COMMENT: Games and gambling – a lawyer’s view

Paul Gardner is a lawyer and early adopter of the Atari 2600. He specialises in commercial transactions and regulatory issues relating to the computer games industry.

Many in the games industry will have heard it referred to as the ‘gaming industry’ – a term confusingly used by some betting firms. This can be mildly irritating, but at least easy to correct. In recent weeks however, this confusion has become increasingly visible and concerning. 

The most obvious manifestation of this has been in relation to loot boxes. In some sections of the media, these have been unthinkingly referred to as gambling, even when it is clear that the mechanics of the particular loot box highlighted does not constitute gambling. 

With so much noise in the media, this misunderstanding can be much harder to correct. However, it is just as incorrect and unhelpful to completely dismiss this criticism and to claim (as some have done) that loot boxes are not gambling. The fact is, they can be. 

To assess whether or not a particular loot box does constitute gambling requires a careful review of its mechanics. In particular, it depends on the nature of the stake and the nature of the prize. 

For example, is the stake purchased (or even partly purchased) with real money and can the prize be exchanged for something of real world value? Looking at different loot boxes, it is possible to identify at least three different types of stake and three different types of prize, so these elements alone generate nine different mechanics. 

"To assess whether or not a particular loot box does constitute gambling requires a careful review of its mechanics"

To further complicate matters, the position varies in each country, so it is entirely possible that a loot box does not constitute gambling in one country but does in another.
But this is not just an issue about loot boxes. 

Among the furore on that subject, another development has received less attention. In October, the UK Gambling Commission wrote a letter to online operators regarding adverts featuring images likely to appeal to under 18s.

The immediate reaction amongst people in the games industry may be to think that this does not affect them, because they are not providing gambling services. At
one level this is correct. However, it does take the Commission a step closer to the games industry.

We know from the paper published by the Commission in March this year that its primary interest relates to social casino gaming. However, its more general concern is to protect children and ‘vulnerable’ people from getting drawn into gambling. There are games that are not casino style games but that do have very similar mechanics to gambling. 

So putting this together, it is easy to see how the Commission might start to look at games with these mechanics that also appeal to children. There are some similarities with the issue around IAPS that arose in 2013, except that potentially this would be much more serious.

The good news is that the Commission has (unlike regulators in some countries) adopted a process of consultation and learning. However, it does not serve the interests of the games industry to dismiss this issue and there is certainly no room for complacency.