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Where facilities for gambling are offered using such items, a licence is required in exactly the same manner as would be expected in circumstances where somebody uses or receives casino chips as a method of payment for gambling, which can later be exchanged for cash.
In August , the commission opened an investigation into skin gambling. Miller further stated that even if other countries were to pass laws or regulate loot boxes, the Commission would still need to follow UK's laws.
In October , a month prior to the Battlefront II controversy, MP Daniel Zeichner of Cambridge, on behalf of a constituent, submitted a written parliamentary question "to ask the Secretary of State for Digital, Culture, Media and Sport DCMS , what steps she plans to take to help protect vulnerable adults and children from illegal gambling, in-game gambling and loot boxes within computer games".
The government recognises the risks that come from increasing convergence between gambling and video games. The Gambling Commission is keeping this matter under review and will continue to monitor developments in the market.
Separately, over 10, UK citizens signed a petition requesting that the UK government "adapt gambling laws to include gambling in video games which targets children", which includes issues over loot boxes.
The response also referenced the Consumer Protection from Unfair Trading Regulations law which, according to the response "includes a requirement on businesses not to subject anyone to misleading or aggressive marketing practices, or, for example, direct exhortation to buy products, such as games content, including in-game purchases such as loot boxes".
In March , MP Anna Turley of Redcar asked the government to "bring forward legislative proposals to regulate the game mechanics of loot boxes".
In response Minister of State MP Margot James said that "PEGI informs consumers purchasing products from major app stores if they contain further purchases and are considering the possibility of placing these notifications on boxed products", and that "regulators such as PEGI and the Gambling Commission are speaking to industry to ensure that those who purchase and play video games are informed and protected".
The Gambling Commission issued a report in November on the state of gambling and its effect on youth.
While news outlets had stated that the Commission determined that loot boxes can be considered a gateway for youths to undertake gambling in other scenarios beyond video games,   the Commission clarified that they had not made any direct conclusion, and only found that about 3 in 10 children in the UK have opened loot boxes in games.
James said "Loot boxes are a means of people purchasing items, skins, to enhance their gaming experience, not through an expectation of an additional financial reward.
And also, more importantly, they can't be traded offline for money. So I think there are big differences, and I don't think really it is true to say loot boxes are gambling.
The Gambling Commission issued a statement in July that they cannot oversee the sale of loot boxes in most video games as there is no way to monetise the items within the loot box, a core distinction from gambling as written in current legislation.
The Commission did caution that there are third-party sites that enable the means to monetise loot box items, similar to skin gambling , but they are not in a position to monitor those sited, and urged companies like Valve to take better steps to prevent skin gambling monetisation.
In its final report, published 9 September , the Department for Digital, Culture, Media and Sport recommended that the UK government take precautionary steps to prevent the sale of games containing loot boxes to minors, and to work with PEGI to make sure that games with loot boxes are labeled as having gambling mechanics.
Further, the report stated that "We consider loot boxes that can be bought with real-world money and do not reveal their contents in advance to be games of chance played for money's worth.
The report also agreed with the conclusions of the Gambling Commission that game publishes and developers must take more steps to limit the grey market of skin gambling.
The National Health Service director of mental health Claire Murdoch stated in January that the Service was incorporating concerns related to loot boxes and the mental health of youth into their Long Term Plan , but cautioned that "no company should be setting kids up for addiction by teaching them to gamble on the content of these loot boxes.
No firm should sell to children loot box games with this element of chance, so yes those sales should end. In June , the Department of DCMS began requesting evidence from game companies related to loot boxes as part of a further investigation.
The report identified the ongoing issue of loot boxes, how they may be seen as gambling and their effect on the youth," and concluded that "Ministers should make regulations under section 6 6 of the Gambling Act specifying that loot boxes and any other similar games are games of chance, without waiting for the Government's wider review of the Gambling Act.
In February , the Isle of Man 's Gambling Supervision Commission updated their regulations to explicitly define virtual items as being "money's worth" even when not convertible into cash, explicitly bringing loot boxes under statutory regulation.
In April , the Dutch Gaming Authority issued a legal opinion that games which both sell loot boxes and permit the "transfer" of yielded items are illegal.
In its report "Study into loot boxes: A treasure or a burden? It concluded that while the loot-box systems in the six remaining games did not meet the threshold for legal action, they "nevertheless foster[ed] the development of addiction" and were "at odds" with the authority's objectives.
The authority gave the developers of the four unnamed games eight weeks to correct their loot-box system or face fines and potential bans on sales of the games in the Netherlands.
EA has planned to appeal this decision. The authority's investigation was opened following a parliamentary question tabled by MP Michiel van Nispen in November Announcing the investigation, the regulator warned of the "possible dangers" of "addiction and large financial expenses".
Following its April announcement, the Gaming Authority began to solicit other European Union countries to help harmonise their ruling on loot boxes among the Union.
In April , Psyonix disabled the ability for players in the Netherlands and Belgium to open loot crates with keys in Rocket League due to government regulations.
The Commission stated that for loot boxes in Overwatch , the action of opening a loot box is a game of chance to receive items of some perceived value to players, and there is no means to directly purchase in-game currency to obtain a specific item, while games like FIFA 18 merge reality and fantasy by using real-life athletes to promote the loot-box system.
In response to the announcement, several companies made their games with loot boxes unavailable to customers in Belgium with no financial recourse to customers who bought or paid for merchandise in the games:.
Electronic Arts' games FIFA 18 and FIFA 19 were also called out by the Commission; however, EA did not make any modifications to these games; EA had previously stated in May that it did not believe the implementation of loot boxes in their games constituted gambling.
Durain's letter stated his concerns that "some observers point to a convergence of the video game world and practices specific to gambling" in his request.
ARJEL noted that items from loot boxes do not normally have monetary value, and even when they are traded through skin gambling, the publisher of such games do not participate in that arena, thus distancing loot boxes from other forms of gambling.
The commission remained open on hearing complaints towards loot boxes on specific games, though have no legal authority to enact any fines or penalties should they be found to be against law.
While Coin Master does not use loot boxes, the game uses a gameplay mechanism that requires the player to play a virtual slot machine to advance in the game, with the opportunity to use items purchased with real-world funds to influence or bypass the slot machine to achieve desirable results, a model adapted by many other games and one that can encourage or trivialise excessive gambling.
If Coin Master had been blacklisted the BPjM may have opened the door for other games with similar monetisation routes to be reviewed.
Also in February , Ardalan Shekarabi , the Swedish Minister for Public Administration , stated that he was "ready to ask [the] authorities to take a closer look at the phenomenon of loot boxes and see if there is a need to change legislation in order to strengthen consumer protection.
In February Polish Ministry of Finance issued a statement saying that loot boxes are not gambling in the light of the Polish law, although it noted that they may well constitute gambling in other jurisdictions.
Polish law defines gambling very specifically, and the current definition is not applicable to loot boxes.
A July report prepared on behalf of the European Parliament Committee on the Internal Market and Consumer Protection IMCP , "Loot boxes in online games and their effect on consumers, in particular young consumers", was one of the first reports to reframe loot boxes as a matter of consumer protection rather than a gambling concern.
The report included recommendations such as restrictions on design features that encourage the addictive loop, better disclosure from publishers to players on loot box odds and the risks of playing such games, parental controls, and consumer testing with governmental oversight.
There are presently no laws in the United States targeting loot boxes, though the renewed interest in the issues with skin gambling from mid highlighted several concerns with using virtual items for gambling purposes.
However, with more technically-literate court judges that may consider "value" more than just a financial value, alongside new perception of how much value in-game items can have resulting from the skin gambling situation, could change how the framework in the United States would classify loot boxes.
Hawaii state representatives Chris Lee and Sean Quinlan issued a statement in November taking a stance against loot boxes.
I realised just how bad it has gotten. We've been on this path for 15 years with day-one DLC, subscription passes, pay-to-win. We as consumers kept accepting that, kept buying those games.
Now we're at a place where we need to consider, do we need to legislate? Does the ESRB have to consider a new rating that could deal with gambling and addictive mechanics?
Rather than passing legislation that could have a slippery slope of harmful effects on the industry, Quinlan stated he would prefer to see the industry self-regulate, either by excluding gambling-like mechanics in games marketed to children, or have the industry rate games with these mechanics for more mature audiences which would affect how they would be sold and marketed.
Minnesota introduced a bill in April that would prohibit sale of games with loot-box systems to children under 18 years of age, and require specific labelling on these games to alert consumers to the loot-box system.
In early May , Republican Senator Josh Hawley of Missouri announced that he intends to introduce a bill named "The Protecting Children from Abusive Games Act" that would ban loot boxes and pay-to-win microtransactions in "games played by minors", using similar qualifications to determine this as previously defined in the Children's Online Privacy Protection Act.
The Federal Trade Commission would be responsible for enforcing the bill by making judgements and leveling fines for games that fail to take these steps.
In September , members from the gambling commissions from fifteen European nations, including Austria, the Czech Republic, France, Ireland, Latvia, the Netherlands, Norway, Poland, Portugal, Spain, UK, as well as the state of Washington from the United States, announced a collaborative effort to "address the risks created by the blurring of lines between gaming and gambling".
While the group's specific focus will be on skin gambling sites, they will be looking to "ensure that features within games, such as loot boxes, do not constitute gambling under national laws".
Video game industry bodies have generally stated that they cannot regulate loot boxes as gambling unless the law of their countries specify what counts as gambling within games.
PEGI has stated that a game having a loot-box system will not automatically require its "gambling content" descriptor. Parliamentary questions in the United Kingdom revealed in March that PEGI is "considering the possibility of placing [in-game purchase] notifications on boxed products".
For example, if a player has poured certain amount of money in gacha, the player is given a chance to choose whatever reward they want from the gacha pool freely.
The association recommended a 50,yen ceiling. The Japan Online Game Association JOGA , which now serves as the Japanese video game industry's self-regulatory body in lieu of JSGA, also issued similar guidelines with further specifications such as "listing all available rewards from the lootbox and payout rates of all rewards" and "listing changes to all available rewards and payout rates upon software revision, specifically during festive campaign with a deadline".
While the new guideline does not recommend any payment ceiling, it recommends to display the expected maximum bet in order to guarantee obtaining the item if it exceeds 50, yen.
UKIE , the video game industry trade organisation for the United Kingdom, asserted its stance that loot boxes do not constitute gambling and are "already covered by and fully compliant with existing relevant UK regulations".
ESRB does not consider loot boxes as a form of gambling, and will not rate such games with their "Real Gambling" content descriptions.
ESRB considers that loot boxes are equivalent to collectible card game booster packs, and that the player is always receiving something of value with opening a loot-box purchase, even if it is not something the player desires.
The Board further stated that games that are labelled with "Real Gambling" will likely be then rated "AO" Adults Only , to comply with gambling laws; retailers typically do not stock such games, and would thus harm a publisher.
As an example, they found that parents were more worried about children spending money in-game and not any gambling aspects, and thus did not include loot boxes as one of its content descriptions, though would like to add them in the future should legislation or other industry standards establish gambling as a critical issue.
The Entertainment Software Association , the parent organization of the ESRB, asserted loot boxes are not a form of gambling, stressing that they are a voluntary and optional aspect in these games.
Electronic Arts' CEO Andrew Wilson stated in May that they will continue to include loot boxes in their games, and "While we forbid the transfer of items of in-the-game currency outside, we're also actively seeking to eliminate that where it's going on in an illegal environment, and we're working with regulators in various jurisdictions to achieve that".
While other publishers have acquiesced to governmental concerns about loot boxes, Electronic Arts has been generally steadfast in that they do not believe their implementation of loot boxes is a form of gambling.
In statements made at hearings with the UK Digital, Culture, Media, and Sport Committee, EA representatives compared loot boxes to "surprise mechanics" that one would find with Kinder Surprise eggs, and believe that their implementation of loot boxes are "quite ethical and quite fun, quite enjoyable to people".
In the wake of the criticism over Star Wars Battlefront II , financial analysts suggested that the video game industry will need to develop self-regulating principles to better handle monetisation and loot-box schemes to avoid government intervention into the industry.
She asked the nominees if "that children being addicted to gaming - and activities like loot boxes that might make them more susceptible to addiction - is a problem that merits attention?
In response to Hassan's letter, the ESRB announced in February that it would require any rated game that offers any type of in-game purchase with real-world funds, encompassing loot boxes, would be required to be labeled as such.
ESRB stated the labeling was primarily meant to help parents watch for games for their children, and because of the brevity of space they have on retail packaging, did not opt to required publishers to identify the specific form of microtransaction.
However, the board still asserted that they still do not believe loot boxes themselves are a form of gambling. Hassan called the ESRB's decision a "step forward", she still remained concerned of "the ESRB's skepticism regarding the potentially addictive nature of loot boxes and microtransactions in video games", and stated "I will work with all relevant stakeholders to continue oversight on these issues and ensure that meaningful improvements are made to increase transparency and consumer protections.
During a November Congressional hearing over problems with Cambridge Analytica 's data leak and associated with Facebook and Google , Joseph Simons , chairman of the Federal Trade Commission FTC , promised to Congress that the FTC will investigate loot boxes, considering the potential market value of microtransactions.
The FTC held a public hearing on loot boxes on August 7, , addressing industry representative and reviewing public comments submitted prior to the meeting.
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