Loot boxes are in-game purchases which allow players to gain random virtual items such as ‘power ups’ to enhance the character’s skills or for cosmetic upgrades such as clothing.

In September 2020, the government launched a call for evidence on the impact of loot boxes to help it understand the positive and negative experiences of these virtual in-game purchases.

Following its review of the industry, the government stopped short of a ban, but said children and young people should not be able to buy loot boxes in video games without parental consent.

The Department for Digital, Culture, Media & Sport said companies must do more to ensure safe and responsible gaming after it found a link between loot boxes and gambling harms, as well as wider mental health, financial and problem-gaming harms.

It said the purchase of loot boxes by children and young people should only be made with approval by a parent or guardian.

The department will create a new working group to bring together games companies, platforms and regulatory bodies “to develop industry-led measures to protect players and reduce the risk of harm”. This will include measures such as parental controls, and making sure transparent, accessible information is available to all players.

In December 2020, research from the Gambling Health Alliance revealed that kids had used their parents’ debit or credit cards to fund the purchases without their consent. And in three of the worst cases, parents had to remortgage their homes to cover the cost of loot box purchases.

The government said that some games platforms, such as Xbox, have already taken steps to improve protections, such as including options that require parental permission for under-18s to spend money within games.  As such, the government wants to “build on this with strong protections for children across the entire games industry and will not hesitate to consider legislation if companies do not bring in sufficient measures to keep players safe”.

‘Premature to take legislative action’

Culture secretary, Nadine Dorries, said: “We want to stop children going on spending sprees online without parental consent, spurred on by in-game purchases like loot-boxes.

“Games companies and platforms need to do more to ensure that controls and age-restrictions are applied so that players are protected from the risk of gambling harms. Children should be free to enjoy gaming safely, whilst giving parents and guardians the peace of mind they need.”

In the government response to the call for evidence on loot boxes in video games, Dorries added: “As the evidence base on loot boxes is still emerging, and direct government intervention may risk unintended consequences, our view is that it would be premature to take legislative action without first pursuing enhanced industry-led measures to deliver protections for children and young people and all players. As a result, the government does not intend to make changes to the Gambling Act or to other statutory consumer protections with regards to loot boxes at this time.

“We want to mobilise the industry’s creativity, innovation and technical expertise to deliver tangible progress, improving at pace protections for children and young people and all consumers. If this does not happen, we will not hesitate to consider legislative change.”

The video games industry contributed £400m to the economy in 2010, soaring to £2.9bn in 2019.