The Blurred Line Between Gaming and Loot Box Gambling

22 September 2026

Loot boxes and skins betting are two gaming practices that blur the line between gaming and gambling, raising questions about regulatory oversight and player protections. Loot boxes, which sell chance-based in-game rewards with randomised contents, are not typically classified as gambling under the UK's Gambling Act 2005. By contrast, skins betting, where virtual items are wagered for cash or more valuable items on separate platforms, is legally recognised as gambling in Great Britain. Yet, both activities are associated with increased gambling activity and harm.

At stake in this issue are not only legal distinctions, but also the financial and mental health risks affecting younger gamers who engage with these monetisation models. Loot boxes are often argued to skirt gambling laws because the in-game items they offer do not have a fixed monetary value. However, research has shown that loot boxes are positively associated with traditional and problem gambling, as well as mental distress and higher impulsivity in participants. Moreover, the skins acquired via loot boxes can often be traded for real-world cash on third-party betting sites, blurring the lines around what type of risk these items carry.

The Regulatory Challenges of Loot Boxes

Currently, loot boxes occupy a grey area in gambling law. The UK Gambling Commission, for example, ruled in 2019 that loot boxes were not gambling under the Gambling Act 2005, as there is no official way to assign a fixed monetary value to the items they contain. This does not account for gambling-like activities, where players can earn in-game currency for skins and then trade or sell those cosmetic items on third-party sites. In fact, research has shown that loot boxes are associated with increased participation in gambling-like activities and mental distress.

One of the main justifications for considering loot boxes distinct from gambling has to do with the ambiguity of their value. Because the contents of a loot box are randomised and their in-game value is unclear, they do not present gamers with a clear consequence attached to their purchase. While it is true that the purchase of in-game items cannot be regulated as traditional gambling, the effect that these chance-based purchases can have on a gamer's mentality is comparable to the impact of gambling.

This has led to calls for a review of loot box regulation, particularly as it relates to younger audiences. In a 2021 report, the Royal Society for Public Health found 40% of young gamers had purchased loot boxes, while 60% said skins betting was highly addictive. The harm associated with these activities, which are being positioned as a normal part of modern gaming, justify more robust guidelines, particularly for games targeted at minors.

Do Loot Boxes Enable Illegal Gambling?

The real-world value that skins and other tradable items developed in loot boxes can accrue complicates the narrative of loot boxes' regulation. Because of the difficulty in measuring the value of cosmetic items like game skins, game companies pitch loot boxes as outside the realm of probabilistic rewards. By contrast, when gameplay currency can be used to acquire items of real-world value, that same gamer potentially stands to lose quite a lot judging by the potential dropoff in their skins' value. When considering loot boxes' risk, it's clear that additional risk factors exist once you view the chance-based reward through the lens of third-party marketplaces where these items become outright currency.

From a regulatory perspective, the question becomes whether enabling skins trading on third-party sites as a byproduct of a loot box model is equivalent to enabling minors' access to gambling. Given the levels of value gamers can win or lose with such assets, the UK's Gambling Commission maintains that the trade of loot-box items that facilitate purchases with real-world cash constitutes gambling. As the harm to minors' impulsivity, gambling activity, and mental health that comes from attributing monetary value to loot-box items has begun to surface, regulatory bodies are finding new ways to push games companies to assess the monetisation model while restricting the in-game development of these items.

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Do We Have Enough Data On What Loot Boxes Lead To?

In response to concerns about loot boxes facilitating young people's exposure to betting, the UK's Gambling Commission and the government undertook a rapid evidence review of skins gambling from May through July 2019. The subsequent whitepaper clarifies that loot boxes have not been considered gambling per se, as long as there is no official means of trading loot box contents for cash. That being said, as the skins gambling market has developed, particularly for games like Counter-Strike: Global Offensive and Steam, the Gambling Commission has recommended that cases involving the trade of loot box items for cash be seen as gambling.

For a long time, the gambling industry has taken a hands-off approach to the role that cosmetics and other monetization tactics have played in enabling marketplaces for real-world financial development of items. There is substantial research that points to an association between loot boxes in video games and traditional gambling behaviors, including gambling-related harm. The UK's Gambling Commission is the first regulatory agency to note the increased potential for gambling addiction that emerges as a result of exchanging real currency for loot box items.

Details That Point to a Regulatory Reevaluation of the Loot Box Model

Three primary factors play into regulation of the loot box model: the trade of loot boxes for cash, the sale of surprise items, and the contracting of loot boxes with players. The Gambling Commission now recommends that products that use loot boxes in these conditions align with the gambling term of art. On the gaming market, that includes any item that effectively becomes a resource used in gambling and holds an appreciable chance element.

Second, linked to skins exchange, UK regulators recommend keeping loot boxes captive to the games app from which they originated. That is, trading loot boxes on third-party markets would be seen as a form of gambling, making regulation of platforms like Steam or Dota 2 a regulatory priority. According to recent figures published by the regulator, at least 84% of random-generated items in skins transactions were sold by youth or minors under 18 years. Accounts fraudulently set up by under 18 gamers looking to enter into skins markets total around 3.8 million, according to the Commission.

When considering how the loot boxes model has affected this issue, the evidence is clear. That is in part due to public scrutiny of what qualifies as gambling. But there is also the limitation of gambling legislation in considering purchases of cosmetics and gaming extras as gambling traps, especially when either game pass makers or cosmetics producers are exempt from gambling transparency requirements.

If regulators start to see the monetization of loot box items akin to gambling, a regulatory reevaluation of gaming features like loot boxes seems likely. This would not include just the UK's Gambling Commission, but global regulatory bodies that set guidelines for gambling and game design as much as in-game item providers and game creators.