In-app purchasing in video games may get caught by gambling regulations. The Gambling Act was introduced in 2005 primarily to ensure that gambling in the UK is done in a fair, open and legal way.
Video game loot boxes are in-game features whereby players invest real-world money for a random chance of winning a prize. It is the randomness of the in-app purchase which has been likened to a game of chance and which, it is argued, is caught by gambling regulations. The digital, culture, media and sport (DCMS) committee published its immersive and addictive technologies report on 12 September 2019. It recommends that loot boxes should be considered gambling and that minors should be banned from purchasing them. Further to this, it suggests that the government should introduce a specialised tax for the gaming industry to examine the allegedly harmful effects of gaming. The report also mentions that gambling content warnings should be incorporated into games containing loot box features and possibly increase any current age limits to support this. Whilst not enshrined in law at the moment, the government could choose to legislate in line with the DCMS Committee recommendations in the future.
If in-app purchasing becomes regulated, software developers may have an extra obligation to apply for specific remote gambling licenses. De-monetisation of games may be a disincentive for publishers to continue supporting software developers’ products which could prove detrimental to the gaming industry. Fines could be enforced where non-compliance with any new regulation occurs. Games facing restrictions on features such as loot boxes could also be pulled from sale altogether in the UK. This could essentially lead to existing gaming contracts being discharged by frustration and would not entitle software developers to claim any damages.
It is ultimately recommended that developers and software houses pay close attention to gaming and gambling legislation in the UK when contracting for development or marketing services, or licensing in order to recognise the practical and legal implications of risk management should more stringent regulation be enforced.