The House of Commons DCMS Select Committee has issued its report on immersive and addictive technologies in which it calls for regulation for video game “loot boxes”.
The House of Commons Digital, Culture, Media and Sport Select Committee has issued its report on immersive and addictive technologies. Its inquiry investigated how games companies operate across a range of social media platforms and other technologies, generating large amounts of user data and operating business models that maximise player engagement in a lucrative and growing global industry. Representatives of major games, including Fortnite maker Epic Games and social media platforms Snapchat and Instagram, gave evidence on the design of their games and platforms.
In summary, the report calls for regulation of video game “loot boxes” under gambling law and to ban their sale to children. The report also says that there was a lack of honesty and transparency in some of the evidence given by some games and social media companies to the Committee. It also calls upon games companies to accept responsibility for addictive gaming disorders, protect their players from potential harms due to excessive play-time and spending, and along with social media companies, introduce more effective age verification tools for users.
Sale of loot boxes to children should be banned
The UK government should regulate ‘loot boxes’ under the Gambling Act, the games industry must face up to responsibilities to protect players from potential harms and there should be an industry levy to support independent research on long-term effects of gaming. The report highlights serious concern at lack of an effective system to keep children away from age-restricted platforms and games.
The Committee has previously called for a new Online Harms regulator to hold social media platforms accountable for content or activity that harms individual users. It says the new regulator should also be empowered to gather data and take action regarding addictive games design from companies and behaviour from consumers. E-sports and competitive games played to an online audience, should adopt and enforce the same duty of care practices enshrined in physical sports. Finally, social media platforms must have clear procedures to take down misleading ‘deep-fake’ videos – an obligation the Committee wants to be enforced by a new Online Harms regulator.
Loot box mechanics were found to be integral to major games companies’ revenues, with further evidence that they facilitated profits from problem gamblers. The report found current gambling legislation that excludes loot boxes because they do not meet the regulatory definition of gambling failed to adequately reflect people's real-world experiences of spending in games. Loot boxes that can be bought with real-world money and do not reveal their contents in advance should be considered games of chance played for money’s worth and regulated by the Gambling Act 2005.
The report calls for loot boxes that contain the element of chance not to be sold to children playing games and instead be earned through in-game credits. In the absence of research on potential harms caused by exposing children to gambling, it calls for the precautionary principle to apply. In addition, better labelling should ensure that games containing loot boxes carry parental advisories or descriptors outlining that they feature gambling content.
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 decides not to, it should produce a paper clearly stating the reasons why.
The government should also 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.
Long-term effects of gaming
‘Gaming disorder’ as formally designated by the World Health Organisation, should be included in independent research into the long-term effects of gaming in a strategy developed by the government and paid for in part by an industry levy. The Committee considers the games industry has not sufficiently accepted responsibility for either understanding or preventing this harm and should contribute financially to research on potential harms associated with its products, as the gambling industry is already expected to do.
The DCMS should immediately update its areas of research interest to include gaming disorder, working with researchers to identify the key questions that need to be addressed and develop a strategy to support high-quality, independent research into the long-term effects of gaming. The government should also require games companies to share aggregated player data with researchers and to contribute financially to independent research through a levy administered by an impartial body.
Gaming lacks ‘protection for vulnerable’
The report cites evidence that "gaming is several years behind gambling in relation to protecting the vulnerable,”. The report notes that games companies were generally reluctant to accept a role or responsibility to intervene on player spending, with difficulty in determining what level of spending might be harmful.
Potential harms – some in games industry ‘wilfully obtuse’
The Committee reports that it found it difficult to get full and clear answers, expressing disappointment at the way some representatives engaged with the inquiry, particularly in acknowledging what data is collected, how it is used and the psychological underpinning of how products are designed. Representatives from the games industry were found to be “wilfully obtuse” in answering questions about typical patterns of play, considered essential information in better understanding of engagement with gaming. Some games and social media company representatives were found to have “demonstrated a lack of honesty and transparency” in giving evidence, with the report questioning what companies had to hide.
The report calls on the industry, particularly large multinational companies, to recognise responsibility to protect players from potential harms and to observe the relevant legal and regulatory frameworks in all countries their products reach.
Safeguarding younger players
With three-quarters of those aged 5 to 15 playing online games, the Committee expressed serious concern at the lack of an effective system to keep children off age-restricted platforms and games. Evidence received highlighted challenges with age verification and suggested that some companies are not enforcing age restrictions effectively.
Legislation may be needed to protect children from playing games that are not appropriate for their age. The report identifies inconsistencies in ‘age-ratings’ stemming from the games industry's self-regulation around the distribution of games. For example, online games are not subject to a legally enforceable age-rating system and voluntary ratings are used instead. Games companies should not assume that the responsibility to enforce age-ratings applies exclusively to the main delivery platforms: all companies and platforms that are making games available online should uphold the highest standards of enforcing age-ratings.