The UK Gambling Commission has told MPs that it does not consider video game loot boxes and FIFA packs to be gambling under UK law

In recent months, loot boxes have been criticised for their perceived similarity to online gambling. The boxes, which reward players with random items in exchange for real money, have previously been deemed a ‘gateway’ to gambling for children and vulnerable people. However, the UKGC has now confirmed that they do not violate UK gambling legislation because there is no legal way to monetize the items players receive.

The declaration was made during a meeting with the Digital, Culture, Media and Sport Committee, which is currently carrying out an inquiry into addictive technologies, with video games and loot boxes a main area of focus.

In the meeting, Neil McArthur, UKGC chief executive, did say that loot boxes “could be a form of gambling”, but that it “depends on the exact circumstances in which they are offered.”

McArthur explained that “The Gambling Act tells us that gambling means playing a game of chance for a prize, and you can certainly see circumstances where loot boxes might fall within that definition, but where things become a bit more complicated are when one looks at the definition of prize, and prize is defined as being money or money’s worth”.

“What that means is that the prize must mean something that is equivalent to money,” McArthur added.

Games like FIFA and Fortnite do not offer players any way to sell or monetize in-game items. However, illegal third-party sites exist where players can either sell virtual items or use them to gamble on casino-like games with the potential for real money prizes. This is known as skin gambling.

Both the Commission and games developers are taking action against these illegal sites. Brad Enright, UKGC programme director, said that the Commission was satisfied that EA, the developer of FIFA, has “taken lots of measures to prevent secondary markets”. The Commission itself is believed to have taken action against more than 20 skin betting sites over the last four years.

The Commission’s comments echo those of MP Margot James, former digital minister. Earlier this month, James told the committee: “I would contest the assumption that loot boxes are gambling and I don’t think that all the evidence that I’ve read from your committee’s hearings would support that assumption either.”

The UKGC’s declaration is unlikely to reduce the criticism levelled at loot boxes and FIFA packs. In recent months, there have been multiple stories of minors spending hundreds and even thousands of pounds on loot boxes.

The Commission did state that it is well aware of the potential dangers of loot boxes, even if they don’t break gambling laws. Enright said, “the very fact that there is expenditure, a chance-based mechanic, children playing the game, we appreciate that that poses significant concerns.”

While loot boxes may not contravene UK law, they aren’t legal in all countries. In 2018, Belgium ruled that loot boxes in certain games violated its gambling legislation and subsequently banned them. This followed an investigation that judged packs and loot boxes offered in FIFA 18, Overwatch and Counter Strike: Global Offensive to be illegal forms of gambling. Similar action has been taken in the Netherlands.

The Gambling Commission’s statement came just a day before Rockstar Games, developer of Grand Theft Auto, revealed that players will be able to purchase real money chips and gamble with them in the game’s new casino feature. While players will not be able to convert winnings into real money, this is the latest in a long line of video game microtransactions likely to draw the attention of regulators and critics.

This revelation suggests that loot boxes are here to stay, despite protests from politicians and the public. While many would prefer for the UK to follow in the footsteps of Belgium and the Netherlands, it seems that there will need to be a change to legislation before regulators can ban loot boxes here.