introduction to the government response speaks more generally in relation to what is described as “the Committee’s …. valuable insights that will help inform the government’s thinking in this evolving landscape”, stating:

4. Whilst digital technologies are overwhelmingly a force for good both economically and socially, they undoubtedly also present new responsibilities to ensure that users – particularly children and vulnerable people – are not exposed to harm. Given the pace of evolution in this sector, government’s challenge is to create policies that are effective within the context of constant innovation, including new and changing platforms, emerging tools and techniques, and a growing range of monetisation models, such as the relatively new development of subscription services in online games. A priority for our ongoing policy development in this area will be to identify and quickly address any evidence gaps, taking an approach that is as future-focused as possible. Where evidence of harm is identified, we will take strong, rapid and proportionate action to ensure users are protected.

5. The government’s Online Harms White Paper, published in April 2019, set out plans to ensure that the UK is the safest place in the world to be online. We intend to introduce in law a new duty of care that will ensure companies who facilitate the sharing of user-generated content have appropriate systems and processes in place to deal with harmful content and activity on their services. The application of the regulatory requirements and the duty of care model will reflect the diversity of organisations in scope and ensure a risk-based and proportionate approach. Companies will be expected to take reasonable steps to respond to and minimise harms, corresponding to the type of service they provide. The government will minimise excessive burdens, particularly on small businesses. An initial consultation response was published in February and a full response with further policy details will be released later this year.

Minister for Digital and Culture, Caroline Dinenage, is quoted as saying:

During the coronavirus pandemic, we have seen more people than ever before turn to video games and immersive technology to keep them entertained and to stay in touch with friends and family. These innovations can present challenges though as well as opportunities, which is why we are taking the necessary steps to protect users and promote the safe enjoyment of this dynamic industry.

It is understood that further details on the measures announced in the government response, including the call for evidence on loot boxes, will be “released in due course”.

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