Video game firms found to have broken own UK industry rules on loot boxes

The UK government’s decision to let technology companies self-regulate gambling-style loot boxes in video games has been called into question, after some of the developers put in charge of new industry guidelines broke their own rules.

In the past six months, the advertising regulator has upheld complaints against three companies involved in drawing up industry rules, including the leading developer Electronic Arts (EA), for failing to disclose that their games contained loot boxes.

An expert who submitted the complaints said he had found hundreds more examples of breaches but had only taken a handful to the Advertising Standards Authority (ASA) in order to highlight the problem.

Loot boxes are in-game features that allow players to pay, with real money or virtual currency, to open a digital envelope containing random prizes, such as an outfit or a weapon for a character.

Despite warnings from experts that loot boxes carry similar risks to gambling, the then Department for Digital, Culture, Media and Sport said in July 2022 it would not follow other countries, such as Belgium, in choosing to regulate them as gambling products.

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Nadine Dorries, who was the culture secretary at the time, warned that regulation of loot boxes, which studies have linked to gambling-related harm, could have “unintended consequences”.

Instead, the government set up a “technical working group”, which included video-game companies and tech businesses and published a set of 11 principles on loot boxes in August 2023.

The guidelines include a requirement to make it clear, when games are advertised, that they contain paid loot boxes.

The working group last met in June 2023. Since then, Leon Xiao, an expert on loot-box regulation and PhD fellow at the IT University of Copenhagen, said hundreds of adverts for games, more than 90% of those he examined, did not abide by the group’s own rule on disclosure.

The games were downloadable from the online stores of Apple and Google, both of which are members of the industry’s loot-box working group. Some were advertised via social media platforms including Facebook, Instagram and TikTok.

The ASA upheld four complaints that Xiao made about games made by EA, Hutch, and Jagex, all of which have helped draw up industry guidelines as members of the government’s working group.

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

EA told the ASA that “human error” was to blame and that the mistake was not representative of its broader compliance with the guidelines. Jagex said there was not enough space to make full disclosure on its Facebook ad and that it had done so elsewhere. Hutch told the ASA it had misinterpreted the advertising guidance and would update its ads.

However, Xiao said these were far from isolated incidents: “I could have made 268 separate complaints, but my resources were limited.”

He said his findings challenged “whether that [working] group can be relied upon to deliver the intended aims of better protecting players and children”.

“Those members are supposed to be role models, rather than rule-breakers themselves,” he said.

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Don Foster, the chair of the House of Lords group Peers for Gambling Reform, said: “‘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 spokesperson for the Department for Culture, Media and Sport said the government had been “clear that video games companies must do more to protect children and adults from the harms associated with loot boxes”.

They said the government would monitor the impact of the industry guidelines and would “keep possible future legislative options under review”.

The UK gaming trade body Ukie said its members hoped to implement their new guidelines by July 2024, to “improve protections for all players and underline the industry’s commitment to safe and responsible play”.

“These principles […] are part of a long history of self-regulation within the video games industry and complement the robust tools and support players already have to play video games responsibly.”

EA said: “We have a long, recognised track record of compliance with loot box disclosures, and we quickly addressed the two isolated omissions caused by human error. We believe it is important for players to be able to make informed decisions about our games before they buy or download, and we are committed to ensuring players and parents have the tools and information they need to make informed choices for safe and responsible play.”

The Guardian approached Jagex and Hutch for comment.