September 12, 2019

On 10 December 2018 the DCMS Committee (which monitors the policy, administration and expenditure of the UK Department for Digital, Culture, Media & Sport (DCMS)) launched a new inquiry into, “the growth of ‘immersive and addictive technologies“. The press release is here.

In the months that followed, the Committee went through an extensive process of evidence gathering, inviting written submissions and also ‘inviting’ representatives of a number of technology and games companies to attend oral hearings.

The DCMS Committee has today published its report. The press release is here. The DCMS Committee has made a number of recommendations to the UK Government and these will not make happy reading for many in the industry.

In particular, the DCMS Committee has recommended the following:

• “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.”
• “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.”
• “The Government should advise 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.”
• “The Department for Digital, Culture, Media and Sport should immediately establish a scientific working group to collate the latest evidence relating to the effects of gambling-like mechanics in games. The group should produce an evidence-based review of the effects of gambling-like game mechanics, including loot boxes and other emerging trends, to provide clarity and advice. This should be done within a timescale that enables it to inform the Government’s forthcoming online harms legislation.”

In the oral hearings, members of the Committee had fairly harsh words for the games industry and some of the monetisation techniques used. It is therefore not surprising that the Committee has made some robust recommendations. However, if implemented, the recommendations would require some publishers to make fairly material changes to certain products and practices.

Although the general intent and direction of the recommendations is clear, they do raise a number of questions that would need to be addressed if the UK Government is minded to adopt them. For example:

• The Committee says that loot boxes paid for with real-world currency should be classified as a game of chance. However loot boxes will already be considered to be games of chance, even when not paid for with real-world money. The reason that loot boxes do not currently constitute gambling is that the ‘prize’ can only be used in the game and is therefore not money or money’s worth. To implement what the Committee appears to be recommending would therefore require a more material change to the Gambling Act 2005, so that the definition of gaming extends to paying money or money’s worth in order to play a game of chance.
• There are a number of different types of ‘loot box’. The Committee’s recommendation about classifying loot boxes as a game of chance appears to focus just on loot boxes that are opened with real world money (or by implication in-game currency purchased with real world money). However, it is not clear if this would extend to other forms of consideration, such as watching an advertisement or providing data.
• Similarly, the Committee’s position on loot boxes that are opened without the payment of real world money is not completely clear. The Committee’s proposed alternative to the sale of loot boxes to children is that, “in-game credits should be earned through rewards won through playing the games.” Presumably this could include loot boxes that can be opened by using in-game items or currency obtained through gameplay, or without any form of ‘payment’. Of course one might then ask how this sits with the wider concerns expressed by the Committee about excessive amounts of time spent by children playing games and the Committee’s related recommendation that more research be done into ‘gaming disorder’.
• The Committee’s intention appears to be that loot boxes that are opened by paying real-world money should only be available to persons aged 18 and over. However, by bringing these kinds of loot boxes within Section 6 of the Gambling Act 2005, publishers would not simply have to restrict access to persons aged 18 and over, but also obtain a licence from the UK Gambling Commission.
• The Committee’s recommendation regarding the PEGI rating system is a little puzzling. The PEGI gambling descriptor states: “The game contains elements that encourage or teach gambling. These simulations of gambling refer to games of chance that are normally carried out in casinos or gambling halls. Games with this sort of content are PEGI 12, PEGI 16 or PEGI 18.” This descriptor therefore has a much broader application then games that contain loot boxes paid for with real-world money. If games that contain these types of loot boxes are to be restricted to individuals aged 18 and older, then logically the only applicable age rating for these games would be PEGI 18.

The games industry will be studying this report very carefully. The UK Government is unlikely to take any action in the near future (not only because of Brexit but also because it is not currently clear which minister has responsibility for gambling issues). However, the report comes at a time when the UK Government is preparing its response to the outcome of the consultation period that followed its publication of the Online Harms White Paper. The report and the recommendations will therefore no doubt inform and shape that response. At the annual conference of the UK children’s charity, the NSPCC, on 26 June,^[1] the then Culture Secretary Jeremy Wright said that the UK Government intend to respond to the outcome of the consultation before the end of the year and to introduce legislation “as soon as possible next year“. The publication of this report underlines what has become increasingly clear – the games industry is facing a much more regulated future.

[1] https://learning.nspcc.org.uk/news/2019/june/how-safe-are-our-children-conference-2019/