Coalition Of Gaming Regulators Formed to Combat Gambling in Video Games

On Sept. 17, 2018, the United Kingdom Gambling Commission (UKGC) posted a statement on its website saying that it was joining an international coalition of regulators to combat gambling in video games. Representatives of 16 oversight bodies got together at the 2018 Gambling Regulators European Forum, and issued a joint declaration committing themselves to protecting consumers, particularly children, from the dangers of gambling.

This announcement comes at a time when the lines between gaming and gambling have become increasingly blurred, and public dissatisfaction with in-game monetisation, and gambling-themed content featured within video games is at an all-time high.

Who’s Involved?

The signatories of the declaration include such big names as the UKGC itself, France’s ARJEL and the Malta Gaming Authority along with entities active in smaller markets, like the gambling department of the Czech Republic and the tourism authority of Portugal. All of the participants represent European organizations with the sole exception of the Washington State Gambling Commission, and together encompass more than 278 million people, or around 54 percent of the European Union’s population.

The full list of signatories to the declaration are as follows: Austria, Czech Republic, France, Ireland, Isle of Man, Jersey, Latvia, Malta, The Netherlands, Norway, Poland, Portugal, Spain, UK, and Washington State. Commenting upon their joint mission, Chief Executive of the UKGC, Neil McArthur, said:

“We have joined forces to call on video games companies to address the clear public concern around the risks gambling and some video games can pose to children. We encourage video games companies to work with their gambling regulators and take action now to address those concerns to make sure that consumers, and particularly children, are protected.”

What Activities Will be Targeted?

Lately, we’ve seen traditional gambling companies add gamification elements to their offerings, like the CCG-inspired Power Up Poker at PokerStars and achievement badges at any number of betting sites. The same process has also been taking place in reverse, with video game developers attempting to add the excitement of gambling to their titles. While there are a wide array of such gambling-related features, the declaration mentioned four of them specifically: skin betting, loot boxes, social casino gaming and gambling-themed content. Here’s an overview of each of them:

Skin Betting

In many games, players can unlock special graphical modifications, called “skins,” to either the player character or various accessories (weapons, apparel, et cetera). Most of them are purely cosmetic and have negligible effects on game-play. Because there are usually mechanisms for trading skins among individuals, they have acquired market value. While the vast majority of skins aren’t worth very much, though, some of the rarer ones can fetch hundreds or thousands of dollars.

Third-party gambling sites have popped up that allow users to trade in their skins, via an automated process, for betting chips. Customers then deploy these chips to play roulette, blackjack, dice and other games, and they can cash in their chips by exchanging them for other skins. There was even a site called CSGOPoker that allowed peer-to-peer poker games funded through “Counter-Strike: Global Offensive” skins. However, the maker of GS:GO, Valve, has cracked down on these sites, and CSGOPoker is no more.

Because they aren’t licensed by either gambling authorities or the actual makers of video games, these gambling platforms tend to lack the protections that traditional online betting services employ. In particular, age verification is all but nonexistent, and stories abound of teenagers using their parents’ credit cards to purchase skins and losing small fortunes at the virtual gaming tables.

Loot Boxes

The loot box is a staple of such titles as “Star Wars Battlefront II” and “Gears of War 4.” They’re typically presented as boxes that contain random goodies inside. While the collection of loot boxes isn’t necessary to progress within a game, they generally speed up the process of players achieving their goals.

In some games, customers can pay a small fee to obtain a loot box. When we consider that the items thereby unlocked often have actual monetary value and can be exchanged with others, it’s easy to see how this can be considered a type of gambling. Opinions vary about the appropriateness of loot boxes in video games. The ratings body ESRB has explained that it doesn’t believe loot boxes are gambling. Yet, an Australian Senate investigation recently found that loot boxes are “psychologically akin to gambling.” And the Dutch Gaming Authority declared in April 2018 that loot boxes were illegal if they could be bought for real money and their content traded with other players.

Social Casino Gaming

It used to be thought that play money gambling apps were totally OK from a legal perspective in most parts of the world. However, the fact that in-game chips can sometimes be bought and sold muddies the waters and has caused some to view social casinos as a type of gambling.

Such was the case in China, which in June 2018 prohibited all poker apps – even those that don’t use real money. While not as all-encompassing, a U.S. federal court of appeals ruling in March 2018 held that social casino gaming was banned by Washington State law because play chips were deemed to be a “thing of value” and thus covered by the relevant anti-gambling statutes.

Gambling-Themed Content

This is the fuzziest category mentioned in the declaration. At its broadest, it could include any mini-game that is reminiscent of a slot machine or other gambling setup. An example would be the poker mini-game in “Red Dead Redemption.”

Bottom Line

While it’s perfectly understandable to want to safeguard vulnerable groups, especially children, there’s a fine line to walk between reasonable protections and regulatory overreach. The average age of gamers is now well north of 30, and so restrictions on what is and isn’t allowed in video games will affect many adults as well as youngsters.

Whatever steps this international consortium eventually decides to take, their mandates will come on top of the rules that are in place at the local, regional and national levels. They risk placing compliance burdens on businesses that are too onerous and may drive smaller developers out of the game entirely.