Will a government review make the regulation of online gambling more effective? All bets are raised

Twice. This is the number of times the word “internet” is mentioned in the Gambling Law 2005. Early next year, the UK government’s white paper on the review of this legislation is expected. The goal is, in the government’s own words, to ensure that the law is “fit for the digital age”. This is something that, given the Internet’s lack of prominence in the original legislation, many believe it is long overdue.

In the 16 years since the law became law, a plethora of digital games with gaming-like functionality have appeared, including E-Sports betting, social casinos, and Twitch services. “A lot of these new setups have the same mechanics as the game, but different results and different ways of getting a reward,” Elena Petrovskaya, a researcher at the Center for Intelligent Games and Game Intelligence, tells me. “And if it’s not directly real money, even though it may look like the same mechanics, it probably won’t be subject to the same rules.”

Perhaps the best known of these new setups are loot boxes – packs of randomly selected bonus items from video games – some just superficial, others filled with items that give the player a better chance of winning – paid either with real money or in-game credit purchased with real money. They are extremely valuable to game developers, generating total income of $ 15 billion in 2020.

The Gambling Act’s limited definition of what constitutes gambling – a game of chance played for money or money – is central to why loot boxes and other forms of digital betting are still not regulated. . Since there is no way to monetize the content of loot boxes – the content only helps players in the game – the Gambling Commission is unable to classify them as games of chance under the existing legislation. This is one of the main changes activists hope to see in the next white paper.

“If you change the definition of gambling to… just a bet for something of value, then you kind of broaden that definition,” says Matt Zarb-Cousin, director of Clean Up Gambling. “And the reality is that these digital items have tremendous value to the people who try to win them. And that’s why they spend so much money trying to earn them.

The importance of loot boxes in the popular football video game FIFA and the high exposure of children to them (40 percent of children who play video games bought a loot box, according to a study commissioned by the charity GambleAware) mean they received disproportionate attention in the debate over what to classify as a game. early this year revealed a clear correlation between the use of loot boxes and problem gambling behavior, and Belgium and the Netherlands have classified them as a form of gambling when purchased with real money.

The companies behind video games argue, perhaps unsurprisingly, that loot boxes should be free from any proposed or hypothetical regulations. In 2019, EA vice chairman Kerry Hopkins compared loot boxes to Kinder Eggs when asked about them by lawmakers, and in October of this year, the head of the experiment at the company claimed they existed “to reflect the real world of football”.

But David Zendle, a video game researcher and computer scientist at the University of York, worries that by focusing on some of the more well-known forms of digital games, the larger problem they represent may be overlooked.

“Loot boxes are a symptom of a larger shift in the way video games are monetized,” Zendle explains. “And there are other phenomena here that are really important … And what I hope is that people think that this is some kind of large and multifaceted construction, rather than a only specific thing that you can get rid of and fix a problem. “

One problem, for example, is the importance of non-fungible tokens (NFTs) in video games. They are unique digital assets that cannot be replaced or duplicated, but can be bought and sold. And boy, do they sell a lot.

They are based on blockchains – digital databases that contain information that can be used and shared simultaneously within a large, decentralized and publicly accessible network. NFTs then act as markers that confirm that a user owns a digital item on that blockchain. The decentralized format in which data is stored on blockchains means that it is very resistant to any form of regulation.

The first really popular game with NFTs at its heart was Cryptokitties, which involved players buying and selling unique digital chats, with one user spending $ 172,000 for one in 2018. Although NFTs are still relatively rare in video games, there is currently great interest in their creation. of a more important role, calling it “playing to win”. NFTs can then be used in a game, sometimes improving a player’s ability to win, often increasing in value over time, before being subsequently sold for profit. In Cryptokitties, users can then, after agreeing on a price with their fellow students, breed their “cats” with others. Although the generated “kittens” are unique, the exact number created may vary.

“So even if you only have one line of code that says you own something, it can still be used in the game, and Cryptokitties that’s kind of what I did, ”Zendle says. The amorphous nature of these characteristics is what makes them difficult to pin down. “So it’s a bit kid, it’s a bit gamey…”

Esports betting – essentially betting on competitive video games as opposed to live sports – is another relatively new form of online betting. But while the Gambling Commission says that if a platform wants to offer esports betting it will need a betting license, some have found a way around that. Players’ Lounge, for example, is a digital betting platform that allows players to bet on theirs performance. “So you know, you’re about to play a game of FIFA, but you can make it really fun by betting £ 50 against the person you’re playing against, ”Zendle explains. The platform will then benefit from a 10% reduction in player registration fees.

There are many games widely played on cell phones that involve game mechanics. Master of coins, the UK’s top-grossing mobile game, requires players to spin to earn coins. While these spins are limited to seven per hour, additional attempts and items can be purchased, both with real money or by subscribing to an email newsletter. Master of coins is classified by some as a social casino – a game similar to a game on a social networking site.

But a big problem with trying to measure the reach and potential damage that platforms like social casinos and player lounges could potentially pose is the lack of data on the price they are costing users. “These continue to make a lot of money and there is still no real appreciation of where that money is coming from, if they can afford it and if it’s hard for their lives,” Zendle explains. “Still no movement to see this as some kind of game.”

We will not know until the review arrives whether these phenomena will receive the attention they deserve. But what is clear is that with the range of mechanisms and formats available online, being able to regulate effectively and over the long term will be anything but a sure bet.


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Robert M. Brown