Loot Boxes

Lord Foster of Bath Excerpts

Thursday 13th October 2022 Lords Chamber

Moved by

[Lord Foster of Bath]

That this House takes note of the response by His Majesty’s Government to the consultation on loot boxes.

[Lord Foster of Bath (LD)]

My Lords, I begin by welcoming the Minister to his new post. I know from experience that DCMS is an exciting department in which to be involved, although one that is sadly undervalued by Governments of all persuasions. I refer to my interest as the chairman of Peers for Gambling Reform, an organisation whose 150 members—Peers from all sides of this House—have been pressing for the implementation of the recommendations from your Lordships’ Select Committee on gambling, on which I had the opportunity to serve. Sadly, much time has passed since the publication of its report and since the Government’s own consultation on gambling legislation was concluded. A much-anticipated White Paper was approved twice by the previous Cabinet, yet has still not seen the light of day. With at least one gambling-related suicide every single day, we simply cannot wait any longer. Could the Minister tell us when the White Paper will be published, and will he agree to meet with members of PGR as soon as possible?

Noble Lords may wonder why I have begun with reference to gambling reform when this debate is actually about loot boxes. I believe there is a very clear link and, as I will argue, that loot boxes should be treated as gambling and regulated accordingly, with a change to the current legal definition of gambling. Your Lordships’ committee recommended this, as did the House of Commons DCMS Committee. The Conservative manifesto for the 2019 election also made a link between gambling and loot boxes. It made a commitment to undertake a review of the Gambling Act 2005,

“with a particular focus on tackling issues around loot boxes”.

While we await the gambling White Paper, we at least now have the response to the separate consultation on loot boxes. I was, frankly, shocked by its contents. It said that the evidence submitted to the consultation showed a link between loot boxes and gambling harms and to wider mental health and financial harms. But it went on to say that the Government do not intend to amend gambling regulation or to introduce any other statutory consumer protections to cover loot boxes. Frankly, that makes no sense. How can a Government that have stressed that they would take an evidence-based approach accept there is a link between loot boxes and harm and yet not legislate to protect people from this harm?

A report commissioned last year by GambleAware stated that links between loot box purchasing and problem gambling

“have been robustly verified in around a dozen studies”,

and argued that loot boxes were “psychologically akin to gambling”. The Select Committee heard similarly overwhelming evidence. Dr David Zendle, of the University of York, for example, has done extensive research in this field. His findings, presented to the committee, found that in every one of his studies spending money on loot boxes is linked to problem gambling, and that the more money individuals spend on loot boxes, the more severe their problem gambling. He told the committee that the link between problem gambling and loot boxes is extraordinarily robust. We also heard that research around the world, from Canada to Finland, has replicated those findings.

Perhaps the most worrying findings were in relation to young people. In the UK, we currently have around 60,000 young people aged 11 to 16 who are deemed to be gambling addicts, with a further 85,000 deemed to be at risk of becoming so. Rates of harmful gambling among 17 to 20 year-olds are increasing threefold. We should be particularly concerned that the research by Dr Zendle and others shows that the observed links between loot box spending and problem gambling were much stronger in adolescents than in adults. According to some research, young people who spend money on loot boxes are more than 10 times as likely to be problem gamblers than those who do not.

Three years ago, the Children’s Commissioner’s report, Gaming the System, also expressed concern about the impact of loot boxes on young people and, like the Select Committees in both Houses, recommended the regulation of loot boxes as gambling. More recently, GambleAware pointed out that, without action, loot boxes—used by 40% of children who play video games—will continue to normalise gambling-like activities with all the well-established consequences.

I have been careful to refer to a link between loot boxes and problem gambling rather than a causal relationship between them. The more money an individual spends on loot boxes, the more likely they are to suffer gambling harm, but I acknowledge that establishing a causative relationship is much harder. However, this effect shows very clearly that one of two things is happening: in one situation, loot boxes are causing gambling problems; in the other, the companies that sell loot boxes are profiting inordinately from children and vulnerable individuals who suffer gambling harms. Such individuals commonly spend thousands of pounds on loot boxes. Either outcome is a cause for concern. So I do not believe that the absence of definitive proof of a causative link justifies the Government’s response, which is, in essence, to do nothing except encourage further research and hope that the industry will do something.

Of course I welcome further research, so can the Minister provide an update on the video games research framework? I am a fan of the UK’s games industry. It contributes significantly to the success of our creative industries, and with developments in virtual and augmented reality will be even more important. It is a responsible industry but, with significant earnings to be made from loot boxes, asking it to take significant steps to reduce their well-documented harms is asking too much of it.

Waiting for enhanced industry-led protections was exactly the same argument that allowed the worst practices of the gambling industry to go unchecked for many years. We were told that the Government did not need to regulate fixed-odds betting terminals because the industry would self-regulate. It did not. We were told that there was no need to bring in a statutory levy to fund research, education and treatment because the industry would provide sufficient through the voluntary levy. It has not. We were told that the industry would cut down on the advertising that is constantly marketed to young people and recovering gamblers. Instead it introduced, for football, a measly whistle-to-whistle ban that does not even begin to deal with advertising hoardings, front-of-shirt sponsorship or programme ads. There has been no let-up in non-football-linked TV ads, nor the constant bombardment of online marketing.

To be told once again that we can once trust the industry to self-regulate a product that directly funds those companies is surely not the right approach to take. A business model that relies on the fiscal success of harmful products must be regulated by the Government, not by the companies themselves. If the Government will not change, can the Minister at least provide details on progress made by the technical working group set up to develop those industry-led solutions?

Even the type of industry measures that the Government are suggesting seem likely to have little effect—for example, enhanced parental controls. As one commentator pointed out, that is like allowing children to gamble in a betting shop as long as a parent is present. More worryingly, as GambleAware-commissioned research points out, advocating enhanced parental controls as a key part of the solution shows how little the Government appreciate how difficult it now is for parents to understand and adequately protect their children from gambling harms, and, given the rapid changes to online activities, how lacking in confidence parents are even about talking to their children about these issues. Surely, given all the evidence, we should expect the Government to adopt a public health approach based on prevention.

In his previous role as Parliamentary Under-Secretary of State in the Department for Health and Social Care, where I believe he did an excellent job, the Minister was a powerful advocate of such a public health approach. I am grateful to the Library for providing numerous quotes from him showing how on several occasions he praised

“public health interventions and a strong regulatory framework”—[Official Report, 3/12/21; col. 1610.]

in relation to other harms such as smoking, obesity and mental health conditions. I remind him that when in March this year, during an Oral Question, I asked him about adopting a public health approach towards gambling he said:

“I know we take very seriously that this is a public health issue that we must tackle in a holistic way. We are looking at how we can allocate funding in the NHS long-term plan to tackle gambling addiction and to ensure that we focus more on prevention rather than simply dealing with people once they have a problem.”—[Official Report, 28/3/2022; col. 1262.)


Does the Minister really believe that the Government’s response to their own inquiry into loot boxes is evidence of the adoption of a public health approach? I certainly do not.

I remind him that as part of the review his own department commissioned Loot Boxes and Digital Gaming: A Rapid Evidence Assessment, a report whose results it sat on for ages. I suspect that was because it showed a

“stable and consistent association between loot box use and problem gambling”.

Despite that, there has been no action by the Government. Leave it to the industry and to parents, and encourage more research, but do not expect the Government to act.

In moving that the House takes note of the response by His Majesty’s Government to the consultation on loot boxes, I simply say that I was dismayed by it. I hope the Government will think again and instead take note of the recommendations of the Select Committees in both Houses, the Children’s Commissioner, GambleAware, numerous academics and many others who believe that loot boxes should be regulated as gambling. I beg to move.

--- Later in debate ---

[Lord Foster of Bath (LD)]

My Lords, I thank the Minister for his reply to the debate and his clarity about being willing to meet, and I hope he will meet with Peers for Gambling Reform in the near future. I thank all noble Lords who have taken part in what I believe is a very important debate, not least because of the issues that have been raised about harm currently being done to children and vulnerable people. I believe that further action that is way beyond the sort of promises we heard from the Minister must be taken, although I welcome the work that is being done. I believe—and I think the Minister has heard this—that far more needs to be done.

I think we have been clear, and I hope the Minister will understand, that we are huge fans of the games industry in this country. Before this debate, I was in a meeting of the Communications and Digital Committee, hearing from one of the leading experts in the world of digital games industry, who rightly pointed out that they are leading the way in new developments in VR and AR that are not only going to help their industry but areas such as health and education also—these are very important. As I hope the Minister has heard, we are clear that where they have a significant financial vested interest in the issue of loot boxes, it is wrong to expect them to take responsibility for dealing with the concerns that we have.

While we have been debating, reports have come out that No. 10 is debating a major U-turn on the mini-Budget. I had hoped that this debate would have led to a smaller U-turn on the issue of loot boxes. Sadly, we have not had that, but I am grateful for what the Minister said and the offers that he made. We look forward to further discussions on these issues. I beg to move.

Motion agreed.