Children’s Commissioner calls for loot boxes to be classified as gambling

Coinciding with publication of a report into online gaming entitled “Gaming the system” (that can be downloaded below), the Children’s Commissioner for England, Anne Longfield, has today called for (a) changes to gambling legislation so that ‘loot boxes’ are classified as gambling and (b) games distributed online to become subject to a legally enforceable age-rating system, as is the case with physical games sold in shops.

This latest call for loot boxes to be classified as gambling follows:

  1. just over a month after a DCMS Select Committee Report on Immersive and Addictive Technologies called for regulation under gambling laws of video game “loot boxes” and for a ban on their sale to children and
  2. a report by the Gambling Regulators European Forum (GREF) eGambling Working Group, concluding that loot boxes do not universally constitute gambling, not least because the definition of ‘gambling’ differs amongst the member countries of GREF with the consequence that a ‘loot box’ will not meet the statutory definition of gambling in all those member countries.
In terms of background to today’s news, the Children’s Commissioner commissioned the research company Revealing Reality to speak to groups of children who play online games like FIFA, Fortnite and Roblox in order to find out what they love, and what worries them, about gaming, in order to “shine a light” on their experiences and to inform policy recommendations. The report produced following that research exercise calls for:
  • tighter rules to protect children who game online and reveals how children can spend hundreds of pounds on ‘loot boxes’ online without any idea of what the rewards will be, and
  • maximum daily spend limits to be (a) introduced in all games which feature in-game spending and (b) turned on by default for children.

To address the concerns raised by children in the report, the Children’s Commissioner’s recommendations include the following:

  1. Bring financial harm within the scope of the Government’s forthcoming online harms legislation. Developers and platforms should not enable children to progress within a game by spending money and spending should be limited to items which are not linked to performance.
  2. All games which allow players to spend money should include features for players to track their historic spend, and there should be maximum daily spend limits introduced in all games which feature in-game spending and turned on by default for children.
  3. The Government should take immediate action to amend the definition of gaming in section 6 of the Gambling Act 2005 to regulate loot boxes as gambling.
  4. The Government’s age appropriate design code must include provisions on nudge techniques and detrimental use of data, as proposed in the draft code.
  5. Games that are distributed online should be subject to a legally enforceable age-rating system, just as physical games are. There should be a requirement for an additional warning to be displayed for games which facilitate in-game spending. The Government should consult on whether age ratings of all games should be moderated pre-release, just as physical games are.
  6. Online games should be a key focus of digital citizenship lessons in schools, rather than lessons focusing exclusively on social media. Teachers involved in the delivery of these lessons should be familiar with how key online games that are popular with children work.

A posting on the Children’s Commissioner’s website states as follows:

With 93% of children in the UK playing video games, the Children’s Commissioner is today calling for new rules to tighten up gambling laws and to address the worries children have expressed about how they feel out of control of their spending on online games.

“Gaming the system” shows how children enjoy playing online and how gaming can help them to build strategic, teamwork and creative skills. Children say online gaming extends normal play into the digital landscape and provides a chance to make new friends.

However, it also reveals the drawbacks, in particular highlighting how many children are spending money on ‘in-game’ purchases because they feel they have to in order to keep up with friends or to advance in the game.

The report reveals how in some cases this spending can be hundreds of pounds, done without any real idea of what the rewards would be, and leaving children feeling like they are gambling. Some of the most significant spending on in-game purchases, often known as ‘loot boxes’, occur where the player receives a randomised selection of items. Some of the children who play FIFA told the Children’s Commissioner’s Office that they are aware that the odds of receiving good players are very low, but were still gambling anyway and spending money on packs. In some cases, children can lose control of their spending on loot boxes and attempt to chase losses by spending more.

The report also shows how some children feel addicted to gaming and do not feel in control of the amount of time they spend playing games. Younger children told us they are playing games for an average of two to three hours a day, whereas older children are playing for three or more hours. One 16-year-old said, “You don’t realise how long you’re actually playing for … sometimes it’s five or six hours.” The close link between online gaming and their social lives also meant some children felt compelled to play, even when it detracted from other activities.

It goes on to say:

The overwhelming majority of children (93 percent) in the UK play video games. Yet despite its popularity, the culture of ‘gaming’- its rules and its rituals, the varying profiles of players, the risks they face – tends to be spoken of by adults, whether they be policymakers or parents, as if it were an alien landscape.

While children can get great pleasure from playing games, either alone or with their friends, the widespread popularity of gaming and the evolution of gaming from offline to online has raised a number of concerns, such as children being able to talk to strangers or becoming the target of bullying. Many of these concerns tend to stem from more general concerns about child safety online rather than actual experiences of gaming. There are worries that over-exposure to video game content may have a damaging effect on the development and socialisation of young people, something compounded by concerns about the length of time children spend playing. A growing concern is around the potential for children to be negatively affected by violent imagery and other inappropriate content. The possible link between gaming and gambling, and the concurrent risk of addiction, is also a source of concern.

We spoke to children aged 10 to 16 to better understand what they love and what they dislike about gaming and how gaming could be improved for them

A form of play: the positives to online gaming

Children say there are benefits to playing online. These can include socialising with their friends, learning new skills, and above all, having fun. In this way, online gaming extends normal play into the digital landscape, and children play by the same social rules that they apply offline. Most online social interactions are with people the children already know outside of online gameplay, such as school friends, and gaming provides a chance to build on these connections. Children choose to play games they know their friends are playing in order to cement their friendships and bond over common shared interests.

“If a lot of people like it at school, you think you’ll like it as well”: Lawrence, 12 (Minecraft player)

In a world where children are less and less likely to be allowed out to play with friends outside of the home, for many children, online gaming and their social lives are closely intertwined. Children consider the shared experience of gaming to be just as important to their friendships, as other non-digital experiences. For some children, online gaming provides a social network through which they can also just talk to their friends, regardless of whether or not they were actually playing.

I can chat to all my friends when they’re not actually with me… or if they just want to tell me stuff in private”: Anna, 10 (Roblox player)

Social harms and the negative experiences of online gaming

However, children also say there are negative aspects to playing online, including feeling frustrated or being teased and bullied by both friends and strangers. Despite the fact that many of the same offline social rules apply to the online world, in some instances, children notice a difference in friends’ behaviour when playing online games. This was fuelled in part by the privacy of headsets and a perceived lack of consequences for teasing or bullying online.

Children are scorned in games such as Fortnite if they are seen to wear the ‘default skin’ (the free avatar they receive at the start of the game). Children say they feel embarrassed if they cannot afford new ‘skins’, because then their friends see them as poor.

“If you’re a default skin, people think you’re trash”: Nina, 10 (Fortnite player)

Some children talk about the aggressive and unpleasant behaviour they experience from other players, for example having their work destroyed.

“I was annoyed when I spent six months building a football stadium and my brother’s friend destroyed it”: James, 12 (Minecraft player)

Children also say that they encounter risks from strangers online – for instance, the risk of being scammed for their personal information. For example, on the popular online game Roblox, children report being offered access to ‘Robux generators’ by other players to improve their game, in return for personal information or passwords, was commonplace. There were a couple of instances in which children had met and formed friendships with online strangers. In these cases, children felt that they had been careful in these interactions but recognised that forming these sorts of connections with strangers online could be harmful.

That’s not fair because it’s a solo game and it’s meant to be every person for themselves – so I reported them”: Julian, 11 (Fortnite player)

Time spent playing games

Younger children reported playing games for an average of two to three hours a day, whereas older children are playing for three or more hours. When asked, some children reported feeling addicted to gaming and do not feel in control of the amount of time they spend playing games.

“You don’t realise how long you’re actually playing for… sometimes it’s 5 or 6 hours”: Nick, 16, (FIFA player)

The close link between online gaming and their social lives means that in some cases children feel compelled to play even when it detracts from other activities. Children can think of alternative things to do if they are not able to play online games, however, would also say that they would become frustrated if they could not play for a long period of time.

Monetisation is where online gaming starts to look less like ‘play’ and more like gambling

The amount of money children spend on games varies. In some cases, the amount of money children report spending on games has increased annually, with some spending over £300 in one year. Peer pressure from friends and online strangers, as well as influence from famous gaming YouTubers, are all factors that children say lead to them feeling pressured to spend money on in-game purchases.

Game design also encourages spending. In games such as FIFA, children can either improve by investing significant time to build up their squad or spend money in the hope of quickly advancing their position. The latter option – to spend money in the hope of progressing – is the most popular option across the sample. With new editions of FIFA being released every year, children feel as though there is an expectation and pressure to buy new players, spend money and build up their team as quickly as possible.

“It takes a long time to get somewhere so you just do that [open player packs]”: Tim, 16 (FIFA player)

In some cases, this spending was done in order to receive a collection of unknown rewards, so-called loot boxes. The most obvious example of this is FIFA player packs, which some children acknowledged as being similar to gambling.

“It’s like gambling- you could lose your money and not get anyone good, or get someone really good”: Tim, 16 (FIFA player)

The lack of guaranteed reward from these purchases can leave some children feeling as though they have wasted their money. The potential to receive a good reward means that children also feel that they are not in control of their spending, and sometimes try to ‘chase losses’. In general, children do not have effective strategies to manage their online spend.

“I never get anything out of it [buying packs] but I still do it”: Lee, 14 (FIFA player)

“You feel like it’s a waste of money… and then you open more”: Nick, 16 (FIFA player)

If gaming is an online extension of children’s offline lives, then the rules should be the same

Given that gambling is not allowed in children’s offline lives, its presence in their online lives requires close attention. Adults who gamble often tend to have boundaries and control measures in place to mitigate against harm. Children are unlikely to be able to put these in place for themselves. If there are concerns around exposure to gambling at an early age offline, then those same concerns should translate into the online world.

The Government’s proposed duty of care addresses some of the harms revealed in our research, including cyberbullying and violent content. Underage use is also a problem, however the white paper refers to this specifically in relation to social media, not gaming. And our research reveals major harms on online gaming platforms, especially financial harms, which are currently not listed as within scope of the duty of care.

Commenting on today’s report, the Children’s Commissioner for England has said:

With 93% of children in the UK playing video games, it is vital that the enjoyment they get comes with tighter rules that protect them from straying into gambling.

Playing games online can be rewarding and exciting and help children to develop strategic skills and friendships, but they are also open to exploitation by games companies who play on their need to keep up with friends and to advance to further stages of a game by encouraging children to spend on loot boxes.

Children have told us they worry they are gambling when they buy loot boxes, and it’s clear some children are spending hundreds of pounds chasing their losses. I want the Government to classify loot boxes in games like FIFA as a form of gambling. A maximum daily spend limit for children would also be reassuring for parents and children themselves.

Simone Vibert, senior policy analyst at the Children’s Commissioner’s Office, author of ‘Gaming the system’ has said:

For too long policymakers have focused their attention on the social media giants. This research shows that for many children, online gaming is just as important in their lives and poses a distinct set of benefits and risks.

It is striking to hear children themselves say that what they sometimes participate in looks and feels like gambling and that they don’t always feel able to control the amount of time they spend online playing.

As the Government continues to develop its online harms proposals, it is vital that the particular nature of online games is addressed and that the duty of care protects all children online, across all the platforms they spend time on.