With gambling mechanics in video games under investigation in the UK, is the day of reckoning finally upon the industry?

A few days ago, the Digital, Culture, Media and Sport Committee of the House of Commons published a report on immersive and addictive technologies. As part of their investigation, the committee studied the nature and impact of loot boxes and other chance-based mechanics and from the look of things, their findings are nothing short of damning.


The video game industry has spent a lot of time under fire over the last two years. While some of it is admittedly unfair, like the (thoroughly debunked) link often drawn by certain political leaders between violent video games and mass shootings in the United States, other charges, such as how the industry is employing increasingly unethical, predatory and possibly illegal practices to boost profitability appears to have far more weight to it.

The inclusion of highly controversial chance-based mechanics like loot boxes, which many have criticised for essentially enabling game makers to target children with psychologically manipulative tactics that promote compulsive gambling-like behaviour has come under a great deal of scrutiny across the world. If you’d like to get up to speed on what loot boxes are and why they have a lot of regulators and law-makers concerned, then you may want to take a look at this explanation from last year.

With gambling mechanics in video games under investigation in the UK, is the day of reckoning finally upon the industry?

If it feels like FIFA and Electronic Arts come up often in the report…it’s because they’re among the worst offenders |FIFA 19

The Smoking Gun

While some countries like Belgium and the Netherlands have introduced bans and restrictions on these features, others have been slower to respond. In the interim, game makers have been highly resistant to removing these divisive features, with many developing them even more aggressively. If I was a suspicious man I’d think they wanted to profit as much as they can before legislation can catch up and put an end to these seemingly indefensible practices.

Notably, back in 2018, the United Kingdom sided in favour of game publishers when the first loot box bans were introduced, seemingly agreeing that the lack of ‘real world’ value for the obtainable rewards prevented loot boxes from being categorised as gambling.

A follow-up study by the UK gambling commission also took this view, although its authors did state that based on their findings, it may be time to expand the reach of existing legislation to include products that contained what they described as ‘gambling-like’ features. It also noted that game makers were not doing enough to safeguard consumers with multiple instances being reported where players unwittingly spent hundreds and sometimes thousands of pounds on loot boxes through accounts linked to a parent’s credit card.

But if you thought the bad press and potential future legal trouble would result in the video game industry taking some time to slow down, introspect and make some necessary and positive changes, well, let me show you something. Here’s the launch trailer of NBA 2K20 from publisher 2K games. A game that is rated as suitable for three-year-olds.

Public patience with the industry is wearing out.

While the sheer lack of subtlety in making gambling the primary focus in this trailer is impressive in a macabre kind of way, it does appear that 2K, like Icarus, may have finally flown a little too close to the sun. A few days ago, the Digital, Culture, Media and Sport Committee of the House of Commons published a report on immersive and addictive technologies. As part of their investigation, the committee studied the nature and impact of loot boxes and other chance-based mechanics and from the look of things, their findings are nothing short of damning.

Crucially, the new report rejects the concept that rewards obtained from gambling-like activities in games have no real-world value. This defence has been integral to game makers in arguments as to why loot boxes and similar mechanics should not be beholden to gambling regulations. The authors assert that the perceived value of digital goods obtained by the user was sufficient to drive behaviour similar to compulsive gamblers in some users and should be treated as such.

A particular area of focus for the report was research that was conducted to gauge the psychological effects of these products on younger players and how often they engaged with such systems. The findings observed indicated a link between exposure to gambling-like features in games and developing behavioural traits associated with problem gambling later in life.

“Many games contain features that are highly similar to conventional gambling products, without gambling being the primary aim of the game. However, there are concerns that being exposed to such features from a young age might normalise gambling.”

“31% of 11–16 year olds have paid money or used in-game items to open loot boxes… the link between loot box spending and problem gambling among adolescents was more than twice as strong as the relationship observed in adults.”

A key recommendation of the report is to work with the Pan European Game Information Council (PEGI), an industry ratings board that sets age ratings for all games sold in Europe, to label games that contain gambling mechanics and revise age restrictions accordingly, essentially preventing game publishers with products that contain such features from being able to sell their games to children.

According to the report, game makers were engaged in creating carefully crafted products, designed to subtly manipulate people into feeling compelled to spend money on post-purchase transactions, while shouldering no responsibility to ensure that adequate safety systems such as daily or hourly spending limits were implemented to prevent accidental or compulsive overspending by players. Indeed, the report does suggest that some games were intentionally designed to target and prey on people with compulsive spending behaviour.

The report also criticised game publishers Electronic Arts and Epic Games in particular over statements that representatives of these companies made during a hearing in the United Kingdom’s lower legislative house, in June of this year. The report slammed Kerry Hopkins, a vice president of Electronic Arts’ legal department, (who became somewhat notorious for her failed attempt to rebrand loot boxes as surprise mechanics) and others for their lack of honesty and transparency, going so far as to describe their testimony as being “wilfully obtuse”.

I do think it will be interesting to watch the industry having to choose to give up gambling or just sell to adults only. Their decision would certainly make it very clear where the real money in video games lies in today’s market. For my money, I have a feeling that if push comes to shove, many video games would prefer to abandon children and take the 18+ rating well before it willingly parts ways with loot boxes. But that’s just my opinion.

While the report is quite long, it’s an easy read and everything I’ve mentioned here is just the tip of a depressingly deep iceberg. If you are interested in learning more about the issue, I highly recommend reading the report in its entirety in order to draw your own conclusions.

Will things change now?

Well, not just yet and not by itself. But if British law-makers were to follow the recommendations of the committee report, we could see all gambling style mechanics in games either banned entirely or restricted in some way and only available in games rated for mature audiences (18/21+). Given that the UK is one of the more business-friendly governments in Europe, it is likely that such a move would cause other governments to launch their own investigations, which would likely have similar results throughout the EU and perhaps beyond.

It could even lead to similar legislation in the United States where a bill that would ban gambling-like mechanics has already been introduced. If game publishers were to lose the ability to implement these features in games for the US and European markets, in addition to China already having an existing limitations on chance-based mechanics in games, it could essentially kill off the practice entirely since these three markets along with Japan account for what is thought to be over three quarters of the total gaming industry. (Although Japan currently appears to be in no hurry to introduce any legislation of its own.)

For their part, game publishers, along with their lobby group The Entertainment Software Association (ESA) were quick to launch a defence of their own, calling any potential action premature as not enough studies have been conducted to conclusively prove any detrimental links between child behaviour and their exposure to gambling mechanics. This strategy of citing a lack of evidence in order to maintain the status quo has worked well for the industry in the past, although it is important to remember that the reason little quantitative research exists is specifically because the industry has been unwilling to share their data on user spending behaviour.

Someone should probably tell the video game industry that making every effort to bury the data you claim would exonerate you… really doesn’t make you look innocent. This is particularly true since as a compromise, publishers have suggested that they would commission additional research into the issue since they have the necessary data. What could go wrong?

If game publishers are allowed to be the ones to run research studies that determine whether or not one of their most lucrative sources of income can be considered illegal or not, we’d pretty much be asking foxes to determine how safe our hen houses are… and if that turn of phrase was too agricultural for you, it’s like allowing pharmaceutical companies to vouch for the safety of their own products… oh, wait.

The video game industry has so far managed to defy the odds and remain entirely self-regulated. But despite the increased government scrutiny into their business practices and the threat of strict legislation hanging over them, as a collective, they seem unable or unwilling to take the steps needed to convince the public that they can be trusted to act ethically and responsibly and to not exploit their customer base as much as possible at every opportunity.

As a life long gamer, I never thought I’d be hoping for world governments to be more involved in regulating video games, but these are strange times we live in. For the video game industry, a day of reckoning has been a long time coming and honestly, the most surprising thing of all is that it’s taken us this long to get here.

The Great Diwali Discount!
Unlock 75% more savings this festive season. Get Moneycontrol Pro for a year for Rs 289 only.
Coupon code: DIWALI. Offer valid till 10th November, 2019 .