Loot Boxes in Video Games

Lord Parkinson of Whitley Bay Excerpts

Wednesday 13th December 2023 Lords Chamber

[Lord Foster of Bath (LD)]

My Lords, in begging leave to ask the Question standing in my name on the Order Paper, I declare an interest as chairman of Peers for Gambling Reform.

[The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord Parkinson of Whitley Bay) (Con)]

We welcome new industry-led guidance to strengthen player protections in relation to loot boxes. We have agreed a 12-month implementation period, during which we expect the industry to work with players, parents, academics, consumer groups and government bodies to implement this guidance in full. We are working closely with academics to support independent scrutiny of these new measures, and we will provide further updates and keep under review our position on possible future legislative options.

[Lord Foster of Bath (LD)]

My Lords, I thank the Minister for his reply. There is a very long list of those calling for tougher action on loot boxes, which computer games players purchase to have a random chance of getting items to help them win—each an expensive gamble. The Government’s own research review showed a

“consistent association between loot box use and problem gambling”,

yet they still leave parents and the games industry itself to deal with these problems. The Select Committees in both Houses and many other people believe that loot boxes should be treated and regulated as gambling. Can the Minister explain why the Government rightly regulate the gambling industry but do not regulate loot boxes, which cause similar harms to individuals and society?

[Lord Parkinson of Whitley Bay (Con)]

Research has provided evidence that loot box purchases may be linked to a variety of harms. In particular, there is robust evidence of an association with problem gambling, as the noble Lord mentions, but research has not established whether a causal relationship exists. There are a range of plausible explanations. We have developed and published the video games research framework to support high-quality, independent research into video games, including into loot boxes. If new evidence becomes available, we will consider it.

[Lord Vaizey of Didcot (Con)]

My Lords, I heap praise on the noble Lord, Lord Foster, who has been a great supporter of the video games industry, although I do not agree with him on loot boxes. I am sure that he and the Minister will have seen the recent report from the Association for UK Interactive Entertainment, the trade body for video games, showing how this industry, which is bigger than film, television and music put together, has huge benefits for our wider economy, including the automotive and health sectors. Does the Minister agree with me that it is important not to overregulate such a successful industry? I refer to my entry in the register.

[Lord Parkinson of Whitley Bay (Con)]

My noble friend is right to point to the huge success of the UK consumer games market. It is currently valued at more than £7 billion, which is more than double its size in 2013—during my noble friend’s heyday as the Minister responsible for it. The industry employs 27,000 people across the country, with nearly 80% of those people based outside London; there are video games clusters in Dundee, Sheffield, Manchester, Guildford and Royal Leamington Spa. The growth has of course been accelerated by generous tax reliefs, including those on which my noble friend worked in government. We are very proud of the impact that it has on our wider creative industries.

[Lord Winston (Lab)]

My Lords, I congratulate the Minister on his careful Answer to this Question. Is it not a fact that this research has been done at Loughborough University with, I think, only 42 families participating, with children from five to 17? We know from other studies on computer games in general that long-term harm is not clearly established with most of these games. It may of course be different with loot boxes, but I rather think that it is important to continue research before one comes to legislation.

[Lord Parkinson of Whitley Bay (Con)]

I thank the noble Lord for those comments. As I said in both my original and subsequent replies to the noble Lord, Lord Foster, we are working closely with academics to support independent scrutiny of the industry-led measures that are being taken, and we want to see how those work and bed in. We have developed and published a research framework so that there can be independent and rigorous analysis to give us the evidence that we need to inform policy-making.

[Viscount Colville of Culross (CB)]

My Lords, players who buy loot boxes, including young people, are often victims of well-known psychological techniques to nudge them towards purchasing ever-greater features in the loot boxes. These include special, time-limited offers, price anchoring and the obfuscation of costs. Is the Minister satisfied that self-regulation will stop these behaviours in the loot box market?

[Lord Parkinson of Whitley Bay (Con)]

As the noble Viscount will know, we have taken action more widely to ensure that people at risk of gambling harm, including children and vulnerable people, are protected. We want to ensure that people are able to play video games safely online and to enjoy them, but also to be protected against any harms that may occur. That is why we are keen to see the industry-led guidelines being implemented and why we will monitor their impact closely.

[Lord Mackenzie of Framwellgate (Non-Afl)]

My Lords, has any action been taken to prevent the gambling industry targeting compulsive gamblers who are trying very hard to stop?

[Lord Parkinson of Whitley Bay (Con)]

Yes, we have taken action including strengthening the land-based age-verification regime; we have taken steps to target online adverts away from children; and, of course, we have increased the minimum age to participate in society lotteries and football pools to 18. The Committee of Advertising Practice also updated advertising rules last year, so that gambling adverts cannot be designed in a way that has a strong appeal to children.

[Lord Kamall (Con)]

My Lords, the noble Lord, Lord Winston, referred to research at Loughborough University that focused on a sample of children from five to 17. Is my noble friend aware of research on older age groups? We know that people continue to play games well into their 40s, 50s and 60s, and that will have an impact on potential addiction not only to games but to loot boxes.

[Lord Parkinson of Whitley Bay (Con)]

I am not, but I shall take my noble friend’s very good question back to the gambling team at the department and encourage it to make sure that we are pursuing research that will add to our understanding of the implications for all age groups.

[Lord Bassam of Brighton (Lab)]

My Lords, whether it is the two-year gap between the Government’s call for evidence and their response, or the further year-long wait for the games industry to announce guidelines, efforts to tackle child access to loot boxes and other in-game features with gambling-like features have been far too slow, in our view. Like others, we hope that voluntary arrangements will work, but if they do not, can the Minister confirm whether the Government have a specific regulatory approach in mind? If so, how long might implementation take?

[Lord Parkinson of Whitley Bay (Con)]

We think the industry-led guidance on loot boxes has the potential, if fully implemented, to improve protections and to meet the Government’s objectives. We expect the games industry to implement the guidance in full and we will monitor that carefully. If the industry is unable to meet our objectives, there are a range of options that the Government may consider, but we would like to see how they bed in first.

[Lord Addington (LD)]

My Lords, will the Minister give us a little opinion? If he had to buy something else via a lucky dip, such as shirts or socks—it may happen at Christmas, we may think—would he be happy? The fact of the matter is that we are actually saying, “You are not buying what you think you are buying; you may have to go back again and again to get that product”. Even without the gambling element here, or the gambling similarity, that cannot be right.

[Lord Parkinson of Whitley Bay (Con)]

Under the terms of the Gambling Act, gambling is defined as

“playing a game of chance for a prize”

of money or something of money’s worth. The prizes that can be won via most loot boxes do not have a monetary value; they cannot be cashed out and they are of value only within the context of the games. They do not meet the definition, and I do not think they quite meet the analogy that the noble Lord made.

[Lord Hampton (CB)]

My Lords, is the issue of loot boxes not just part of the wider issue of in-app purchases in games? Does the Minister agree that we need more transparency on the whole idea of games and how they are funded?

[Lord Parkinson of Whitley Bay (Con)]

Yes, we are committed to ensuring that video games can be enjoyed safely and responsibly by everyone. To support that, we are working closely with the Games Rating Authority, which ensures that all games are appropriately rated. That includes information for those who buy them on what they can expect from their purchases. We have also, as I say, developed and published the video games research framework to support high-quality, independent research into games, and that is an important tool to augment our understanding of the impact of playing video games.

[Lord Greenhalgh (Con)]

My Lords, sadly I do not have any relevant interests to declare in the way that my noble friend Lord Vaizey of Didcot has. He is right about the importance of the video game industry but, as a parent of three children, I am pleased that the noble Lord, Lord Foster, has raised this issue, because my son, at not much more than 10 years of age, suddenly spent several hundred pounds on a video game precisely because of this sort of entrapment. We need to keep a weather-eye on this. I encourage the Government to realise that when your child plays a video game, you expect them to play a video game, and when they gamble, you expect them to gamble. At the moment, the lines are too blurred.

[Lord Parkinson of Whitley Bay (Con)]

I point my noble friend to the response the Government issued to the extensive call for evidence on loot boxes. We were very clear that loot boxes should not be purchased by children unless enabled by a parent or guardian; that all players should have access to spending controls and transparent information about what to expect; and that better evidence and research should be developed to inform future policy-making. We are taking all those steps forward as we look to see the industry implementing the guidance over the next 12 months.