EU study criticising the classification of loot boxes as gambling

On 16 July 2020, EU Parliament Research Service published a study on loot boxes (Loot boxes in online games and their effect on consumers, in particular young consumers).[1] The aim of this study is to provide an overview of loot boxes and other in-game purchase systems, outline their regulatory landscape within the EU, and give recommendations to address problems for (in particular young) consumers caused by loot boxes.

The study steers away from previously published (non-EU Parliament related) articles on loot boxes, which took the position that loot boxes constitute gambling. Instead, this study explains that loot boxes are generally not considered games of chance, even if they do raise (some) consumer concerns.

The EU Parliament Research Service then criticises a Member State driven approach to classify loot boxes as gambling, and, thus, to consider them a breach of law. Even if it lies within the competence of the Member States to establish whether loot boxes constitute gambling, this is not desirable. There is a lack of harmonisation regarding the classification of loot boxes. Some Member States want to treat loot boxes as gambling (i.e. the Netherlands and Belgium), whereas other Member States do not. Such a fragmentised approach also stifles the single market for video games. Certain video games, which include loot boxes, are unavailable or offered with a reduced content in Member States where loot boxes constitute gambling. In other Member States loot boxes are fully available.

Instead, this study propounds that loot boxes should be addressed from a wider EU consumer protection angle. This is because of the EU’s wide-ranging competences in this field as opposed to gambling, and a well-established consumer acquis. This should go beyond the current measures in place, which include:

• The (in)voluntary disclosure of the statistical chance of obtaining the content of a loot box;
• The attachments of a label to video games where loot boxes are involved as stipulated by the European video game content rating system PEGI; and
• Voluntary mechanisms for parents to control the play behaviour of their children.

By promulgating a more holistic EU consumer protection approach to address loot boxes, away from a Member State driven approach where the focus is on whether loot boxes constitute gambling, this study provides a “breath of fresh air”. This comprehensive study will (hopefully) mark the beginning of a different approach on how to address loot boxes. Furthermore, it is likely that IMCO will take this into account in the context of (possible) upcoming legislative work on loot boxes.

[1] This study was requested by the European Parliament’s Committee on the Internal Market and Consumer Protection (IMCO).