Which Implementations of Loot Boxes Constitute Gambling? A UK Legal Perspective on the Potential Harms of Random Reward Mechanisms

Loot boxes are virtual items in video games that offer the player randomised in-game rewards of uncertain in-game and real-world value. Paid loot boxes represent a lucrative and prevalent contemporary monetisation method that encourages repeat purchase through randomisation. The psychology literature has consistently reported a relationship between loot boxes and problem gambling. However, various implementations of loot boxes have not been sufficiently differentiated and separately examined. The literature and gambling regulators have generally argued that only loot boxes that cost real-world money to buy, and offer rewards that can be transferred to other players and are consequently worth real-world money, constitute ‘gambling.’ This paper identifies the potential harms of two other types of loot box: one does not cost real-world money to buy and the other does not offer rewards that are worth real-world money and argues that both may constitute ‘gambling’ under UK law. This paper hypothesises that even loot boxes that neither cost real-world money to buy nor offer rewards that are worth real-world money may be potentially harmful as they may normalise gambling behaviours. This paper highlights that, when the game’s design and economy are exploited by players, a particular implementation of loot boxes may involve real-world money, potentially contrary to the game company’s intentions, and thereby effectively constitute ‘gambling.’ This paper recommends that future empirical research separately examine the potential harms of each type of loot box.