New EU report on tackling loot boxes advises dropping ‘gambling’ approach – instead suggests game design and consumer protection model

A new report commissioned by the European Parliament concludes that tackling loot boxes by making them illegal in specific nation states, such as Luxembourg and the Netherlands, should be abandoned in favour of EU-wide measure focused on game design and consumer protection law.

Loot boxes in online games and their effect on consumers, in particular young consumers is an even-handed and well-informed report – a breath of fresh air compared to many recent attacks on the industry and its monetisation. It intelligently defines different kinds of loot box, notes that in the main they are not considered gambling, but then goes on to still tackle the tricky consumer issues around loot boxes.

It notes that bans under gambling regulations have removed loot boxes but also impacted the single market for video games, often meaning that such games are no longer available in those countries or have reduced content. It also bemoans the varied legal rulings from such countries:

“The fact that the national gambling authorities have come to different conclusions about the nature of loot boxes, despite similarities in their national legal definitions of gambling and despite their cooperation in the framework of GREF, shows the limitations of such a national approach.”

It does however still have some choice words about the design of such mechanics, not just of loot boxes but also what will inevitably follow if specific legislation is put in place.

“As business models and design elements in the video game industry develop rapidly, focusing in particular on the regulation of loot boxes carries the risk that they will simply be replaced by other potentially problematic game designs and monetisation methods in the future and that regulation will lag behind technological development.”

The report then advises that the EU “broaden the perspective beyond gambling aspects and approach the issue of loot boxes and other problematic game designs from a wider consumer protection angle.“ Noting that the Union has great competency in consumer protection law, and that would be a better angle of approach in the long-term.

The report is not convinced at present that methods such as revealing odds, making IAP more transparent and parental controls will be able to entirely tackle the problem. And that more testing and proof is needed of their efficacy in tacking the problem.

It concludes: “Should these existing practices (which are mostly voluntary) be found insufficient to protect players from potentially harmful effects of loot boxes, they could be regulated at EU level in a similar manner.”

Well-research, level-headed, evidence-based, forward-thinking. It’s a great example of what we will lose come the end of the year. Let’s hope that the UK continues to maintain the same consumer standards as the EU in games, as anything else would be a disaster for the industry here.