Last updated on April 8th, 2024 at 10:43 am

The government has faced criticism for allowing companies to self-regulate gambling-style features, following an expert’s discovery of numerous violations

The UK government’s choice to allow tech firms to self-regulate gambling-like loot boxes in video games has come under scrutiny. Some developers responsible for new industry guidelines have violated their own rules.

In the last six months, the advertising regulator upheld complaints against three companies involved in creating industry standards, including Electronic Arts (EA), a major developer, for not disclosing loot box inclusion in their games.

An expert who filed the complaints mentioned discovering hundreds more breaches but chose to bring only a few to the Advertising Standards Authority (ASA) to emphasize the issue.

Loot boxes are features within games where players can use real money or virtual currency to unlock a digital container holding random rewards, like character outfits or weapons.

Despite expert warnings about loot boxes’ gambling-like risks, the Department for Digital, Culture, Media and Sport decided in July 2022 not to classify them as gambling products, unlike countries like Belgium.

Nadine Dorries, the former culture secretary, cautioned against regulating loot boxes, which studies have linked to gambling-related harm, citing potential “unintended consequences.”

Instead, the government established a “technical working group,” which included video game and tech companies. This group published a set of 11 principles on loot boxes in August 2023. These guidelines include a requirement to clearly indicate in game advertisements if they include paid loot boxes.

The working group’s last meeting was in June 2023. Since then, Leon Xiao, an expert on loot box regulation and a PhD fellow at the IT University of Copenhagen, found that hundreds of game advertisements—over 90% of those he reviewed—did not comply with the group’s disclosure rule.

The games were available for download from Apple and Google’s online stores, both of which are part of the industry’s loot box working group. Some were promoted on social media platforms like Facebook, Instagram, and TikTok.

Xiao lodged four complaints with the ASA regarding games developed by EA, Hutch, and Jagex, all of which contributed to the industry guidelines as members of the government’s working group.

The four games in question were F1 Clash and Rebel Racing by Hutch, EA’s Golf Clash, and Jagex’s RuneScape.

EA attributed the issue to “human error” and stated that it did not reflect its overall compliance with the guidelines. Jagex argued that there was insufficient space in its Facebook ad to provide full disclosure but that it had done so elsewhere. Hutch claimed that it had misinterpreted the advertising guidance and pledged to update its ads.

However, Xiao noted that these incidents were not isolated, stating, “I could have filed 268 individual complaints, but I had limited resources.”

His findings raise doubts about “whether that [working] group can be relied upon to deliver the intended aims of better protecting players and children.”

He stated, “Those members are meant to be exemplars, not violators of the rules themselves.”

Don Foster, chair of the House of Lords group Peers for Gambling Reform, stated, “It is abundantly clear that self-regulation does not work and that the government must intervene to properly regulate loot boxes and their marketing to protect children.”

A Department for Culture, Media and Sport spokesperson remarked that the government had emphasized that video game companies must take more action to shield children and adults from the risks associated with loot boxes. They added that the government would assess the impact of the industry guidelines and would “keep possible future legislative options under review.”

The UK gaming trade body Ukie mentioned that its members aimed to implement their new guidelines by July 2024 to “enhance protections for all players and underscore the industry’s dedication to safe and responsible play.”

These principles are a continuation of the video games industry’s longstanding practice of self-regulation and add to the strong tools and support already available to players for responsible gaming.”

EA stated, “We have a well-established record of complying with loot box disclosures, and we promptly rectified the two isolated omissions due to human error. We believe it’s crucial for players to be able to make informed decisions about our games before purchasing or downloading, and we are dedicated to providing players and parents with the necessary tools and information for informed choices regarding safe and responsible gameplay.”