Loot boxes cause financial and emotional harm to kids due to gambling-like design techniques, UK study says

A group of UK researchers have conducted a study of games with loot boxes and other chance-based rewards. They identified the harm these mechanics cause to children and shared their recommendations for solving this problem.

The Between Gaming and Gambling report by Newcastle and Loughborough Universities (via Eurogamer) collected data between August 2019 and July 2022.

The researchers tracked the gaming habits of 42 English families with children aged between 5 and 17. They also interviewed 20 parents of kids who have purchased loot boxes and 10 game designers who have worked on titles with these monetization mechanics.

Here is what the researchers found out:

• Loot boxes can cause financial and emotional harm to kids and young people, including compulsive spending, senses of shame when players reflect on the amount they have spent on in-game items, and senses of frustration when they fail to gain desirable item;
• Kids don’t understand the value of money and find it difficult to track their spending, because they usually buy in-game currency in small amounts, and in-game purchases in general are dissociated from their real monetary value;
• Loot box items are designed to encourage repeat spending because they are highly desirable and appealing to kids due to their social value, aesthetic quality, rarity, and/or in-game advantage;
• Digital items borrow design techniques from regulated gambling — slots, affirming sounds, free spins or other daily rewards — to increase engagement and in-game spending;
• Online games are built around repetitive, never-ending loops of daily activities that affect purchase decisions and manipulate kids’ spending patterns — this leads to some players adjusting their life routine to match the in-game schedule;
• Parents often feel powerless and tolerate loot boxes because online games provide their kids with social benefits, but also cause peer pressure and lead to compulsive spending akin to gambling;
• Manipulative game design techniques create unfavorable conditions for making purchasing decisions, including the feeling of nearly winning and changing the odds as players spend more money in the game.

How can the problem with loot boxes be solved?

• The researchers believe that the games industry should have its own independent regulator responsible for making games with loot boxes fair and safe for all players.
• Regulation should affect not only loot boxes, but also other paid reward systems like in-game currency and direct purchases.
• All loot boxes that can be bought with real money should be age-restricted products for people over 18 years old.
• The industry should standardize in-game purchasing systems, parental controls, and game accounts to help parents manage their kids’ in-game spending.
• Games with loot boxes and other reward systems should include special spending trackers and spending limits.
• The researchers think that the UK’s Competition and Markets Authority should undertake the review of games with chance-based rewards to monitor activity and safeguard children.

More information and detailed conclusions can be found in the full report.