Game creators ‘likely to be considering seeking gambling licences’

Creators of games such as FIFA and Overwatch are more likely to seek gambling licenses and implement age restrictions than ditch controversial “loot boxes”, according to a gambling regulatory expert.

FIFA and Overwatch are among the high-profile games criticized for exposing children to gambling.

Anne Longfield, the Children’s Commissioner for England, has called for tighter legislation to protect online gamers as it is noted that some children are spending significant sums of money, sometimes without a parent’s or carer’s consent.

Loot boxes allow players to spend real money to unlock additional characters, equipment skins and/or in game gear. On some occasions, the “loot” may assist the player in advancing further into the game and at a faster rate.

One of the most famous examples is FIFA’s Ultimate Team, where users can pay for packs of players to improve their team. The packs are random and, therefore, akin to gambling.

Nick Wright, a gambling regulatory specialist with SolutionsHub, says game developers such as Electronic Arts, which makes FIFA, Star Wars Battlefront II, and Apex Legends, are likely to be considering obtaining gambling licenses.

He said: “The loot box system is incredibly valuable for these companies. FIFA Ultimate Team made up 16% of the EA’s business in the fiscal year 2017, 21% in 2018, and now 28% in 2019.

“Tighter regulation would slash revenue streams and cut profits and require developers to think of new ways to engage with and monetize, their players.

“Would they remove loot boxes? Probably not but they may need to think of ways to age verify games where loot boxes are involved.

“I would be stunned if some of these companies aren’t already considering obtaining gambling licenses and consolidation and partnerships with existing holders would likely allow them quicker access into regulated markets.”

Statistics state that nine out of 10 children play video games in the UK alone with some children already displaying concerns that the purchasing of loot boxes may be considered a form of gambling.

Mr. Wright said: “Many people may think that loot boxes are only a recent phenomenon. However, their history and roots can be traced all the way back to the early 1900s where decorative cards were placed in cigarette packs.

“More recently the silver collectible cards placed in packs of US Baseball cards saw sales top $1 Billion USD in the early 1990s before reducing to its current level of $200 Million USD today.”

“Fast forward to 2012 and loot boxes were more commonly found in video games such as FIFA and CS:GO before being more widely adopted in games such as Battlefront and Call of Duty. Income from the sale of Loot Boxes is a valuable product vertical for game studios with Blizzard alone reporting income of $1 Billion USD from Overwatch in 2017.”

So, when will developers need to get a gambling license? Not any time soon.

Mr Wright said: “In November 2018, UK Gambling Commission chief executive Neil McArthur,  reporting to a Department for Culture, Media and Sport select committee, said that while there are ‘significant concerns’ about children playing games which offer loot boxes then loot boxes themselves do not qualify as a form of gambling under current laws.

“It seems that Mrs. Longfield will need to make a case for the law to be changed before the current status quo can be changed. In the meantime, the UKGC, as well as other top-tier regulators, will no doubt be keeping a close eye on sector developments.”