Loot Boxes

Lord Trevethin and Oaksey Excerpts

Thursday 13th October 2022 Lords Chamber

[Lord Trevethin and Oaksey (CB)]

My Lords, I am also a member of Peers for Gambling Reform, led tirelessly by the noble Lord, Lord Foster of Bath, although my contribution is negligible compared to his and to the work done by the noble Lord, Lord Butler. I agree with everything that they have said, and I have also found the Government’s response to the consultation on this matter naive and unsatisfactory. I will develop certain criticisms.

First, the response recognises, fairly enough, that there is compelling evidence of an association between the purchasing of loot boxes and problem gambling. I recall that 12 peer-reviewed studies are cited, and they all come to the same conclusion. It might be thought that that represents a good reason for taking some sort of action to mitigate the damage being done by the availability of loot boxes in video gaming. But the Government’s response declines to take any such action on the basis that there is at the moment no satisfactory evidence to support a finding that there is a causal connection of the relevant type between purchasing loot boxes and problem gambling. I agree with the noble Lord, Lord Foster, that, even if that were so, it would not in itself be a sufficient reason for complete inaction of the type commended by the Government. But I find completely unconvincing the Government’s position on the quality of the evidence for a causal connection between the two things. In the course of my brief discussion of loot boxes and all that they bring with them, I will suggest that it is obviously correct to infer that there is some relevant causal connection between what one might call excessively enthusiastic and expensive purchasing of loot boxes on the one hand and problem gambling on the other.

Secondly, in the course of my speech, I will agree with and develop the point made by other speakers that the purchasing of loot boxes is, in substance, a form of gambling. The Government’s response relies, inappropriately, on a semantic analysis of the definitions used in the Gambling Act 2005. A realistic assessment of the position would recognise the very close similarities between loot box purchasing and what one might call gambling in the strict sense.

Thirdly, the response is disappointing in that it pays almost no attention to what one might call the lived or real-life experience—I suppose it is real life—of those who play video games and are motivated or incentivised to buy loot boxes. Like the majority of Members of this House, I suspect, I am not a video gamer, although I am a gambler, as I have declared on other occasions, and I know all about gambling for all sorts of reasons. However, I have spent some time on YouTube over the last couple of days, looking at some interesting presentations of the opening of loot boxes, so I have some idea of what goes on when one pays one’s money and opens up a loot box. With respect, I say that nothing in the Government’s response suggests that the authors are familiar with or have paid sufficient attention to the visual and auditory stimuli used by the gaming industry to make loot boxes attractive.

Finally, I entirely agree with the noble Lord, Lord Butler, that the core message of the response—which is that, as things stand, it is sufficient to leave it to the industry to sort matters out—is wholly unrealistic and naive. It is also unfair to the gaming industry, which is a magnificent part of this country’s economic activity, because it ignores the acute conflict of interest that arises.

I will briefly develop what I have said about the Government’s position on an absence of evidence on the relevant type of causal relationship. Generally, the paper takes a rather odd approach to the role of evidence in the preparation of this sort of document. This does not augur very well for the White Paper we have been promised for months and months on the reform of gambling legislation in general. Of course, evidence is very important; it is taken in the course of this sort of consultation process, and it must be assembled and acted on. However, when I read the report referring favourably to the provision of evidence from respondents that children have less developed impulse control than adults, have a greater susceptibility to peer pressure than adults and may have a limited understanding of purchasing decisions, I wonder why it is thought necessary for any evidence to be given on those blindingly obvious matters at all. That is an indication that something rather strange is going on in relation to the handling of evidence.

Looking at this point about causation, what sort of evidence would be required to prove a causal connection between overenthusiastic purchasing of loot boxes on the one hand and problem gambling on the other? Would the research show that children developed a taste for gambling by unlawfully gambling online, then became problem gamblers, and then started to play video games and found that the purchase of loot boxes satisfied their craving to gamble? It is not likely that that evidence would be available; children generally get into video gaming first and then gambling later—only a bit later, unhappily, because of the accessibility of online gambling. That is the general sequence.

Might there be evidence that some human beings are predestined, for genetic reasons, to become problem gamblers, and the same innate characteristics that will make them problem gamblers cause them to be overenthusiastic purchasers of loot boxes? Maybe, but there is no such evidence of a genetic or neurological nature to that effect yet. I suggest that a more sensible analysis of the position would run as follows. First, there is a very close resemblance between the act of buying a loot box and the act of gambling on, say, an online slot machine. Secondly, the gaming industry presents loot boxes in a way that makes them virtually indistinguishable from some online slot machines. Even I am not stupid enough to play online slot machines, but I know what they look like. Thirdly, the buyer of a loot box unquestionably takes a risk, using in-game currency to buy something the value of which is unknown.

Fourthly, there is an illusion of control, in that different types of box—which, visually, could be a crate, pack or some form of container—may be chosen. They have different and rather odd names, they cost different amounts of money, and a child might well wrestle for some time with what he or she thinks is a delicate decision as to which box should be purchased to obtain what is hoped to be an ultra-rare product contained within. Fifthly, suspense is generated—I have seen this on YouTube—by a delay while the box is opened, or while it explodes slowly and dramatically, issuing forth all sorts of good things. Similar effects are created by suitably dramatic background noise. Sixthly, there is the possibility of a big win: the acquisition of some so-called ultra-rare item which will enable the gamer either to compete more effectively or to dress or equip the avatar in a way that will impress other users. Seventhly, the industry uses the notorious near miss effect, which can persuade the disappointed purchaser, who finds that the box contains some humdrum piece of equipment that is already possessed, to have another go and cough up some more money. In the words of an academic study footnoted to the government paper,

“the randomness is objectified and becomes part of the entertainment”.

I therefore entirely agree with my noble friend Lord Butler that, if it looks like a duck and does everything else that a duck does, it probably is a duck. In substance, then, this is probably gambling.

The paper relies on the definition of gambling in the Gambling Act and, at paragraph 35, says,

“we view the ability to legitimately cash out rewards as an important distinction.”

That is, if you gamble in the strict sense online or elsewhere and you win, you can turn your winnings into money or they represent money—which you can spend on other things, if you are wise enough to take it out and do so. Very well, that is one point, but I suggest that the distinction is more apparent than real: video gamers are using what is called “in-game currency” to gamble on a loot box which may contain something that they value—they may win; they may lose. The fact that what they are acquiring normally has value only within the virtual universe constructed by the game— although there are circumstances in which the contents of loot boxes can be traded for real money—is nothing to the point. This can be compared and contrasted—but mostly just compared—with the position of a problem gambler in the strict sense: the problem gambler risks cash and when that problem gambler wins cash, the value of it is, as it were, contained within the gambling universe and will be used to buy further gambling time. The analogies are compelling.

I am out of time, so I simply close by respectfully inviting the Minister to assist the House by indicating precisely what the Government expect the gaming industry to do to mitigate the risks connected to loot boxes. If I were running a gaming company and I read this response, I would not know what I had to do to clean things up.