Here's the definition of a "lottery" under the uk gambling act "(2)An arrangement is a simple lottery if— (a)persons are required to pay in order to participate in the arrangement, (b)in the course of the arrangement one or more prizes are allocated to one or more members of a class, and (c)the prizes are allocated by a process which relies wholly on chance."

There is also a complex lottery where the process begins with chance. This covers things like scratchcards where you choose which things to scratch off but which card you are given, and what is printed on the card is governed by chance.

http://www.legislation.gov.uk/ukpga/2005/19/section/14

Lotteries are one of 3 forms of gambling covered by this regulation, so in the uk at least it seems pretty obvious that lootboxes are gambling from a legal point of view. Lotteries are permitted for people older than 16 in the UK but it's an offence to allow a "child" (someone younger than 16 in this law) to participate (http://www.legislation.gov.uk/ukpga/2005/19/section/56)

It's also an offence if your company to manufacture, supply, install or adapt gambling software without a license. So they could be liable from that point of view also, in the UK at least.

edit: clarify one bit of wording

> and (c)the prizes are allocated by a process which relies wholly on chance."

This part sounds leaky to me. Game producers might assign prizes which are based e.g. 99% on chance and 1% on skill.

The law calls that a complex lottery. But it's still a lottery, and the UK law on lotteries is very simple: No for-profit lotteries.

You can (and at least two big companies do) make money from operating a lottery on behalf of a charity, but you can't run a lottery where the profits themselves go somewhere other than a "good cause" such as a charity. And the UK has tighter regulation than the US of charities so it's harder to have a "charity" that basically just puts money into your own pockets.

Wagers on things which are part-skill and part-chance are covered by the definition of "gaming", which is one of the other forms of gambling in this law and seems like it was originally designed for games like roulette, poker etc. If the loot-box is designated gaming then the restrictions are no less severe and certain exemptions around lotteries wouldn't apply (so probably more severe).

I agree - Gambling is rolling the dice to make back more money than you put in. Loot box is rolling the dice to get digital items you want with no expectation to profit. There is a difference.

How is it with no expectation of profit? E.g. in CSGO you could pull skins that are worth 100s of dollars... and then sell them on 3rd party sites.

Also the rare skin itself can be the profit because you get a higher status and prestige within your peers.

I often wish, there was a diffrent sort of gambling- taking the customers money and refunding it - in secrecy to the familys whos reward-circuitry-hacked members bleed them dry.

That- and only that, is the acceptable gambling that i could accept existing.

The British government owns lots of banks, one of them, the National Savings and Investment Bank has a product that is almost this (but not secret), named 'Premium Bonds'.

You buy bonds, and like a lottery ticket they might randomly win a prize in a draw. But because it's a bank not a lottery the bonds themselves never go away if you don't win, it's basically a savings account except instead of boring percentage interest you randomly win prizes.

That's like saying "gambling is gambling, roulette is roulette"...